What is the idea? The startup idea is to use the available screens in bars and restaurants for real-time advertisement which will be viewed by the people in the bar or the restaurant at that moment. The startup will tie-up with bars and restaurants and connect their screens to a cloud-based device through which advertisements can be relayed. The startup will sell ad slots based on real-time data on the number of customers in the pub or the restaurant. There are various ways to count the number of people in a place, and some of them will be explained below in this article.
The startup will develop and use an algorithm to arrive at the pricing of advertisement slots based on real-time data and sell them to earn money.
Market Definition This form of advertisement falls under the category of "Out-of-home advertisement". "Out-of-home advertisement" or "Outdoor advertisement" is a form of advertisement which targets customers when they are outside their homes.
According to research by Global Industry Analysts Inc. in 2015, the global market for outdoor advertisement is expected to reach USD 50.7 Billion by 2020. The report also notes the reasons for the increase in expenditure on this segment and some of them are given below:
- One of the primary reasons noted for the growth in spending in this sector is the urbanisation. It notes that over half of the world's population now resides in cities and urban locations and it is expected that this figure will explode as more than two-third of global population starts living in urban areas by 2050;
- It also notes that the world population is becoming mobile and people are spending a significant part of their day outside their homes such as airports, railway stations, streets and malls. The average time in commuting has also increased over the years, giving more reasons for increased growth in this segment;
- Strong economic growth, rising consumerism, improving standards of living, increase in disposable income, and changing lifestyles, represent other factors driving growth in the market.
The report also goes on to state that oversized digital billboards drive the outdoor advertisement segment and it is expected to dominate this market still, given their ability to attract attention. It also notes the importance of video wall systems featuring wall-sized display screens and other mediums like LED/LCD screens that are being used these days for reaching out to customers.
According to the report, Asia-Pacific represents the largest chunk of the market worldwide. The region is also expected to grow at the fastest pace with an expected compounded annual growth rate of 8.6%. This has largely been attributed to the retail boom in China, Singapore, Malaysia, Thailand, Hong Kong and India.
Competitor Analysis The outdoor advertisement is an old industry and is dominated by giants like Adams outdoor advertising, JCDecaux SA, Lamar Advertising Company, Clear Media Limited, EPAMEDIA and Pattinson Outdoor Advertising. As noted in the market definition segment, the dominant position is enjoyed by oversized billboards in the outdoor advertisement segment. In addition to this, there are players like Half Minute Media and Digital Pub info which work in the area of bars and pub advertisement. It is essential to note that most of the players in the outdoor advertisement are restricted regionally in terms of their market
Pain Point & Target Audience Because the cost of advertisement on bar screens would be much lesser than oversized screens, the target segment would expand multifold. The targeted customer market for this business is "any business looking to advertise from small businesses to big brands".
Till now, most outdoor mediums are expensive, and there are limited means to reach out to advertisement agencies, thereby restricting the small business owners from enjoying the benefits of advertising.
Value Proposition The startup will aim to make the process of buying real time advertisement slots seamless; It will also help advertisers in targeting their audience types in various locations. And more importantly, now the advertisers can be assured can get real-time data on the reach of their brand campaign.
Business Model The startup would tie up with restaurants to engage screens on its network and sell the advertisement slots to advertisers in the manner specified in the section on "value proposition" above. The pricing would remain dynamic on the models of google Adwords, and the subsequent revenue will be shared between the startup and the pub/restaurant owner.
Way to marketThe first steps would be to create the technology for counting the number of people in a room using the process mentioned above. Once it is resolved, the startup needs to work on the algorithm which will determine the price for the advertisement slots. The startup would need to test the prototype in one locality first. Once the prototype is tested successfully, it can start adding more places and screens on its network.
Milestones The key in this business is going to be the number of screens that would be there on their network. One of the biggest benefits this business has to offer is the fact that advertisers can relay advertisements in real-time and select geographical locations. The fact that an advertiser would know the number of people that will or might look at a screen will be a big seller. The startup should aim at adding at least 1000 screens in the first year. This should preferably be in one city, and once, it has successfully dominated one city in this segment, it can scale up by adding more cities across the globe.
Investment Needed For PrototypeFor testing & building the prototype, pitch for raising 100K USD from angel investors or incubators. There are incubators which focus specifically on incubating adtech companies like The Bakery and Collider (dedicated to advertisement and marketing startups). There are other incubators which incubate tech startups, and the startup could reach out to them as well. There should be no office rentals or salary payout; the entire budget should be apportioned for customer acquisition and technology.
Team Capability You would need a tech person on your team with good understanding of algorithms and mathematical computation. It would also be essential to have someone with advertisement or marketing consultancy background to effectively design and pitch the strategy and benefits to brands.
Investors / Expert Take It needs to be noted that because of the advent of facebook and google, the adtech startups have struggled and the funding deals in this industry have decreased. The investors will now look at companies which can show a successful application of tech in the advertisement industry.
The outdoor advertisement segment is expected to rise for the foreseeable future, and there is no reason for investors to oversee this segment. Ft.com noted that "As adtech start-ups are forced to target audiences and customers beyond Google and Facebook, investors believe innovation will creep back and the funding winter will cease".
Therefore, if this product is implemented successfully even on a small scale, the startup should be leading this segment in future.
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