Much of my work is to do with the pricing of innovation, especially digital innovation. One thing I have noticed during my interviews with customers is that the benefits of new digital offerings are often NOT immediately obvious to most customers. What is typically more obvious are the limitations of the new digital offering compared to what is currently being done and their barriers to adoption.
This insight also comes from my own experience. Let me explain how my own views have evolved with respect to digital outdoor advertising!
Digital Outdoor Advertising c.2008
Around 15 years ago digital outdoor advertising was first introduced on the London Underground. Whereas previously all posters were on paper, now some had been replaced with video screens. At that time, I was personally quite negative about this innovation given that electricity was now needed for outdoor advertising. This was a time when, in order to tackle climate change, the UK government was spending taxpayer money on advertising to encourage the British public to use LESS energy. How dissonant it would have been if the UK government had shown their 2008 “Save Money, Save Energy” campaign adverts on these new London Underground video screens!
A part of the reason I can recall my attitude so well from that time is that I remember agreeing with points made Peter Tertzakian in his excellent and thoughtful book ‘The End of Energy Obesity’, published in 2009. He draws attention to The Rebound Effect whereby, in this example, energy efficiency savings made by consumers in their home would then be available to be spent on new energy consumption. Perhaps some consumers would spend this saving on budget flights abroad? As Tertzakian describes, the notion of a Rebound Effect was first discussed by the 19th Century economist William S. Jevons. As Jevons considered the use of coal, he suggested that efficiency gains actually increase rather than reduce the use of energy. Jevons Paradox, as it became known, can make one think that acting on energy efficiency is a fool’s errand!
Specifically relevant to this blog article, Peter Tertzakian wrote:
“I observed a classic example of the indirect rebound effect on a business trip to London in late 2007. Back then, the British government was making noise about banning the bulb as early as 2012. Yet I felt the emptiness of such policy talk as I descended an endless escalator to the bottom of London’s landmark subway system, the Tube. All the paper billboard holders advertising products and West-End plays had been replaced by flat panel video screens. The irony was stunning. Paper billboards use zero energy to get their message across, whereas a typical flat screen consumes 250 watts or so.”Peter Tertzakian, The End of Energy Obesity (2009), p. 123
A while later, and I cannot remember when exactly, quite suddenly it occurred to me that the advertising capabilities of digital are very different to the traditional paper adverts. Specifically, it should now be possible to provide very time sensitive advertising to specific locations. This value proposition has now become reality through D6 Outdoor Digital.
Digital Outdoor Advertising 2023
In a nutshell, my views have changed considerably! I am now very favourable towards the idea of digital outdoor advertising.
- It has the potential to reach people with the right data at the right place at the right time.
- It allows for flexibility in the amount of advertising shown according to demand.
- It allows for creative pricing, such as with the communication of time limited offers and capacity limited offers.
I was curious to see how digital outdoor advertising was working out in practice and did some fieldwork during a trip to London on 30th March 2023. As I travelled the London Underground I could see that there is now a mix of static and digital adverting. At Euston tube station I saw a static advert for the Cheltenham Festival for two weeks before. The lapsed promise of “TICKETS ON SALE NOW” seemed quite old-fashioned and strange. Before 2007, without digital alternatives, my reaction would have been quite different. Then there was no notion that a paper advert was ‘static’.
Another thing that struck me was how digitally connected London Underground passengers now are. On stations where a signal was possible, most people were looking at their cell phones. It seems to me that there is now a consumer expectation that information we consume to be current and dynamic.
Implications and Recommendations
We are at the early stage of the digital transformation in many areas of our lives. In areas I am familiar with, there are going to be huge changes in medical equipment connectivity and what that means for patient care; in the way that consumers use their healthcare data; and in the use of autonomy with cars.
- For researchers running a project on a new digital offering, it is important to be nuanced in your interpretation of what customers are saying. Anticipate that the value drivers to adoption will mature over time and be guided by experience. Be aware that NOT all customers respondents are equal and that some will have far more insight about the potential of the product than others.
- For companies developing innovative digital products should have a clear idea of the problem they are trying to solve and develop a mission statement based on outcomes that address this problem. They should also develop their understanding of the enduring ‘jobs to be done’ that will best resonate with customers about their technology. They should also understand the current market situation and value drivers of their technology to build initial market adoption. They should also have a pricing strategy!
- For pricing consultants, consider how the pricing and product offering can be developed which best captures the value of the digital innovation.
- For the Jockey Club, which manages the Cheltenham Festival, consider how a new digital outdoor advertising campaign could work for 2024. Next year will be the 100th anniversary of the Cheltenham Gold Cup and the power of digital outdoor advertising may well be even more valuable in how they manage their advertising, customer demand and pricing for this unique occasion.