A closer look at iSign-Pinpoint Digital OOH deal
August 4, 2011 by Dave Haynes
Anyone who has been around Digital OOH sector in Canada for awhile knows the long story of the network in convenience stores operated by Quebec-based Couche-Tard (known as Mac’s stores in English Canada).
A deal to put a network in there was off and on, off and on, for what seems like years – the Couche-Tard people, by all accounts, hard bargainers.
A network finally did start going in – with a POS-integrated screen at cash and two others elsewhere in the store – across Canada. Ownership has changed a couple of times, and now a publicly-listed technology company is trying to close a deal to buy it once again.
iSIGN Media Solutions says it will soon close its purchase of Pinpoint Media Group, and once terms and conditions are sorted, the deal will result in “the largest DOOH (Digital Out of Home) broadcast to mobile phone network in the world.”
iSIGN and its partners see a huge broadcasting network, says a new press release, that will be able to message approximately 1.5 million shoppers and others in proximity per day. This will be one of the largest single audiences in Canada which will favourably compare to, or surpass any cable and satellite system viewers giving advertisers a larger audience with measurement instantly.
The network has 1,400 stores and 5,600 screens, and iSign’s big selling proposition is proximity marketing using Bluetooth.
“Pinpoint’s convenience store channel is in the fastest growing and profitable segment today with frequent shoppers and opportunities to both influence and collect anonymous shopper data,” says Alex Romanov, iSIGN’s CEO. “Pinpoint’s network of approximately 5,600 digital signs is one of the largest in North America and will be the first in the world to have signage content broadcast to mobile phones of all customers in and in proximity of each of the 1,400 stores.”
This is a share swap deal, plus a $250K secured loan to Pinpoint to recapitalize the company.
Romanov is understandably doing what all guys do who run a small tech company on a venture exchange – whipping up enthusiasm like nobody’s business. There’s lots of “firsts” and “largests” and “fastests” coming in announcements and re-announcements.
Some background and context is helpful in looking past that hyperbole, and more fully understanding what’s up here.
1 – There’s not a lot of ad sales going on with this c-store network. The reported revenues are $2.2 million (a number greeted with skepticism by people who would know). Even at that, $2.2 million divided by 1,400 is $1,571 per store in pre-cost of sale dollars. A year. It’s $131 a month, which is not good. I’m not in a Macs often but when I have been, the ad count has never been high. The recaptilization loan suggests the network is running on fumes.
2 – Back in April, iSign made noise about a $3 million purchase order from Pinpoint to buy 1,400 software licenses and gear for Bluetooth marketing in the stores. Three months later, the seller was buying the buyer, and loaning it money.
3 – Proximity marketing has been around for a few years now and even its biggest proponents would concede (maybe off the record) that it hasn’t exactly caught fire. There are lots of technical and audience dynamic reasons. But the general feeling is that proximity marketing in retail and for Digital OOH stands a better chance of taking hold when Near Field Communications-enabled smartphones are common or standard, and there is no complicated pairing or Bluetooth device discovery monkey business needed to make things work.
4 – Buying Pinpoint means renegotiating the contract with Couche-Tard. I contacted Romanov, who kindly got back to me and explained that three years have passed on the existing deal and the deal would be revisited.
“With the sale of Pinpoint to iSIGN, it is an obligation of the purchaser to insure that contract is fully transferable with proposed added requests to consider a new full 10 year term and proposals of data management and participation of both major brands and local services on the network.”
If there is a rev share in the agreement, the Couche-Tard people are probably underwhelmed with the trickle of money coming in. If there are revenue share guarantees, that’s not at all pretty for iSign and Pinpoint, and they’d want that revisited/lowered/stroked out.
So, the revised iSign-Pinpoint network may indeed – on paper and in press release terms – be a high-flying, market-leading, cool-as-all-get-out media play. But in real world terms, you have a media network clawing away to sell ads in a short-dwell time environment, and a company working hard to drive adoption for a marketing technology that so far hasn’t really caught on, and is already seen as interim stuff until NFC grows common.
Not sure where this will all lead. C-stores are a tough media environment.