This is very odd, but then again there is no end of Very Odd in the Digital OOH (or whatever we’re calling it this week) space.
This is a network, if you look at the financials, that doesn’t appear to generate anything remotely close to $1.5 million in ad revenue annually, and presumably whoever bought the rights thinks the pot of gold is many times that of $1.5M, to make it worth their while.
Unless they’re nuts (see opening paragraph).
What’s also very odd is the announcement doesn’t say who has bought the ad rights.
I have been watching this company for a couple of years because they promote themselves through investor relations PR with the intensity of a classic stock promoter, announcing pretty much anything. I also dip into the OTC investor boards, which has shameless cheerleaders trying to boost the share price and others who have been steadily railing against the management team and said crappy share price. I’d taken a particular interest lately because the company’s contract with the group that owns the c-store guarantees an annual minimum royalty to the store of $500K, and based on the financials I didn’t know how that was going to actually happen.
One bit of speculation about the buyer is that a brand’s agency has bought the rights to dominate the environment (which is pretty tough with two or three screens in fairly big footprint stores).
So someone or something has all but rescued this and let iSIGN – which had bought the network a couple of years back in what looked like a deal to show someone was buying their proximity marketing tech (even it was really themselves) – go back to being a tech company.
The company that was selling the network and had the rights – Pinpoint Media Group – failed badly. Many, many people have tried c-stores as a medium, and most and maybe all have failed (see 7-11 US for latest example).
With that context, here’s today’s announcement:
iSIGN Media Solutions Inc. (“iSIGN” or “Company”) (TSX-V: ISD) (OTCQX: ISDSF), a leading provider of interactive mobile advertising solutions that serves advertisers, manufacturers, retailers and advertising agencies throughout North America, is pleased to announce that it has successfully concluded negotiations to grant exclusive advertising rights for the signage network and mobile network located in the Mac’s Convenience Stores (“Mac’s”) across Canada with a new strategic partner.
The strategic partner is a company with a strong background in the digital signage industry and a successful history of selling digital network advertising. This agreement will enable the strategic partner to add the Mac’s network, which is the largest digital and mobile network in North America consisting of approximately 6,000 screens and 1,400 antennas in about 1,400 stores. This expansion of their existing footprint is to increase their advertising sales.
This agreement, commencing July 1, 2013 will mirror the length of iSIGN’s contract with Mac’s with an option for a five year renewal. The strategic partner has agreed to pay $1,460,000 annually, commencing July 1, 2013, for each year of the contract in order to maintain the exclusive advertising rights. iSIGN will also receive a commission of no less than 5% on the gross advertising sales generated by the strategic partner throughout the term of this agreement.
“We are very pleased with this agreement,” stated Mr. Alex Romanov, iSIGN’s Chief Executive Officer. “It moves the responsibility for the sales management of the Mac’s network to a company with digital advertising sales background that is strongly committed to significantly increasing sales in the Mac’s locations.”
“The partnership provides us with a significant and regular cash flow that will be used to expand our core business of data gathering through mobile messaging,” added Mr. Romanov. “We look forward to working together with our new partner and will continue to offer our mobile messaging solution to enhance or establish other networks.”
I really doubt any of the big guys, like a Pattison or Astral, are part of this.
Big, big Hmmmm on this one.
Dave Haynes is the founder and editor of Sixteen:Nine, an online publication that has followed the digital signage industry for some 14 years. Dave does strategic advisory consulting work for many end-users and vendors, and also writes for many of them. He’s based near Halifax, Nova Scotia, on Canada’s east coast.