GSTV CEO On Outcast-Gilbarco Deal: Different DNA Will Be Challenge

January 21, 2014 by Dave Haynes

The recent news that a fuel dispenser firm (Gilbarco) had acquired a media firm (Outcast) that puts ad screens on top or in the pumps was pretty interesting. In its immediate wake, the CEO of Outcast’s prime competitor offered to pass along his point of view.

I was way out of town, so I asked GSTV CEO David Leider to do a Q&A with me via email. Here’s his response:

Q. Was the Gilbarco deal a surprise for you?

Leider: Outcast has been a Gilbarco partner for four years now, so it was not a major surprise. Gilbarco’s acquisition of Outcast is certainly good for Gilbarco. At the end of the day, a giant conglomerate like Danaher Corp. (owner of Gilbarco) buying Outcast certainly is an endorsement for ‘video at the pump.’ Moreover, it guarantees Gilbarco has a team to service its media. For Gilbarco, it’s not about the media business so much as that guarantee. Outcast now is a built-in service provider to run Gilbarco’s media network.

Q. What are the implications for your business, and the larger video at the pump medium?

Leider: A giant conglomerate has endorsed video at the pump, making an acquisition like this another proof point for the increasing impact of the medium on retailers, advertisers and viewers. It also shows the interest level in media companies from those outside the space. The main challenge is what type of organization is best suited to seize the opportunity that video at the pump presents. Gilbarco is not a media company, and the Outcast side of the business will be challenged within the structure of a new organization with a different DNA. Everyone has seen these types of acquisitions in the past; acquisitions of companies outside of an organization’s core have not worked.

 In order for anyone to be successful in this space, or in any fast-moving media or technology space, they need the energy and commitment that comes from the entrepreneurial ownership of the founders. When you look at most acquisitions and the facts associated with M&As, 50 percent of the selling management team is gone after 12 months. The entrepreneurial spirit, the drive from equity ownership diminishes. Look at all the hot companies Microsoft and Yahoo! have purchased. The founders are all gone. The products are really non-existent in the belly of the big company. Without that drive, they have an industrial management company that is now trying to learn and run a media business.

GSTV will be able to continue its core focus on media: programming, ad sales, customer experience and the retail experience, not selling dispensers. A long way to essentially tell you that this is very good for GSTV. We believe it will expand our leadership position as the number one media company in the space.

Q. How do you compare with Outcast in terms of scale and revenues, if you have a grasp of the latter?

Leider: GSTV is larger than all the other video at the pump companies combined. We currently deliver 46 million monthly viewers; we have more stations, and we drive more revenue. We will continue to do so because we’re a media company through and through.

Q. Would you do a deal with a hardware company that really doesn’t know the media business?

Leider: When it comes down to it, you’re either a great hardware company or a great media company – it’s hard to be both. We have a great hardware partner with Wayne, a GE Energy business. Each of us focuses on our true areas of expertise. This is the formula that is driving programmatic growth for GSTV, and it provides consumers, advertisers and retailers with the best experience and results. We’ve been media guys from day one, and we are focused on putting out the best product possible. And our partner Wayne puts out the best media pump in the business.

Q. Is the medium itself maturing, in terms of settling in as a regular buy as opposed to alternative or experimental?

Leider: Not only is the medium maturing, but our research continues to demonstrate the success of video at the pump as an advertising medium. GSTV delivers an average 44 percent ad recall, and even higher in many cases, which far exceeds the 26 percent recall advertisers are getting from TV. A recent campaign for an automotive insurance advertiser of ours resulted in almost 80 percent ad recall.

As we like to say, our viewers are tethered to the screen with an eight-foot rubber hose. They’re bored and have nothing to do. GSTV provides them with the most engaging experience with content from our exclusive partners, including ESPN, CNN’s Headline News and Showbiz Tonight, Bloomberg TV and AccuWeather.

Q. Will this business evolve? I’ve always wondered if there were alternatives with larger screens in the forecourts but not right on the pumps.

Leider: All businesses evolve. We just launched a new music discovery and content segment that directly integrates with a mobile phone app. We spend a lot on researching what consumers and retailers want as well. So we’re always enhancing the experience. Regarding your comments on alternative screen configurations in the forecourt, we believe a TV at every fueling position will drive higher levels of engagement than a few more randomly placed larger screens. You really can’t beat the one-to-one nature of the GSTV experience.

Q. This is by no means the first acquisition of this type in Digital Out Of Home. What’s been the track record?

Leider: Digital media in general is a difficult space for people to successfully grasp. Without knowledge of the media business, and digital media, it is tough to make this work. I’d rather not name names, but we have not seen a ton of successful acquisitions in DOOH yet.

Q. Do you prefer Digital Out Of Home or Digital Place-based?

Leider: We don’t prefer to use either term because video at the pump is a large player in the overall advertising space and can compete with traditional mediums. GSTV is a unique full sight, sound and motion medium, more akin to TV or cinema advertising than simply screens with or without audio in typical DOOH venues, like elevators, retail stores or malls.