rVue Ad Transaction Fees Free-Fell in Q1

May 16, 2012 by Dave Haynes

Anyone who thinks selling and servicing Digital OOH networks and advertising is easy should have a wander through the financials of rVue, which just released its SEC -required financials for the last quarter.

This is a company that has built up a pretty substantial footprint of media inventory and has some solid, experienced people behind the wheel, and is still struggling mightily.

The first quarter financials, says a release, show the transaction fees it gets from brand advertisers and agencies for placing ads with rVue enrolled networks – which is rVue’s core business – were just $16,319 for the first quarter of 2012, down almost 87% from a year earlier. That is attributed to “the timing of executed and anticipated campaigns.”

Net loss for the first quarter of 2012 was $(1,733,750) compared to a net loss of ($924,061) in the 2011 first quarter. Basic and diluted loss per share was ($0.05) in the first quarter of 2012 compared to ($0.02) in the first quarter of 2011. rVue ended the first quarter of 2012 with $256,040 in cash and cash equivalents.

The financials express, as is required, cautions to potential investors:

At December 31, 2011 our registered independent public accounting firm expressed substantial doubt as to our ability to continue as a going concern because, since inception, we have incurred substantial losses and negative cash flows from operations. Management’s plans to address these concerns include (i) having raised $935,000 through the sale of convertible notes in January 2012, (ii) staff reductions in March 2012 which will result in an approximately $430,000 of annual savings, (iii) a hiring and expansion freeze, including the abandonment of plans to open new offices, until we generate sufficient revenue to warrant a change, (iv) plans to raise an additional $1.5 million through the sale of securities, and (v) entering into additional strategic relationships which are expected to lead to additional revenue opportunities.

The company has raised money, as well, through issuing secured promissory notes and says it has working capital to operate through the balance of 2012.

rVue has a seemingly impressive number of Digital OOH networks to sell through its demand side buying platform, with approximately 101,000 locations and 763,000 screens. That equates to 243 million daily ad impressions across these networks.

However, you have to get the brands and planners interested and trusting in what they are buying. The struggle any company that represents small networks has is with accountability (are the screens even on and the ads playing?) and credible measurement. I read somewhere else today about online real time buying platforms struggling with sales numbers because of low quality inventory. It doesn’t mean the Digital OOH sites and content are bad, but more that they are scattered and varied.

I also don’t think it helps that there is still a big debate and struggle about where Digital OOH fits in the media landscape. Is it OOH? Is it TV? Is it digital? Or, as rVue founder Jason Kates has floated recently, is it part of the emerging concept of Social TV.

I get the Social TV notion, but it feels like trying to start over on a different adoption curve.

Tough, tough business.