35 (130) 2018
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Smarter ads will follow us everywhere – with our permission

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Ross Newens, co-founder of Nova Group, and president of the board of 4fun Media  SA talks to Michael Dembinski about how technological innovation is revolutionising advertising.

We begin the interview with an overview of 4FunTV, which Mr Newens launched in 2004, but it soon becomes clear that the future is offering an immensely broader palate of possibilities for advertisers than just music TV. Yet it's music TV – with its demographic of digitally-native younger viewers, all geared up towards interactive technologies – that is a great place to start when approaching the digital future of advertising.

The 4Fun.TV brand at the core of 4Fun Media S.A. (in which Nova Group is a significant investor) is aimed at 16-36 year olds, but the company has made an enormous transition into the digital out-of-home (DOOH) advertising market, with nearly 70% of the total digital screens in Poland. The firm is also moving into the e-commerce world. “With one million Facebook fans, 300,0000 Android app users and 30,000 users regularly interfacing with our chatbot tool – there is conversion from music – through interactivity. We are moving towards e-commerce, allowing users to print their own goods, monetising their favourite brands.  Get the balance right between clicks and bricks – the retail experience offline – buy more – online – buy more consistently.

“I can't imagine a better place to do business right now than Poland – there's a can-do attitude and a real will to get on with it!” As we speak, Mr Newens is in the middle of communicating 4Fun Media's Q1 results. “Investor confidence in the management is the driver. So communicating with the market is crucial. We have a relatively small market capitalisation, the Warsaw market [the firm is listed on GPW main exchange] is not very liquid, but our share price has grown from 4zł to 15zł over the past two years,” he says.

The younger demographic market audience is dynamic, ready to use new technologies as they appear. “One such trend is watching two screens at the same time, it's a good example of where advertising is going.” You're watching the same programme – a TV series, say, along with several of your mates in different locations and you're commenting on the action via a communicator app like Messenger or WhatsApp.” This new behaviour has huge implications for advertisers. For one, it gets around the problem of ad blockers. You can't block what you're actively watching. Advertising agencies today divide their budgets between TV and internet spend. But in three to four years' time, the divide will be blurred. In the battle to wrest consumers' increasingly diluted attention, hybrid agencies, such a FCB Bridge2Fun, part of 4fun Media , offer digital content targeting specific audiences, spanning TV and online. “This is where advertising is going. Content, more then ever before, is king – the content carries the message,” says Mr Newens.

Another place where advertising is heading is out of the home. Not necessarily 'outdoors', because much of it is indoors – inside shops, malls, airports, railway stations, petrol stations – hence 'out-of-home'.

“We have over 20,000 digital screens, out of around 30,000 across Poland,” says Mr Newens. “These are clustered into networks; for example, we have 45 locations, 135 screens and nine videowalls in Empik stores which can be targeted for example at parents and children, with a 'back to school' message. In Lukoil stations, we target the male traveller. We have screens in gyms, in supermarkets – in Carrefour alone we have 577 screens.” The real magic of DOOH is what you can program it to do. The smart part is the software, not the digital screens. “With DOOH you can sell day parts. Between 7:30 and 9am there's a different audience, hurrying to work, there's a different message, for different products or services. Ads for Specsavers – when it's sunny, advertise sunglasses. When it's darker, reading glasses. Those ads that tell you that you're 2km from the nearest McDonalds – we can do better than that. In heavy traffic, it may take you 10 minutes to get there; when traffic's flowing freely, it may take you five. We can link the digital ad to a traffic database. Or to an air-pollution database to promote air-purifying products from Phillips. At 3pm, a special offer on kiełbasa or evening meal ideas,” suggests Mr Newens. “We need to educate the advertiser about the stuff that we can do.”

Another huge advantage of DOOH is that it allows cities to de-clutter their outer fringes, all those suburban landscapes made ugly by a jumble of competing billboards. For municipalities, it offers the chance to promote tourist information and events and communicate with citizens. Digital screens also mean no more wasted spend on out-of-date ads for last week's music festival or in-store promotion that ended two days ago.

“Planning a network of digital billboards takes time – locations need to be chosen not only from the point of view of footfall, but also considering access to a power source and to the internet – this takes capex. Now, capex on screens – economy of scale means that when you order 200 screens, the price will be getting lower. Advances in tech also tend to push the price down. The big expense, rather, is the software, which puts the magic into the screens. This is getting cleverer, and this is where the competitive advantage between DOOH agencies will lie,” says Mr Newens.

“Our software is written in this building. We have a different business model, and a different mindset – with 70% of the digital screens on Poland today. Our competitors in this sector are Clear Channel, Stroer, AMS and JC Decaux. We are essentially a start-up, with 50 million zlotys market capitalisation, we're fuelled by innovation which can't stop; it can't stand still – that's our edge. It takes a lot of work turn a good idea into a real product or a service multiplied by zlotys and hours of time invested.” Mr Newens estimates the number of locations with DOOH advertising will increase sevenfold over the three years.

Other than TV, online and DOOH – what else is there?

“Virtual reality – we are witnessing something like the dawn of pay-TV or even cinema. The mass introduction of VR will be driven by movies and sport. And gaming – already by 2015, the revenues generated by computer games exceeded those of Hollywood and the music industry combined.”

“The challenge will be to bring VR into the home. I believe that the first breakthrough VR movies will be screened in cinemas, with hundreds of people sharing the experience together, though individually. At first, they won't be long – around ten minutes,” he says. With VR you can direct your attention anywhere by moving your head, not just at where the director points the camera. Sales of VR and augmented reality (AR) goggles are forecast to rise by 50% year on year, the compound growth leading to a global market of somewhere between 40 and 100 million sets by 2021. “Now this is a beautiful opportunity for advertisers! Retailers like Ikea are  already creating   virtual shopping experience that allow you to shop in virtual reality, moving around the store, clicking on things you like, seeing them in 3D in the relevant environment, and adding them to your trolley. Traditionalists will not become users of this – or indeed any new technology – until they can see the benefits. Over the next five to ten years, the pace of change will accelerate. Open-source software will allow innovation-driven start-ups to develop new apps and interfaces that work in VR and AR. There's so much happening where they can make money,” says Mr Newens.

But there have to be checks and balances; data protection being key. “The EU's General Data Protection Regulation is great, it sets the standard around which our industry can function. Data is being collected at an accelerating pace –  and it needs to be protected. GDPR means we all have to rebuild our databases on the grounds that consumers have consciously opted in and know their rights around their data.

“The 2002 Spielberg film Minority Report really inspired us – now the technology foretold in the film has become real. If I've given my permission for my retina to be scanned, I can be traced as I walk into a mall and I can be given ads tailored to me. It will happen anyway – the good thing is, you will only get such ads if you want them. If you want to take it – do so on purpose. Some  online retailers  can already dress me, show me a 3D model of myself wearing the shirt, while chatbots are available to advise about any questions I may have, and to deliver the clothes to me. Regulating the data used to be the hurdle. GDPR has levelled the playing field.”

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