• by Larry Dobrow , April 15, 2004

When Clear Channel Outdoor announced plans earlier this week to "push the limits of static displays," one could almost hear its competitors sigh. Hadn't the company already pursued with its usual zeal the development of technology to remotely and quickly change static signs?

Apparently not, according to Clear Channel Outdoor Chief Executive Officer Paul Meyer. "Outdoor is one of the only businesses where technology is not a threat," he notes. "Until we're all flying around with backpacks, our business is going to be there. So it makes sense for us to be a lot more proactive than we've been."

Central to the technology push is the hiring of respected digital-media vet Michael Hudes to fill the new post of executive vice president, corporate development. Hudes arrives from AdSpace Networks, where he served as president and chief operating officer. During his tenure, the company made building digital media networks for advertising a top priority.

At Clear Channel Outdoor, he's largely being asked to continue that mission. While CC hasn't exactly been a wallflower in pursuing digital opportunities, Meyer is keen to be more of a catalyst for introducing new technology to the out-of-home business.

Along these lines, he has handed Hudes a three-pronged charge: to look at CC's assets (particularly its mall and airport divisions) and examine how the company can introduce existing technology in those venues; to think about how that technology is being used in other venues and determine where CC should look to expand its presence; and to seek out tech suppliers that could potentially develop a cost-effective way to remotely change CC's static signage.

"The day we can do that, we'll have truly changed the nature of our business," Meyer says. "We'll have become the most flexible ad medium that's available to our customers."

Hudes believes that most of the pieces are in place for Clear Channel to charge forward immediately. "To build a digital media business, you need real estate, sales and marketing, and a solution," he explains. "We have the first two in spades, although there's some internal education work that has to be done on the sales side." As for the solution, Hudes describes it as fourfold: hardware (especially displays), software (command/control platforms to connect networks), integration services (partners who can put the hardware in the ground and maintain it), and connectivity.

"The technology challenges aren't insurmountable right now. The challenge is where you deploy that technology," Hudes notes.

To this end, Clear Channel Outdoor has devised an "inside-out" approach to further digitalize its offerings. The company will first upgrade its assets inside public spaces (movie theaters, airports, malls), then move on to large-format digital signs within the next two or three years. "The plasmas and LCDs [for indoor] have come down in cost so quickly, so it makes sense to start there," Hudes explains. "We're waiting for the technology that will take the cost of [large outdoor] display down. I think we're probably two years away from a product that's ready for the commercial marketplace."

Adds Meyer: "This isn't Star Wars. There is already a company out there trying to market a large-format static sign system with copy changeable remotely. Fundamentally, the system works--but the intensity of the colors isn't where we want it to be." Still, he seems more than cautiously optimistic, considering that global players like Sony, Samsung, Philips, and IBM are pressing forward with plans for digital media hardware and software.

Meyer and Hudes both emphasize that the shift in Clear Channel Outdoor's strategy was not motivated by advertiser demand. "They're not clamoring for technology for technology's sake; they're clamoring for ideas," Hudes says. Rather, the company believes that affording advertisers maximum flexibility is the best approach. In addition, CC is enthused by efforts underway at Arbitron and Nielsen to better measure the impact of out-of-home advertising. Meyer predicts that by the end of the year, there will be a more effective and credible measurement system for Clear Channel Outdoor and its ilk.

"Advertisers want more than counts of people passing in front of signs. They want to know the demographics of people in those cars," Meyer explains.

Hudes' arrival roughly coincides with Gannett's purchase of Captivate Networks earlier this month. With the acquisition of Captivate and its thousands of screens in elevators across the country, Gannett is seen as eager to push forward in the out-of-home space. And while it's no threat to a behemoth like Clear Channel--it doesn't have the real estate--one cannot dismiss a company boasting more than 100 daily newspapers, 500 non-daily publications, and 22 television stations.