Slide Show >>It's been a long time since the simple, yet profitable billboard has had a makeover—too long, if you ask Ran Poliakine. So he has developed a technique for ushering the staid, static billboard into the Digital Age.
And while the technology may have more in common with old-fashioned paper and ink than newfangled flat-panel displays, it could fundamentally change the face of the $23 billion outdoor advertising industry. The company Poliakine founded is called magink display technologies, and it's currently putting its methods to the test in London. If they're successful, you will probably see billboards powered by magink on the roadside in the U.S. and other markets soon.
Magink, based in Israel, has developed a digital ink technology that is based on helix-shaped molecules. Stretch them to a certain length, and they reflect one color, stretch them out more, and they reflect yet another, and so on. Put enough of the molecules together on a billboard-size surface and you can make them look like anything you want, change them as often as you need—even animate them. The ink molecules are contained in a layer only five microns thick, so to the naked eye, magink images appear as if on paper, rather than a TV screen.
SWIFT ON THE SWITCH. But the product is better than TV-like displays, or even light-emitting diode (LED)-based technology, Poliakine says, because it works well in sunlight. Instead of needing its own powered light source, the magink display reflects the light of the environment around it. "We don't fight with the sun, we join forces with it," Poliakine says. "Any light-emitting technology is going to compete with the sun. In our case, the more sunlight you have, the better the image looks." When it's dark, just shine a light on it.
The technology is catching the eyes of outdoor advertising companies such as Clear Channel (CCO), JCDecaux, and others for many reasons. A digital billboard can be changed as often as needed, whether it's a few times a day or a few times a minute, with virtually no need for physical contact with the billboard itself.
Each display will have its own Internet connection and can be programmed remotely. A billboard advertising Egg McMuffins at a local McDonald's (MCD) at 7 a.m. can be plugging Big Macs by 10:30 a.m. Airlines can push last-minute deals on seats. Local merchants can advertise the special of the day, every day.
POWER SAVINGS. "In markets where you have the ability to build a network, suddenly you can sell day (spots), where the business model looks more like that of the TV and radio companies," says analyst Jonathan Jacoby, who covers radio, TV, and outdoor advertising for Banc of America Securities (BAC). "Advertisers will be willing to pay more to get their message out at the right time, and some time slots will be worth more than others."
The idea is already taking hold in Europe, where outdoor advertiser JCDecaux uses scrolling billboards to display up to six ads each, targeted at different times of the day. The result is that scrolling boards generate as much as €15,000 ($19,100) a day, on average, vs. €5,000 for a static board, Jacoby says.
Billboard operators stand to benefit too, by taking a spot that now serves one advertiser at a time and turning it into a space for several clients at once. Ads can be rotated several times a minute. And it's not likely to run up high power bills, either. The display only needs power when the image is changed, not when it's showing a static image. That can make a big difference to operators of billboards that would otherwise need a constant power supply. "We're talking hundreds of times less power than other technology," Poliakine says.
FUTURE IN TABLETOPS. As inexpensive and unique as magink's technology may be, it's still playing catch-up to LED-based technology. One LED vendor, Daktronics (DAKT) has already installed more than 100 LED-based digital billboards operated by outdoor advertising giant Lamar (LAMR). The company says it plans to spend $50 million on digital billboards this year. It's not hard to see why. In one case in Pittsburgh, 11 Lamar-owned boards were generating only $11,000 a month in revenue. After being switched to digital technology, they're pulling in more than $50,000 a month each.
To its advantage, though, switching to magink's technology costs less than an upgrade to LED-based billboards, says Jacoby of Banc of America Securities. He reckons that the capital outlay for a magink billboard is one-third that of an LED-based billboard. But he also says there are limitations. He says magink can only produce boards as large as 20 ft. wide by 10 ft. high, and that even at that size, several smaller boards are attached together in a way that makes them look a bit like a group of tiles. However, he says those drawbacks will be addressed soon.
Beyond advertising, Poliakine says magink has plans to apply the technology elsewhere. "The vision goes beyond the billboard," he says. "Wallpaper and tabletops are both surfaces that magink can do. We can activate any surface around us."
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