These are some of the better discussion points this board has seen in some time.
Todd and Urbancowboy have touched on some of the minutia that is difficult to articulate on this blog.
My general comments:
The Forbes article notes Rent�s targets and mentions possibilities. It could have discussed a few more successes.
I�m neutral on its immediate effect.
I believe Rent will get to where they have to.
I believe their relationship with cable is BETTER than we know.
I believe Nielson gets way too much credit for their product. If an alternative would be available, Nielson would have been dust a long time ago.
There are alternatives coming soon and I believe Rent is way ahead of the big guy(s) on this one.
I am surprised, and thankful, that Rent�s core business continues to carry them. This has also provided for significant data collection opportunities.
Future will depend on the growth of new revs.
These may come from VARIOUS svcs.
Bottom line is that I believe Rent will deliver.
Let�s just say that they have to.
I think what the cable companies are going to find, if they haven't foud out already, is that 20% of their customers buy 80% of the premium services. This 80/20 rule holds for movie rentals at all the large chains. It's the same people who watch 4, 5 , 6, even 10 movies a week that provide most of the revenue. So to the extent that Rentrak's services can help companies sell more product to the 20% of heavy users or increase sales among the 80% of casual users will determine how ultimately successful they will be. In my opinion.
�do you think that knowing the length of "stay" on a web site is valuable to an advertiser?�
�can rent take this system and track the page hits on google, msnbc, yahoo which are linked to video?�
Answer: With out a doubt! The questions are though: (please see my take on the answers below the questions)
1. How big is the market? (Can Rentrak carve out enough market share to make us all happy?)
2. How valuable is the service?
3. Can Rentrak create enough of a value proposition to create the revenue numbers and margins we need to lift the stock?
My problem is that aggregation and reporting on media consumption is old news. Even the Internet is flooded with companies that offer services such as:
1. Independent verification of page hits
2. Independent verification of unique users per day
3. Independent verification of true PPC figures (I.e. Google Adwords, Overture, etc.)
4. Independent site traffic verification and analysis (I.e. who is hitting the site, where are they coming from, what are they doing on the site, how long are they on a site/page, where do they go after visiting the site, etc.)
These services are not new- companies like FlyCast (now Accipter?) back in the mid �90s started providing such services and I am aware of firms such as PWC, Accenture and Deloitte even dipping their toes into this space.
This is not to say the world does not need a better mouse trap or that inventing a better mouse trap will not make all share holders rich. But my opinion is that it is difficult.
Here is my recommendation to the Rentrak management team (for what it�s worth� never put much value in free advice, eh?)
1. Rentrak already has more video consumption, VOD consumption, etc. data than anyone else in the world. And RENT has all the US census data, etc. that is public domain in their system.
2. The market is moving heavily to �1 on 1� consumer models (I.e. direct marketing, etc.) as we find new ways of conducting �1 on 1� consumer models cost effectively.
1. Build out additional data feed / aggregation mechanisms (Such as consumption on the internet, retail sales outside video, radio, etc.) For each data aggregation mechanism, find a business plan that will compensate for the cost (does not have to be a significant margin)- This can be where the core �3rd party aggregation, authentication and reporting� LOB can play-
2. Start looking at ways to use this growing consumer pattern database to sell extremely high value services. As an example, why not be the engine for all real-time product placement advertising? Why not be the engine online retailers use to profile their customers in hopes of increasing the �buy� rates and the $ value of each purchase? (When a customer checks out, the cashier can make real time recommendations on additional products / services the customer may be interested in) Why not be the firm Madison Ave. turns to when they need to profile market consumption trends? Why not be the ones that provide the engine that upsells like products, services & content on the new VOD interfaces that are coming out on set-top-boxes? The possibilities are endless�. My thought is that once we show we can pop a marketing response rate by 20-30% by using this incredible asset (the collected data), Rentrak�s multiple will increase 10 fold and I get a vacation home!
I checked it out and discovered what they are doing now is for free and neilson is planning a on-demand tracking system next year. Time warner is doing the tracking themselves.
The last line in the story says it all -
they are at the mercy of the cable operators.
whats others take?
can neilson come up with a tracking system?
will they be able to have cable operators pay for the service ?
I am starting to worry Rentrak is missing to opportunity with their essentials package.The major cable operators are already working with other companies to create �micro profiles� of their customers and to then target ads per micro-profile. The concept is that by zip code, consumer patterns differ and the cable operators can sell a higher value marketing opportunity (at significantly higher rates) to advertisers if they can promise extremely selective presentation of the ad. (i.e. Only show range rover ads on TV in neighborhoods with an average income > $200k. or- only show ads for Disneyland in neighborhoods with a high average number of kids below the age of 12)
Some of these tools are even piloting features that allow cable operators to dynamically put product placement in TV shows, movies, etc. (can�t be �tivo�ed�) and the cable guys are working with the content owners to work out revenue models that make sense for both parties.
In talking with a stout Rentrak supporter, I have heard two arguments why Rentrak will win:
1. Rentrak really focuses on the reporting � data collection element and not on the stuff above. To this I say: So what? From what I have seen, the tools above all collect & aggregate their own data as a freebe with the tool. Also, the cable guys are not buying data aggregation & reporting- they are buying tools to help them either dramatically cut cost or dramatically increase their revenue. (Think �Move way up the value chain�)
2. Rentrak has the data, data aggregation experience and �super tools� to set them aside from the world. To this I also say �So what?� The cable guys are buying tools that have a direct impact to top-line or bottom-line numbers. Not the sexiest technology. The existing tools in the market are showing real improvements and I have yet to see a cable operator exclaim �Rentrak just made my quarterly revenue goal! I love these guys!�
Last but not least, I would be afraid of Nielson. Not that they are good� and not that Rentrak is bad� but Rentrak does not have anything that can�t be reproduced for a reasonable price and Rentrak does not have the market share to dominate this space (yet).
You "longs" out there, what are your thoughts? I am not bashing... just posting critical questions / points and am absolutely open to seeing the greater light.
whats others take?
can neilson come up with a tracking system?'''''''
sure. that said they are way behind and in the tech business that might be fatal.
''''will they be able to have cable operators pay for the service ?
i think the advertisers will be the ones paying. the cable companies will not be the standard bearers here because the advertisers wont trust the numbers they get from the cable companies. nielsens got its start because they are a 3rd party who can give you numbers you can trust on tv viewership. somebody needs to have that roll for vod. rentrak has a good chance of doing that. can others do it? sure. will they get there in time so that there "way" of doing things is compatible with what rent and comcast are doing? not so sure.