Gail Chiasson, North American Editor
This month we welcome Tom Touchet, CEO, City24x7, New York.
- It took almost five years for City24x7 to launch. What is your background, and how did you get involved with this project?
I was the chief executive for the most valuable news program in network TV history, NBC’s Today Show with Matt Lauer and Katie Couric. We grossed more than $750 million my final year in charge. Prior to that, I was an executive producer at ABC News, where I won a Peabody Award for coverage of September 11. The key pieces in my career are brand-building and content monetization, which go hand-in-hand when providing a creative product that people can trust.
I was recruited to City24/7, although it was an easy sell. I immediately bought in. The core of the idea was simple: as you walk through the streets, a city should be able to communicate directly with its citizens.
I remember thinking that Outdoor has all these valuable locations, but they were under utilized. Outdoor companies were making good money on basic paper ads. I looked at that and thought there was a real opportunity. You could use relevant content, interactivity and mobile engagement to change consumer behavior. That, in turn, would build a much stronger revenue stream.
- By last October, you expected to have 100 of your kiosks installed in various areas of New York City and had an eventual target of 250. How many do you actually have now?
As we discuss this, NYC is in the midst of a huge RFP for ‘Public Communications Structures & WiFi’. What I can say about our current status is somewhat restricted.
That said, the RFP calls for 10,000 locations across all five boroughs and some estimates place the 15-year contract value at $750 million. All this, because about five years ago, we walked into the city and pitched this idea, then began working incredibly hard to make that idea a reality.
Our vision, and how we tested, designed, and promoted it, has since dramatically changed the greater landscape of the ‘Smart Cities’ concept. It spawned copy companies, built an emerging market, and has become the template for cities around the world looking to exploit 21st-century public communication possibilities.
Make no mistake, this is the first ‘Internet of Things – Smart City’ RFP. And, it is almost exactly what we pitched to the city years ago. It included revitalized, purpose-driven enclosures, as well as free public WiFi at every location. It included 911 service, with video call capabilities – so a call center could see and assess what kind of situation was unfolding. In fact, our 911 system was granted a patent on Sept 11, 2012 because of how cleanly and smartly it works. It allows pre-selection and classification of emergency – to speed communication to the right department. Trucks can roll to a fire faster. Ambulances can be directly dispatched to accident scenes. A security threat goes straight to the correct authorities. That means minutes can be saved on a response time, in a world where seconds can mean the difference between life and death.
Prescient on our part, it is recognized by other cities who are coming to us for a smarter system.
One other ‘smart’ mention: regardless of the potential result, I love that the RFP calls for a ‘dream team’ of companies. That’s smart. Proper execution for something like this does require ‘best of class’ partnerships – eg. connectivity partners like Verizon, networking and sensor partners like Cisco, an innovative outdoor partner and a ‘best of the best’ content solution. As a New Yorker, and one who built City24/7, that makes me happy. It benefits our company, we are growing elsewhere and we are recognized as pioneers of this industry.
- City24x7 units seemed, initially at first, to go up very slowly. What was the major holdup? Are you still experiencing that?
We were early – very early. We plowed a lot of ground and learned a lot. Our system is better now. Our financial model is much stronger now. The technology is both cheaper and better now. Moore’s Law guarantees that… and ensures it will continue to get better.
I won’t minimize our problems. We were a startup. It was expensive, and the government process took a long time at every turn. We persevered – at great financial cost and continuously despite obstacles – because we believed in our vision of the future. It was and still is a vision where cities could and should effectively communicate helpful information where and when it matters most.
That said, there was a flaw in our New York City contract that neither side foresaw. That flaw became a great lesson for us, and long-term it’s served us well.
Our original pilot and pitch to the City was made in conjunction with Verizon. But, the process took years, and by the time the contract was finally signed and ready for deployment, Verizon was getting out of the payphone business.
Unfortunately, the City constructed the contract with a communications company in mind. But, we started implementation in a forced partnership with the new owners of the payphone enclosures: Titan and Van Wagner are outdoor advertising companies – who all of a sudden happened to own payphone structures where they could put their ads.
Our contract with the city has no financial incentive built in for them. Worse actually, there is a disincentive to their participation – as we are effectively competing for the same ad dollars. That was immediately problematic.
New York City may have been an interested and willing partner, but the new franchise owners did not have proper financial incentive. Deployment was slow in NY.
However, the new RFP addresses that issue. And, our experience helped us learn how to create a business model that works for OOH companies, the target city and us. That’s now a great advantage as we move forward. We’re seeing Outdoor companies come to us for their legacy infrastructure because we know how to help in cities, and we have a clean, powerful license model that works for them.
- Have you expanded yet to other cities? If so, where, and if not, why not?
There’s a huge expansion coming. Every major city in the world now realizes the opportunity at hand. IoT is changing the game. I don’t think it’s an exaggeration to say that the first IoT media channel will dwarf traditional outdoor advertising in value and provide far greater services – all while delivering information access for all. That’s a powerful story, and one every city should own.
We are smart, aggressive and flexible. We are working to expand in places that make financial sense for the company. That now includes stand-alone contracts with cities, where a partner controls the hardware and we deploy the software solution. It includes licensing the IP to bring new value to legacy infrastructure. And it includes deployments where we will control only the media content.
Sorry, I won’t name names, but we’ve learned from experience.
We are the pioneers, and there are quite a few companies that are copying our every move. Imitation is flattering, but it’s not great business. We’ll soon announce a series of moves all at once, after deployments have begun.
- Where would you like to expand to next and why?
We focus on the core of our value, and that means primarily targeting ‘walking cities’ and other complementary markets like campuses.
There was a great report recently that showed that walking cities are both smarter and richer.
That’s a great headline for any Mayor who wants to revitalize their downtown. In the US, we’re even seeing some cities with a reputation for urban sprawl (like Miami, Atlanta, Los Angeles & Denver) making shifts toward walkable urban development.
- What are the major changes you have made since the first prototypes of your kiosks went up? And have you made any recent changes?
I’m a huge believer in purpose-driven architecture. While it was an early important step, deploying our smart panels inside obsolete payphones was not purpose-driven architecture.
Our very first pitch: The City’s Public Design Commission called for revitalized enclosures. Fast forward a couple years and prior to this new RFP, the city held a contest to reinvent and REVITALIZE payphones. That’s pretty cool. Revitalize was exactly the right word, and a concept that preceded the contest by years.
But change is never ending. If you stop, you lose. We were incredibly early out of the gate and acceptance has increased. Minutes ago, Mashable named IoT as the very top of eight surging startup industries. As IoT grows and money pours into the sector, new opportunities will abound. The old street model – where one company could invest CAPEX and see lucrative pay back over a decade – will be tested. Companies will need to move faster, partner more often, and create value to survive. Those that do will thrive. Others will not.
- What do you find are the most used buttons on your screens? Why do you think that is?
We’ve built a system that is responsive to the environment, and therefore usage is driven by circumstances. For cities, there are three things that always matter. Which one is at the forefront depends on what is going on.
Every city wants to: INFORM, PROTECT, REVITALIZE.
Here’s what that means in practical terms:
INFORM: Citizens and tourists should have access to real-time local information. It should be easy to view, and easy to access. We believe signage should broadcast information – not just ads. Every city bus shelter should display how far away the bus is and offer maps, directions and the location of nearby restaurants or shops in case you have a couple of spare minutes to grab something. Every city news kiosk should broadcast hyper-local events happening in the area parks, on Summer Stage, museums and other venues.PROTECT: When emergencies occur, and they will, the city should be able to provide access to immediate two-way communication to every citizen, wherever they may be. Our technology supports this goal as we:
a) Broadcast emergency info and alerts from the government directly to the citizens. This provides clarity in the critical first moments of an emergency, promotes calm in emergencies of greater duration and helps first responders and emergency personnel keep a safer more secure city.
b) Provide a safety touch-point that is always on and always accessible.REVITALIZE: Small businesses should be able to promote their specials in real-time. It’s the city’s infrastructure. It should be used for real economic development and not just to sell beer ads.
That said, general usage is not really one button but rather equally divided amongst our three tabs: WHAT, WHEN and WHERE.
WHERE, our interactive wayfinding tab, seems to edge out the other two by a fraction. Sometimes it’s the simple things that people want the most. For tourists and locals, being able to immediately access a large multi-touch map without searching Google maps on a small mobile device or loading a battery consuming GPS app on a smart phone has proved very powerful and valuable.
- What type of advertisers are on your screens? Is it more difficult to get national advertisers than local – or do your even court the nationals?
Of course we court the nationals and we have been quite successful. What hurt us was the NYC expansion problems listed above. You have to understand that when executed with vision and foresight, this digital OOH advertising landscape will dramatically change forever. You will see viral gaming and events that are tied through social media and executed on the streets of our cities.
Look at the guy who gave out cash in mystery locations throughout cities using clues on Twitter. This is a whole new world and national advertisers are incredibly smart and so are their ad agencies and PR shops.
- You did have an arrangement where local retailers could go on just a few screens in their local neighbourhoods rather than on the whole network. Does that make programming more difficult to control? Please explain.
Nothing is easy, but empowering local businesses to do things that they could have never done before is a core function of our offering. Content management and scheduling are a complicated process, especially for people who have no exposure to this world. People who run a small business don’t have time to immerse themselves in time consuming technical learning. To date, we have managed their messaging but we’re actively making it easier for us to control and, ultimately, for them to control.
- You had to make arrangements with a whole lot of partners for City24x7. Have you added any more since the launch?
We continue to surround ourselves with smart IOT partners that understand the value of what we provide to both cities and citizens, and feel that their offerings are in sync with ours. We expect to announce several exciting new partnerships in the near term.
The RFP proved to be an accelerant on a number of levels. I think it was the best sales call we could have asked for. We’re now engaged with quite a few innovative Outdoor companies, as well as some other companies that have access to prominent real estate.
- Considering the long length of time it took to get City24x7 up and running and knowing that you had to develop a lot of partnerships, is it difficult to arrange something similar in other cities. Why or why not?
In fact, it is now much easier. Many of our partners are global leaders and have a presence around the world. Building relationships with blue chip companies is a long, arduous process. You need to articulate a vision and build a model that benefits them. We’ve demonstrated the value of our unique platform. Our partners see that value and have committed to join on as we expand our roadmap.
- Your product is owned by founders Roger Rowe and Karl Turkel, plus many of the staff, including yourself, and three unidentified angels. Is the company looking for more investments, for expansion in New York, in other cities, or otherwise? Why or why not?
We’ve been very lucky to have some great investors who believed in the vision of the business.
One more Angel has joined us since we last talked. He holds a prestigious position in the advertising world and serves us well as he provides great insights into the business.
We will soon be closing a Series A raise, which will help accelerate our expansion. Our shift away from a CAPEX hardware intensive model has made the investment discussion a lot easier, as has the emergence of IoT.
- Is City 24×7 profitable yet? Please explain.
Not yet, but getting there. The team is smart, creative and dedicated. We are engaged at the forefront of a truly exciting IoT market. And, we have fantastic partners who share our vision and will see huge benefit from our mutual growth.
We have multiple revenue options including direct sales, software and IP licenses and franchise rights. Moreover, we control our own destiny to a certain extent. We can keep CAPEX costs low and become profitable quickly, or we can invest more CAPEX and lock up additional locations with potentially greater upside.
That said, what we won’t do is overbid just to win a contract. I think it’s bad business. I know some OOH companies make a habit of wildly overbidding and then walking away or trying to renegotiate mid-contract. That’s a recipe for disaster. Cities and transit agencies are smarter. Information flows freely between them. I guarantee that they’re noticing and the practice will come back and bite these companies.
- In your planned expansion to other cities and towns, are you looking for new partners or can you use many of the same partners as for New York? Do you have any commitments yet from them?
We have several core companies that will partner with us wherever we go. Depending upon the city, there will be local partners who are part of the local city fabric. We will look to those key strategics to join up with. We are currently finalizing a deal with a local partner in a soon to be announced city.
- You are a big fan of the Internet of Things. Can you tell us how you see it, what it means to you and the outdoor industry?
The Internet of Things has taken off – Smart Cities are one of the fastest growing sections. This year alone, an estimated $265 billion dollars will be spent on IoT Smart City solutions.
Moreover, the change in Outdoor is now fast and furious at the top. The most innovative Outdoor companies are adopting parts of the same road map. Look at what Clear Channel Outdoor did in Boston following the Marathon bombing, by broadcasting incredibly helpful safety and security messaging. Or how they are blending billboards and mobile phones. Look at what JCDecaux is doing with interactive bus shelters in Barcelona and elsewhere.
The Outdoor market is not about basic advertising anymore. Through the use of quality content and by blending both mobile and interactivity, it is becoming much more relevant.
Finally, all of this information needs to be delivered in a coordinated, smart way – so that people can see it, and use it when they are on the street, or download the city app and use it as they walk across town.
In other words:
• Smart screens that broadcast so you can see the information from down the street, tied to a
• Smart phone app that people will use all day, and all of that – plus IoT services – delivered through
• Smartly deployed connectivity. That’s public WiFi, LTE wireless and Fiber lines supplementing the redundant system.Smart screens + smart phone and smart connectivity – all make smart citizens and ultimately a smarter City.
Build the channel like this and you are guaranteeing a smart city, and improved quality of life for all citizens. Moreover, you are growing a stronger revenue stream for the city – one that will benefit the city in a myriad of ways not yet discussed. It guarantees outdoor dollars that are driven by CONTENT – providing more relevance and higher profit. It drives mobile interaction – which brings the city mobile advertising dollars AND engagement with the younger smart phone generation. Plus, it allows low-cost inclusion of sensor programs – like air-quality, bio-sensors and more – that can feed off the connectivity base that is deployed on a fully articulated system.
This is the first Internet of Things – Smart City channel.
- As you go into other cities, are there things that you would add or subtract from your screens?
One of the best parts of our broadcast is the chameleon-like interface that allows a ‘plug and play’ mentality for new apps. For example, one of the US cities that we are working with has a hot tech bed in its downtown district – as do many great cities. As we expand, it is our goal to bring the local collective to the streets. It’s their city and their local representation and their local energy is critical anywhere we go.
But the core vision is always a constant.
It’s time for every City to use their valuable real estate, to deliver messages of value: INFORM – PROTECT – REVITALIZE. Give people something relevant to look at as they walk down the street. Give them something that helps their day, that improves the quality of life, that will undoubtedly save a life or prevent an incident.
Let people learn something about the city they live in. USE the signage to engage them! Maybe, just maybe, people will spend less time staring like zombies at their phones as they walk, because they’re discovering something of value by gazing up and around them.
In turn, the city will be building a far larger and more sustainable revenue stream.
- What kinds of measurement systems do you use?
We are fundamentally an IoT media channel, and that means we are a voracious data animal. We’re taking in sensor data, we’re aggregating city data, and we’re generating user data through every interaction on a street screen or smart phone. That allows data and metrics that are very powerful. Cities can adjust events and programs based on real-time data. Citizens can change behavior based on data that translates quickly to information. Brands can take that information and use data derived to create smarter and more contextually accurate campaigns.
That said, I’m participating in an IAB panel on the Connected Consumer next month, and we use ‘Eyes On’ Metrics for our outdoor campaigns. So, we’re certainly operating and selling, using industry standards and best practices.
- Your screens are clear and organized. What, if anything, would you still like to add and why or why not?
Thank you for the feedback. Simplicity is critical in an OOH situation and we pride ourselves on a clean information structure. People need to easily grab what they want or else it’s useless. That goes for people with disabilities as much as anyone else. Our WHAT, WHEN, WHERE trademark and New York City ADA (disability functionality) award are symbols of this.
One touch takes you to:
WHAT you need to know,
WHEN you want to do it,
WHERE you want to go.The software that you’re referring to is a beta and we’re incredibly eager to expand off of this foundation. Technology and app development is ever-changing and we’ve structured this build off on a flexible framework that can easily adapt to the next best app or technology.
- How do you keep them clean?
We have formed a partnership with an experienced global company, with revenues in excess of $100 million, who will serve us well on many levels, one being maintenance. They will now be part of our team that we can introduce to the select group of hardware manufacturers we have lined up for future city installations.
- How do you make consumers and advertisers each aware of City 24×7?
That’s the one hundred million dollar question that any brand or service is faced with. Much of our team has deep media and advertising roots and we see tons of potential media outlets and PR noise available to us, throughout the U.S. and globally. This is who we are. It’s in our blood. It’s how we’re wired.
As I’m sure you can see, there are elements here that are a very disruptive model. There was also a lot that was very early. Very early. But, it was all SMART, all City focused, and all ahead of its time. And, the market is proving us right.
June 27th, 2014 at 14:11 @632
Adrian, Gail-
Really good stuff. Loved this. Much different perspective from usual, and quite interesting. Like how bluntly honest it is.