April 13, 2010
 

Mike DiFranza's Captivate Elevates the Net

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While there may only be a small chance that Bono and and his band, U2 were inspired to name their hit album, Elevation after taking a ride in a Captivate-screen elevator, there is a big chance that up and coming musicians, white collar workers and executives will be in 2009!

That's because Mike DiFranza, Captivate and parent company Gannett plan to elevate the power of the net for Captivate's captive audience, by inspiring them with ideas and opportunities to act on, once they've returned to their desk, after being taken for ride in an Captivate elevator!

As founder and CEO of Captivate Network, Mike DiFranza leads a national news and entertainment network that delivers programming and advertising in office building to a targeted audience during the workday. A pioneer in the alternative media advertising market, during the late 1990's Mr. DiFranza realized that elevators offer a unique environment in which advertisers and content providers could reach a captive audience with their messages.

In anticipation of hearing him speak at next week's ad:tech/NY conference, (beginning November 3 to 6 at the New York Hilton), I jumped at the chance to meet with him, once he hit the door open button for us to meet!

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By Wendy McHale

Wendy: How's it going?

Mike: It's going very well!

Wendy: Before we chat about Captivate and industry trends, tell me a little bit about your background? Where did you go to school? What kind of degree do you have?

Mike: I have an Engineering degree from North Eastern University where I majored in Computer Science. Prior to starting Captivate, the company that I was working for sent me to the Harvard Business School to attend their program for Management Development.

Wendy: How did you come up with the idea for Captivate?

Mike: As you might expect, it came to me when I was standing in an elevator!

Wendy: LOL. Of course!

Mike: One day, as I was flying back from a business trip on the red-eye, I made a quick pit stop to my office before I went out on vacation. I went into an elevator in the building and as the doors closed I noticed the discomfort that people had when they get into an elevator, in a way I had not done before.

Wendy: Right.

Mike: At that time, there was a new technology in the interactive space called "Push," which I was familiar with. As I was standing there, I somehow connected the two dots between that weird elevator experience and how Push technology could help change that. I envisioned the idea of putting a screen in elevators for people to watch.

Wendy: Makes sense.

Mike: : I knew intuitively it would decrease that dysfunctional feeling we all get so I thought it was worth pursuing. That was the genesis of the business. I wasn't a media guy. I looked at it strictly as a consumer.

Wendy: When did you install your first screens? Were they in New York?

Mike: No, we installed the first prototype screens during 1998 in Boston.

Wendy: Right. I think the first time I saw one was around year 2000. I remember thinking, "Wow, how cool! I watched it instead of looking at the floor How many screens are there now? How many buildings?

Mike: We're in approximately 850 buildings and approximately 8700 screens. It's a far cry from the first prototypes that's for sure.

Wendy: How were you able to sell this into building management companies?

Mike: We did something radical.

Wendy: What was that?

Mike: We talked to these companies and listened to what they had to say.

Wendy: Wow, what a concept!

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Mike: .When we first approached the real estate/building management companies, other than seeing their interest in finding a new revenue stream, we quickly heard that they had a problem that the Captivate tool solve.

Wendy: What was that?

Mike: Well, the real estate community often has a difficult time communicating with their tenant base. The only time they engaged then was when there was a problem. Back in 1997 when we were still in development, we created an interface that allowed the building office to publish content and important information on to the screen in the elevators. For example, it would allow them to inform tenants and people in the building that the building would be testing the first alarms today. Or that they would be doing a fund raiser in the lobby; or they have a social appreciation day. Whatever it happened to be, we provided them a communication platform that allowed them to engage their tenants.

Wendy: That makes a lot of sense.

Mike: In addition, we looked at it from a consumer stand point. It had to increase the comfort not decrease from the elevator riding experience. Our editorial staff walked into the shoes of the viewers in the elevators. So we brainstormed on the type of content that was valuable to our audience and created stories that were relevant to the time of day, day of week, seasons etc.

Wendy: What was your approach to advertisers?

Mike: We thought about the advertising categories which we felt would see the value we brought. It was really a no brainer. Most clients wanted to reach the business decision maker, but they also wanted to reach people from a consumer consumption standpoint as well. In essence, we took our story out to the market based on the fact that we could reach a high concentration of white collar workers in areas of commerce.

Wendy: How long did it take these advertised to catch on? The reason I ask that is that I imagine that Captivate falls into the blurry category of alternative media.

Mike: Oh yes.

Wendy: When I talk to media buyers about alternative media, it's often like, "Yeah. You need to go right to the client because they understand big ideas." And then the client will say, "Okay I love this. But you've got to see my agency."

Mike: Exactly! Usually, what I call the ugliest meetings that I ever have often turn out to be the best ones; because you get real insight to what people are thinking.

Wendy: What do you mean?

Mike: One early conversation I had with an agency was with somebody who I thought was a little bit rude. He said, "I don't care about you or your product, because my clients aren't asking for it." Then I thought, "Oh really! I get it. Thanks very much."

Wendy: Right.

Mike: We then decided that we would build our selling strategy around getting directly to the clients. We would create an interest on the client side and then the agency normally just followed.

Wendy: Okay, let's talk about digital media. Captivate is right in the middle of it. Can you talk about how you are evolving into that area?

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Mike: Sure, it goes back to our original business plan which I have right here. When you think about it, about 50% of the time somebody who is riding in the elevator, the next stop after they get out of it is to sit at their desk. Therefore if we give people sample of contact on the screen and we make it interesting, there's a great likelihood that they will go to the website to get more information.

Wendy: Makes sense.

Mike: When we were a startup company we couldn't really afford to do that in any meaningful way. Our elevator network wasn't really big enough to drive traffic. We had to put that thought on the back burner. However in Q1'09 we're going to bring it to life and start to implement it in a much more sophisticated way.

Wendy: How?

Mike: We are putting the finishing touches on our consumer site, so that you can see any of the content that you see on our Captivate screen. You'll be able to make contact with the information you saw via the website. We expect that it may be as good or better than the actual ad itself.

Wendy: Give me an example.

Mike: Let's say you are riding the elevator and see that BMW has a new ad campaign running and it says go to Captivate.com and configure your ultimate BMW and that's to win a car. We can now drive our consumers from the elevator to the actual website and allow our customers and advertisers the opportunity to engage on a much deeper level. From an advertising stand point, it takes Captivate from a one-way content and advertising platform to an interactive experience which will help us provide our advertisers metrics which until now we had been unable to do.

Wendy: Okay, so how's the story playing on Madison Avenue so far?

Mike: We're just beginning to talk about it. We have introduced this as a part of the brand activation platform. Right now it's seen as an idea promotional vehicle. We'll be able to gauge the response as marketers begin thinking hard about 2009.

Wendy: It sounds like your focus will have to stay on the client-side. The agency business continues to be in transition. The holding companies create a maize that could drive you crazy. It wasn't always like that. When I began my career in the 1980's agencies often had a single discipline or everything was serviced out of one shop. Of course that was how traditional media worked. The world has changed.

Mike: The most challenging thing we find is that agencies should be focusing on the audience; where and how they can engage with our audience, versus what media type you fall into.
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Mike: Of course. I've been in this space for a long time. It's important how we educate the market place. We have industry wide initiates that are now coinciding with our own initiatives. Education is a large part of our selling efforts. We want to continue to innovate and drive the thought leadership around the industry. I try to get out there and challenge the conventional wisdom.

Wendy: Okay, let's change gears. You had Captivate for a while before you connected with Gannett. How did the whole piece fall into place? How did that whole acquisition happen?

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Mike: What happened was, we were all raising money, post 9/11. We were experiencing incredible growth at the time of around 30-40% per year. The business was doing quite nicely and we were ready to raise our next round of financing. We were talking to the investment community as well as various strategic partners. We met with Gannett and the discussion quickly went from being an investment for them to them considering us as an acquisition.

Wendy: That must have been great!

Mike: It was. What was interesting to me was their experience in the US market. We were a new medium form that didn't fall into the company's core business, which at the time were local and national newspapers. They had to work to create awareness and interest for something that didn't exist before.

Wendy: How is it working now?

Mike: Gannett's culture operates with a high level of integrity. Obviously, for me, after putting my heart and soul into Captivate for 9 years, it was really important that we had a good cultural and philosophical line in order for me from the standpoint of handing over the keys to another company.

Wendy: Let's talk more about your digital program. I heard you're employing "User Generated Content" in your programming. Is that true?

Mike: It is. One of the unique things about Captivate that most people don't realize is that we have a large editorial staff while most of the other digital sign networks are basically RSS feeds. We have almost 10 editors that review stories that come from over a 100 different content partners. They are responsible for selecting those stories which they think will interest our audience most.

Wendy: That's interesting

Mike: It makes us that much more unique. It allows us to publish a lot of things that perhaps other networks can't because of their limited programming structure. To your point, we are also able to generate user generated content, which our viewers are providing us content which we are posting that content on the screens.

Wendy: That's fantastic. How fun is it if you get into an elevator and see something that shows up in your building's elevator. It's like, "Hey, look what's on the screen. That's mine."

Mike: That's right. You kind of understand where we are going. The first stop toward proving to ourselves that we had a viable web strategy was to created content online and that a lot of people would sample, which could in fact drive traffic back to our website. Blogs were the first test of that, where we actually had our editors actually creating a blog on the screens of the elevators, which people would read, which would motivate them to go back to their desk and actually engage with them as well. We've seen our blog traffic go up from zero to literally thousands of unique users hitting that blog on a regular basis.

Wendy: That's amazing. Think about the fact that you've seen it on the elevator, you go back to your desk, and it's fresh in your mind. You plug in and you're continuing the engagement.

Mike: Right. What's interesting is that it allows us to take it to the next level now. We ultimately see that it as a new goal, a new end game to leverage the screen in the elevator. It's a communication channel that will help us build a community. That's really where we are going.

Wendy: Which of course is ultimately a brand marketer's looking for.... is community.

Mike: And again, we don't have to create all the content. Once we get the ball rolling so to speak, we'll be able to sample content that our communities are creating and leverage that.

Wendy: Let's talk about digital OOH business. I constantly see things from eMarketer and other research that continuously reports a huge upswing in the category. It sounds like these reports are dead-on based on your growth. Is this just because brand marketers and advertisers just need a new, less cluttered place to advertise their goods and services? What are you contributing?

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Mike: I think the real issue is that consumers are inherently mobile and advertisers can no longer reach those consumers exclusively through the traditional methods they used in the past. I look at myself. I only watch television once in a while. And when I do it's a live sporting event. So if you are trying to reach me through TV, good luck! An advertiser has a better chance of reaching me where I put 8 to 10 hours a day at work, or at the airport or in the airplane.

Wendy: That's typical for most executives.

Mike: But if you want to reach me, you need to reach me through out-of-home venues because I'm on the go .And I think that that's the realization that advertisers are coming to. There's also a macro-trend that shows that television audiences are declining and costs are increasing. So the return on investment of an advertising dollar by definition has to be going down on a regular basis.

Wendy: We can't forget ROI.

Mike: I think it's a combination of those two things that are driving people to look at alternative channels for these consumers. That's really what this is. This is a channel. This is not an out-of-home venue. This is a communication channel that allows you to reach a valuable audience of white collar consumers.

Wendy: What do you think of mobile advertising? The next generation of media platforms like iPhone and Blackberry?

Mike: I think that channel's with mobile. I think is ultimately a viable ad platform, useful platform. It's like an ATM in my mind. It's there to do a job. But if you interrupt me from doing the job at hand, I'm not going to be happy. The question now is, "How do you engage a consumer to opt in?" In our case, Captivate does so without interrupting what they are doing. It enhances what they are doing. How do you do the same thing with the mobile device? Obviously, hand-held devices have location value, they have targetability, and you understand the demographic profile really well. So I do believe that mobile will ultimately get there, but the question is, "What's the experience for the consumer?" I don't think that anyone's cracked that code yet.

Wendy: Okay, let's talk about everyone's least favorite topic, the economy. What is your take on how it's going to affect our business.

Mike: I look at it from the standpoint of the high-tech industry since I spent 10 years in it. The high tech industry is always about telling people they have a problem with one aspect or another of their business and how the seller's solution solves that problem. In essence, the high-tech industry creates the need.

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Wendy: Right.

Mike: I think that the media industry for many years has benefited from this built-in demand, so a lot of folks have built up skills around servicing that demand. Those are critical skills when you have a market like that. But as the market has changed, with more solutions than ever before, now you must enter into a conversation from, "Here's the digital media plan" to, "What is the problem we are trying to solve" which must be raised long before the digital media plan is produced.

Wendy: That's interesting. Are you planning on discussing that type of thinking at ad:tech?

Mike: I think we're going to cover all the basics of content, of measurements to engagements. All the topics that are relevant for all media; and how they apply to our particular segment of the industry.

Wendy: In terms of Captivate, do you hire interns? Is there a place for them?

Mike: We do. I'm active in the market place right now recruiting top tier talent. It's really exciting in terms of the quality of people that are involved.

Wendy: What do you look for? What qualifications, specifically?

Mike: In terms of experience we have the benefit of some people developing their skills in the early days of cable and other niche media. The path to success is not a straight line. You have to be flexible and challenge conventional thinking and not just work the agency, but also get to the client or get to the client sales force to understand what's really going on in the business.

Wendy: Any final thoughts?

Mike: Since we're talking about the character of the kind of person we look to attract, I'll tell you a quick story about a meeting I had recently that had a big effect on me.

Wendy: What's that?

Mike: Recently, I was sitting in a hotel lobby waiting for someone to arrive to a meeting. A young lady came up to me and asked me if I'd like a cup of a coffee. I hadn't had coffee yet so I said, "Wow that would be great. Thank you." Once I got my coffee I couldn't help but watch that she was also interacting with several of the other guests in the hotel. She was just amazing. Suddenly a student was walking by who worked there, so I said, "Excuse me, can you tell me where the General Manager is, because I need to pay a compliment to one of your employees." He pointed to the lady who offered me coffee and said, "That's her." It turns out that she was the General Manager. So I walked over to her and began chatting. I told her, "I've got to tell you, it's really inspiring to see someone take so much ownership of her customer's experience. How do you find people like that, because that's a skill set I'd love to inject in my business?" Her exact words, which I will never forget were, "You have to hire the heart first and then you can teach them the skills."

Wendy: That's great. Mike, I want to thank you for this. I look forward to seeing you at ad:tech!

Mike: You're welcome, Wendy. It was my pleasure!

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