TV time: RMS Networks beams marketing fare directly to consumers where they shop

South Florida CEO, Nov, 2004 by Barbara Perkins

In an ordinary stucco office building, around the corner from a string of modest Fort Lauderdale homes, is the seat of Jason Kates' media empire. On a typical Tuesday morning, the 44 year-old Kates eases back on his sleek corner office couch at RMS Networks and instinctively flips on the television. The lanky, soft-spoken CEO is not goofing off. With six television networks and 40 channels to oversee, Kates is just keeping an eye on business.

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And business is booming. This year RMS is on track to haul in $10 million in revenue, double the revenue of a year ago, RMS, an acronym for Retail Media Systems, creates and produces in-store television programming for retail outlets nationwide.

"Our receptionist changed the name because she didn't like saying Retail Media Systems, so she just started calling it RMS," jokes the affable Kates, whose laid-back management style permeates the firm. For example, his 38 employees enjoy an on-site chef who prepares lunch each day. "That's been a lightning rod for years," Kates says. "When we weren't making money people saw it as a big waste. But it really helps for us all to be able to sit around with each other and break bread."

Kates, who has a video production background, launched the company nine years ago with the idea of marketing to consumers at the point of purchase. Today, the tactic is better known as "away-from-home" marketing.

RMS creates and produces advertising, as well as news, sports and entertainment programming, that is sent through broadband networks to television monitors in clients' showrooms or stores. The company manages the air times, frequency and the regions where the programming airs. Unlike other players in the industry that solicit advertising for the programs they produce, and then charge on that basis, RMS assesses a flat fee for its services.

It may look like regular television programming, Kates says, but RMS punctuates the audio on the programs to get and hold a customer's attention. "People don't come in, sit down in a chair and watch," he explains. "We've figured out how to manage the audio to draw them in. It's all about how you feel when you're in the store."

Hoag Levins, editor of New York-based adage.com, the Web site of Advertising Age magazine, says in-store advertising is increasingly popular. "It's one of the largest areas for growth," says Levins, who notes that even Wal-Mart is doing it. "Television is so fragmented now and it gets harder and harder to reach the mass audience. So big marketers are going where the shoppers are and speaking to them there. It has to do with efficiency and economy."

The first few years of operation for RMS were easy, recounts Kates, until retailers began trying to replicate the success of online retailer Amazon.com. "Retailers were thinking, 'We can get rid of our real estate and become an Amazon.' Meanwhile, I'm in the lobby trying to sell." Those were lean years, says Kates, who downsized the company in response.

For the last several years, retailers have gone back to focusing on in-store marketing, he says. This year, RMS was hired by Fort Lauderdale-based automobile retailer AutoNation to roll out a test of its AN Network in several dealership groups nationwide.

"We put the TVs in our dealerships to enhance the experience, to give information to customers that they should know," says Edward Cicale, vice president of media services at AutoNation. "There are [also] music videos and other light stuff, but we give them more information on the products."

Kates adds that RMS does not "just hang TVs" up in the auto showrooms. For instance, "AutoNation has Maroone Ford, Power Ford, Courtesy Ford, and they're all different markets. We actually customize the content for each one of these environments. And when you walk into one of these showrooms and you're looking at the cars, we're talking to you not just about the car but accessorizing, financing, insurance," he says.

Besides market demographics, Kates and his team look at such details as length of stay in clients' stores, which affects the pace of the shows. "In convenience stores, for example, the average stay is a little over two minutes," Kates says. "We've had dramatic success in convenience stores because we have figured out the code--how much content and how to pace it."

Besides AutoNation, Kates' stable of writers, producers, editors and engineers are now pumping out programs for retailers such as Roanoke, Va-based Advance Auto Parts and Minnesota-based Musicland Group Inc., the holding company for Suncoast Motion Picture Co. and Sam Goody music stores.

RMS will not work with its clients' competitors. "A lot of what we do is very proprietary," Kates says. "We know marketing plans and strategies for major corporations. And that's why we we're not out there running around telling everyone what we do."

Nevertheless with "over I million retailers out there," Kates says he is focused on building new business and doubling the company's revenues in the next year. "We're still a small company as far as revenues go but if everything stays glued together, the company should continue to grow dramatically."