Chris Grosso, Intersection

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The out of home media company Intersection is probably best known as the operator of that network of smart cities display totems - called LinkNYC - on the sidewalks of Manhattan and New York City's boroughs. But the company has a much bigger footprint around the United States - mainly mass transport systems, but also the flashy Hudson Yards mixed-use development in New York, and United Airlines.

I had a good chat with Chris Grosso, who took over as CEO a couple of years ago, but had already been with the company for a few years, having come over from the broadcast and digital world.

We got into several things - like the state of the DOOH industry and the evolving needs and demands of the municipal governments who become business partners for Intersection. Smart cities needs, for example, are shifting.

We also get into Intersection's recently announced addition of AI-driven ad and content targeting, with the idea of making what's on screens not just relevant to the city, but all the way down to neighbourhoods and streets.

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TRANSCRIPT

Chris, thank you for joining me. Can you give me a rundown on what Intersection Is all about? 

Chris Grosso: Sure, and thanks so much for having me. Very excited to be here, Dave and I very much enjoy reading your publication and the newsletter, and the email all the time. I’m Chris Grosso, the CEO of Intersection. We are a leading out-of-home advertising company in the USA focused on major US cities. We really are differentiated from the other out-of-home companies in three ways. One is typically we put in consumer amenities in center cities, most notably things like the LinkNYC program in New York, so Wifi kiosks across the city of New York. We do customer information and advertising systems for places like Chicago Transit Authority and SEPTA Transit Authority in Philadelphia.

And we do bus shelters in many US cities as well. So very much driven by bringing consumer amenities and partnerships with cities and transit authorities. The second biggest differentiator for us, which is most relevant to this conversation, is our focus on content and programming. We like to put useful content on our digital screens, and we wanna put entertaining content on our digital screens, and that could be anything from what time your train is coming to what the weather might be to art or fun facts. We want to program these screens just as you program any other screen in order to make them entertaining and engaging for consumers.

And the last piece of our business we pride ourselves on is selling data-driven advertising. We like to be very focused on the data that helps our advertisers understand who they're reaching when they advertise with us, as well as what happens after the release. 

So the idea of consumer amenity that I gather that the smart city-ish kiosk that you're putting on the street and other things like that, that’s a more modern version of the amenities, to use your term, that outdoor companies have been doing for a whole bunch of time with bus shelters, right? 

Chris Grosso: For sure, and we're also in the bus shelter business as well. We do some stuff with Bikeshare, and I think it's a long tradition in out-of-home advertising to bring the amenity to allow us to get access to the public right of way to put the advertising in, and this is very valuable for a city transit authority because they're getting something that they don't have to put up the cash for. So it's a real value-creating event both for the communities as well as the advertisers. 

Is it the price of entry now for particularly larger urban geographies like New York and so on, where if you want to play, you're going to have to provide infrastructure as well? Can't you just put in display totems?

Chris Grosso: I think it really depends on the municipality and the deal structure. In some cases, companies have to put up the capital and bring the amenity and bring the service into the community, and that can both be the infrastructure, but increasingly also the software and the services that you can bring. But there are also some cases where, you know, particularly with the Infrastructure Financing Act, that the city or municipality might want to put up the capital for the infrastructure themselves, in which case we'll partner with them to create the revenue stream as well as overlay the data and the software to really get the most out of the infrastructure.

In all cases, I think that it's important is being able to have these digital screens up, having software to put the right content in the right app at the right time a big is an important part of the equation and a big differentiator for us. 

Does that happen much where you have municipalities that are making a capital investment?

Chris Grosso: It depends on the deal, but yes, and there's a couple of different ways you do that sometimes the municipality puts up some of the capital themselves. In other cases, in many of these deals, we recoup the capital through the revenues. So we might if we put up the money and then recoup it out of the payments to the city.

So there are many different ways you can do a deal. 

Chris Grosso: There are many different ways you can do a deal. There are a handful of companies, of which we are really good at this and have built a strong team that knows how to work with cities, work with transport authorities, and create value, both for us and also for the cities.

I think one big differentiator for Intersection is we are a mission-driven company, and we are very focused on making cities better through our products. 

You came out of Broadcast & Online, which is very much a digital entity, and now you're running a company that has to do a lot of infrastructure and has to do these sorts of capital-intensive deals. Was that a big adjustment? 

Chris Grosso: It's a different business. There are a lot of similarities between being in the digital media space and the Intersection space. But certainly, in the last few years, I've learned a lot more than I ever thought I would about trenching and conduit and coin fiber and a lot of construction.

I like to say I was in consulting, and then I was in media and software. So this is the first job I actually had, physical things to deal with, and it's an interesting and exciting part of the job, and it's a real differentiator for us at Intersection. Because we have people who are very good at digital media, but we also have people who are very good at working with cities. And we've got an extraordinary team of folks who really understand how to deploy and operate these things in physical space, and that goes for even the guys who are out, cleaning and posting. We've got a really great team of professionals and field operations who really understand work in physical space, and part of what makes our business both fun also gives us a leg up is we're good at these different disciplines. 

You also, I assume, had to learn a lot about politics and about city bylaws. 

Chris Grosso: We've got people who very much understand that world for sure. 

Which is a bit of a labyrinth.

Chris Grosso: One could say that.

You have to deal with them, so you're being careful. I can understand that. 

Chris Grosso: I think the level of talent in these city governments is really impressive and we benefited at Intersection when we started, we were put together by a historic business Titan, which was an out-of-home advertising company, and then Control Group, which was a digital innovation company, we put together to create Intersection in 2016, right before I started.

But we had the benefit of Dan Doctoroff being our chairman, who helped put the deal together and was an alumnus of the Bloomberg administration. We've benefited from some folks who come out of that world, who really understand that and did a great job in government and then can help us understand how to do stuff with the government in a way that creates value for the population and citizens, and people who live in the cities for sure, but also, creates economic value for our business.

When the whole Smart Cities thing bubbled up with LinkNYC and other initiatives like that, there was a lot of noise around it. This seemed to be the way that digital at home was going, that anything that was going into big municipalities was going to have to be a smart city initiative in some way. Has that really played out? 

Because I don't hear as much and/or read as much noise about all that now, and I know that we can maybe get into this a little bit of the LinkNYC has had its revenue struggles through the years. I don't know where we're at with that now, but it doesn't seem like smart cities have the same kind of energy around them that maybe they did in the mid-2010s.

Chris Grosso: I think the definition of what a smart city is has evolved, and I think the parts of the smart city that are important people might not have thought of as smart cities but are huge trends in the changing nature of cities. You really saw that during the pandemic. 

So what I mean by that is if you look at the evolution of mobility in a city, which wasn't the classic under the rubric of Smart Cities. Still, you think about how people get around cities now versus how they did 10 years ago with Bikeshare with Rideshare, with changes to how the transit authorities function, all of that is a much smarter way to run a city than several years ago and requires data and requires real-time information. So I think a lot of the ethos around the smart cities just got absorbed in how cities are operating, and particularly a lot of that got accelerated during the pandemic.

One of the biggest areas of smart cities is what do you do with parking? And that's outside of our world, but if you think about the pandemic that happened. It really made people reimagine what you do with street-level parking in cities because all cities, particularly New York and others in the United States, suddenly put restaurants on the restaurants due to the need for giving these restaurants the ability to run their business without indoor dining, and that reimagined the whole way people do parking. Is that a classic smart city type of initiative? I don't know, but it totally reimagined how the street works, and I think if you walked down the street on the Upper West Side today versus what you saw in 2019, it's a completely different experience with the bike share and the outdoor dining and other things of that nature. 

So, are there still demands among municipalities to have these smart city kiosks/totems that are multipurpose devices that they're advertising totems? Obviously, there's an interactive thing, maybe there's WiFi built-in and sensors and so on.

Is that still being deployed and asked for? 

Chris Grosso: I think the form factors are changing, and I think the needs are changing in the cities, and I think that there are a lot of fundamentals that cities need. So it may not be a totem, but cities need bus shelters, and now it's not just a bus shelter, it's a mobility hub.

Cities need advanced wayfinding to manage this multimodal transportation system that's coming out of the pandemic. Cities have always needed it, and I think we all underestimate going to smart cities. Still, we realize now that cities need the ability to broadcast content, localized content at street level. Whether it be what time my train is coming, emergency messaging, or just education around when the community board meeting is, that has a ton of value. So I think the original premise of Smart Cities is let's take an iPhone and put it at street level. I don't think that's turned into the right answer, but I do think there are applications and amenities in the right of way that are required that cities want and are ready to ask and get deployed.

And I do think you'll continue to see these kinds of initiatives. It just may not be in the form factor of totems. It may be a bus shelter because, you know what, you can put WiFi in a small shell in a bus shelter, and by the way, the bus shelter provides shade, and that's really important in certain municipalities, shelter from the rain, and that's important. So I think smart cities have evolved into what are the real needs of the people who live in the cities where before it was, “Hey, we've got a cool thing. Let us give you this.” and even if you look at the Link, the core propositions of Link like free WiFi and phone calling for sure are hugely used and hugely important. But what we also recognize is Link as a megaphone to broadcast real-time information to the city of New York is also hugely valuable and something that the community has been able to leverage effectively. Most recently, we played a big role in the we love New York campaign where, you know, if you put content on Link, we can reach, I think, 90%+ of New Yorkers a hundred times a month.

That’S a massive megaphone that can be valuable to advertisers, but it also can be valuable To the city. If there are schools that get shut down for a snowstorm, flip the switch and tell everyone the schools are shut down due to the snowstorm, that's a big value for a city. Is that a classic 2015 Smart Cities thing? I don't know, but it's a huge value. If you are a parent, figuring out whether your kid's going to go to school or not the next day. 

So where is Link at in terms of rollout and viability? 

There've been a number of stories through the years about revenue challenges and pace of rollout, and so on, but I haven't really seen anything for a year or more. So I'm curious where it's at, and as you said, it has its value, and people like it and everything else, but is it still the way forward? Would you continue to deploy this? 

Chris Grosso: Yes, so during the pandemic, working with our partners ZenFi, we actually have a new form factor for a next-generation Link, which we call Link 5G, which has many of the original features of Link, like the free WiFi and the tablet to make phone calls, but it's taller, and it allows for multi-tenant small cells, to support New York City's 5G rollout. We are in the process of working through deploying those now with our partners ZenFi, who run Fiber and telecommunications.

So this would, this is a nice little partnership for you because they'd be able to share the infrastructure cost, I assume. 

Chris Grosso: Exactly, and also they have the expertise in telecommunications. We are in the media content advertising space. We really understand media content and advertising software. But we're not telecom companies. ZenFi is a world-class telecom company. They understand fiber, they understand dealing with carriers and that kind of thing. So it is a good partnership. They've been great partners for us. 

Your company recently announced, and you've been talking about localized content, that you're doing localization of content using AI. It strikes me as, great, this is something that absolutely should be done but it was also very reminiscent of stuff that was done, as much as 20 years ago when they would call it hyper-local. 

But hyper-local was very difficult to achieve and very difficult to plan at that time, and it seemed more like an aspiration than something that was possible to do it in a way without a whole bunch of work. I assume that's changed hugely because of databases, APIs, and also AI. 

Chris Grosso: Yeah, so we've always done localization, and given our screens are often deep in neighborhoods, it's a very effective way of doing stuff.

We've always done it, though, with structured databases, right? Weather: give me the weather in a zip code, right? Transit: give me what's going on at the closest train station when the trains are coming. Top 10 lists of the best songs in this neighborhood, but it's all very much tied around structured data, and rules engine and APIs, and we're very good at that. 

We have a whole suite of dynamic advertising products. We've got a great product, for instance, that you're a retailer, you put the ad up for the retail and then a map at the bottom to tell you how to get to the closest retail location and that's highly localized, but it's all based on structured data—the big difference now what AI is that it allows you to do things with much more unstructured depth and much more visual creativity, which we're very excited about testing and rolling out. So, for instance, if you have an ad for an alcohol brand, how do you put that alcohol brand in context for a neighborhood? Maybe you show what's the relevant drink for this block, and the AI can figure out that this is the block that Edgar Allen Po lived on, so it'll be Edgar Allen Po’s drink. Trying to do that manually would be impossible. But you can do that using these AI engines and then on the visual side as well, which is very exciting. Maybe there's a mascot or character of a brand, and let's actually put that brand in context in the neighborhood and dressed up as someone from the neighborhood. You can do that kind of thing with these AI engines that if you were rying to do this yourself, you may not figure out the creative idea, and could never have the army of people who take to build all that creative. So that's why we're very excited about using these tools to do localization for unstructured data, and yeah, more creative types of ideas than the classic, “Hey, here's the top 10 songs being played in this neighborhood.”

It expands a lot of possibilities. But how do you do the gatekeeping on it? Because, as many people have described, AI can sometimes have these “hallucinations” and come up with a strange list that maybe isn't the top 10 songs in that neighborhood.

Chris Grosso: Yeah, for sure. One way you do it is to control the prompts and make sure you're being smart about how you're doing the prompting.

The second is: We still would envision having a layer of humans looking at all the creative before it goes on the screen to catch stuff that just doesn't make sense. Over time that problem might go away, but you still want some level of quality control, but it's very different to have creative designers take a look at a hundred pictures over the course of an hour and just check everything to make sure it looks good as opposed to trying to create all those mocks literally. It's a huge difference, and so I think, at least to start, we're going to have some level of human quality control in this for sure. But I still think the ability to use these tools to be able to do things you never could do before because you just didn't have the army pf people and it would not be cost-effective to work is really what we’re moving towards.

In the old days, my understanding of digital out-of-home was a media planner would develop the plan, and the media company would execute it based on the insertion orders for that plan. When you're getting into hyper-local AI-driven targeting and original content by the street, who's doing that plan?

Chris Grosso: I think it's often in partnership with the advertiser or the agency, right? There may be cases where the agency has a really good idea of what they want to do. There may be cases where the agency says, help us think this through, and we've always provided creative services to our clients whenever they needed it. So this is not far afield from what we do already. 

When I mentioned some of these dynamic advertising, oftentimes, we build them on behalf of advertisers and our agencies as part of our partnership. So we envision it in the same way. 

David:] I gather that programmatic is on the rise. The usage level is up. The last number I saw was like 15% of digital out-of-home ads are now booked out of programmatic platforms. Is there a bridge between programmatic and this AI-driven hyper-local stuff, or do they have to operate independently because it's just how it works?

Chris Grosso: I think to start, you have to build out these campaigns, and these campaigns will be more high-touch than your classic programmatic campaigns. So I think to start, these really have to be directlt sold because a lot of this is around the creative idea and creative concept, and there needs to be back and forth with clients to really get this right.

As opposed to programmatic, which is really about scale and tonnage and efficiency, and we spend a lot of time on programmatic as well, for sure. We launched a Place Exchange, which is an out-of-home ,SSP and we actually spun that business out because they did a lot of work with us, but they were doing work with all the other publishers, too, so it made sense to be an independent company.

We have very deep integrations with Place Exchange and several other SSPs. So we're very focused on programmatic and do view it as a growth driver. But I do think the creative side has to be much more, and I really think long term the way the business goes - I used to work for Tim Armstrong at AOL who used to call it the concept of the barbell - and I think you're going to see continued growth of programmatic, and then the direct sales really going to be about driving solutions for advertisers that are highly strategic and deep partnerships with advertisers. It could be something like the AI program, or it could be like other things we do, for instance, where we have advertisers sponsor train stations or whole train lines for multi-year deals where we work together to rename a station or a train line.

In New York City, the Bet MGM renamed the line that goes out to the Meadowlands, and we do this in other places as well. So I do think you're going to see the direct sale be much more solution-driven and working very tightly with the advertisers and the agencies to build these really cool things, whether it be AI or long-term sponsorships or big programs and then on, on the flip side, you'll see the programmatic businesses continue to scale as well. 

Has the characteristics of venues and the type of venue partners evolved over the years, like the old Titan was about transit and street furniture, but you have other companies that are very active in airports and other mass transport hubs. 

Is that evolving for you as well, or are you very much about kind of street-level advertising? 

Chris Grosso: We're about cities and the the key thing is street level advertising in cities is really really important for us, and a big area of focus transit remains a big area of focus as well.

And then we've done a little bit in airports and airlines. We've also done work with some of the next-generation multi-use developments like Hudson Yards, where we put in the wayfinding directory system and the advertising system, and that's a great business for us. But our criteria for whether or not we want to partner with someone really comes down to being able to do something value creating in big cities, top 25 cities in the US. That's what we're good at. That's how we're differentiated and sure, the types of partners that we work with will continue to evolve just as the audiences are evolving. 

If you think about the transit business, the transit business includes street furniture. It includes signage outside train stations, it includes buses, and it includes the train stations themselves. I think during the pandemic, what we found is the vast majority of our revenue, and where all the growth was is on the outside of the train station, the outside of the bus stations, everything that's at street level. And that offset the fact that the train stations themselves have fewer people, but there are still tons of people outside the train stations, and that's where we put a lot of our emphasis on the ad side. 

Has the business recovered from the Covid era? 

Chris Grosso: Yes. It looks different given our revenue mix, but we're largely back to pre Covid revenue levels. The bus exterior business and the street furniture business are well above. The train station part of the business is still somewhat below because the ridership is just not there. Then we're continuing to look at new types of inventory, whether it be multiuse destinations, as I said, like Hudson Yards, airlines and new forms of street furniture. For instance, we've got a great ad campaign on the bike share in some cities. 

Do you have to look at municipal opportunities differently now? Because of the way Covid changed things and the urban downtown areas not being as heavily populated with office workers as they were in the past. It's different in New York or something, but let's say in Cincinnati or Minneapolis, or something where not as many people are coming into the urban area.

Chris Grosso: Yeah, we do the exact same methodology when we assess the deals that we look at, which always starts with where the audience is, and we've got folks who are really good at looking at GIS and traffic patterns and people patterns to understand the scale of the audience on all the different assets we might either deploy or take over the ad sales for.

That mechanism, we do exactly the same mechanism that we did in 2018-2019, we do today. What comes out of those models is a little bit different, for sure. But what's great about a lot of our business is we typically cover the entire city, not just the central business district.

And a good example of this would be in New York, the LinkNYC. If you look at the impressions, both ad impressions generated by the LinkNYC network before and after the pandemic on a network level, they're pretty close. However, the Links in Midtown Manhattan, where people are going to work three days a week are lower, however the Links on, say, the Upper West Side or in Brooklyn are actually higher because of things like outdoor dining and people working from home.

So the people are all there. They just moved around different places, and so the methodology we use, which is understanding where the audience is, works fine, we look at everything the same way. But what comes out of those models is different based on how cities evolve. 

I talk a lot to people in Europe, and they have asked me where are things at in terms of what they call Green Signage and are there North American digital signage and digital out-of-home network operators that are concerned and doing something about energy costs. Is it something that comes up with you, or is it something you're trying to address? 

Chris Grosso: We are definitely looking at sustainability to the extent it's part of our assessment for screens on how much power they use, and then we are also looking at how to make these networks more sustainable. Ways you do that. So, for instance, one is, we do static bus shelters, but they still need a backlight, and we will use solar panels on those shelters, which has the benefit of both being greener friendly, but also just cheaper because you don't have to pull power to the shelters. Regarding digital signs like LinkNYC, we've looked for opportunities to source electricity from green sources and that's been something we've done successfully. 

But then also we look at our footprint on how we take care of our infrastructure. So we've started to test, for instance, electric vehicles in one of our markets. All the trucks that we use are electric right now. Running that as a pilot it's gone very well. The guys love the EV trucks to the point where we had a couple of EVs and a couple of gas guys just fighting over who got to use the EVs. So instead of being a half-EV, half-gas pilot, we put everything on EVs in that market because everyone's fighting over to drive the EVs. 

Are you being banged on at all by municipal authorities or by public interest groups saying, you need to do something to reduce energy waste. These displays on the sidewalk are not mission-critical. 

Just like Europe, where they were saying you need to turn these off for certain periods of time, they don't need to be running 24/7 anymore. Is that something you have to worry about, or are you hearing about?

Chris Grosso: I think municipalities want you to be sustainable, but I think we would argue our signs are mission-critical and should be up 24/7. But no, no one's asked us to do anything otherwise, but if you think about the importance of real-time information, if you're looking at when my bus is coming, or the weather and the sign's not on, that's a problem.

We like to think, and we would insist all of our signs are actually pretty mission-critical. Now that being said, there are things you can do around how much power you use and dim the signs at night, and that kind of thing to reduce the energy load and optimize that, and everyone consents to do that. And then again, to the extent we can source power from green sources, we do that as well. 

Last question. What can we expect to see out of Intersection in the next year? You made that announcement recently about generative AI. What's next? 

Chris Grosso: So I think we're very focused on product innovation around serving, meeting our customers on the needs that they want.

So I think you will continue to see more innovation around ad formats. You're also going to start to continue to see more innovation around measurement and attribution and our ability to help people, help advertisers understand who's seeing their ads and what they do after their ads and that's a huge focus for us and a big area of investment. I think you’ll hear a lot about it, and then, we're always looking at new partnerships and new deployments, and we've got some stuff cooking right now that we're hoping to be able to talk about towards the back half of the year as part of our continued expansion.

All right. Chris, thank you very much for spending some time with me. 

Chris Grosso: Thank you, David. I appreciate it.