Impart Media Group released comments about anticipated 4th Quarter results early yesterday in a press release stating they have changed their business model. Impart had a heavy weight towards advertising revenue and had made a strong push to establish itself as a leading network operator of digital displays over the last 18 months.
If you look at Impart's 2nd Quarter results, it is easy to see why they have had a change of heart. Although revenue increased by $700,000, their net loss went from $161,00 for the first 6 months of 2005 to an incredible $5.9 million loss for the first 6 months of 2006. To be fair, it appears they made a few acquisitions along the way but let's face it, a cashflow negative company balloning their loss to 5.9 million over 6 months is a monster issue to face regardless of future revenue projections.
I believe the lesson to be learned here is that the advertising model demands that the cost of the equipment necessary to operate such a network must be absorbed by the customer who hosts the equipment. In otherwords, convince the venue of the value of the software for their need and then sell advertising as a way to offset the cost of the equipment and software. Unless the location has some "skin in the game" they will be reluctant to help with advertising sales, equipment upkeep and other issues that may arise.
If the value delivered is software first and advertising second, I believe the medium has a chance to proliferate at a much quicker pace.
