Gas Station TV moves pumps more growth into downtown

Gas Station TV, now making a splash with its impending move from suburban Birmingham to downtown Detroit, is an unlikely juggernaut in the rapidly transforming world of media and marketing.

For starters, when CEO David Leider launched in 2006, he and the cofounders opted for an old industrial building with two windows in Oak Park, just outside Detroit, not traditional media centers of New York or Los Angeles. Lower cost was a factor: "Remember, it was 2006 and there wasn't a lot of great stuff going on here at the time," Leider said.

The basis of their business was an idea — to install TV screens on gas pumps at filling stations — that years before had been tried and discarded by oil companies.

Today this outfit of 80 people has GSTV screens operating at 3,000 gas stations in 45 states, less than a decade after beginning life as a 90-day pilot program at five Murphy Oil stations in Texas.

Last June, Detroit-based Rockbridge Growth Equity, with Quicken Loans chairman Dan Gilbert among its major investors, purchased GSTV, setting the stage for Leider and his crew to join the growing cohort of expanding businesses raising Detroit's profile as an emerging entrepreneurial hub.

Leider, 49, sat down last week to talk about GSTV's growth, the unusual persuasive power of a talking gas pump, the cultural fit with Gilbert's high-energy Quicken family of companies, and why he believes there's plenty of runway for GSTV to keep growing.

Leider, a Detroiter and University of Michigan graduate, had never met Gilbert before putting GSTV up for sale last year. After eight years, the other original cofounders and investors were ready to cash out and move on, but Leider wanted to keep growing the company, so they hired Barclays PLC to help find a buyer.

Rockbridge and GSTV, both private entities, don't publicly reveal revenue or profit numbers, but they claim they currently have 52 million monthly viewers of the news, entertainment and advertising shown on the TV screens at gas pumps across America. By next year, Leider said, GSTV will be in all 50 states. He expects his staff to grow to 90 or 100 by the end of this year, and sees steady annual growth of 5% to 15% in the ensuing years.

And the secret to that success? "We like to say you're tied to that screen with an 8-foot rubber hose for about five minutes," Leider said.

In other words, GSTV has a viewer in front of that screen for the time it takes a driver to fill up the tank — typically four or five minutes, during which a program cycle that long will include snippets of news and entertainment, plus ads for big national brands, or target local demographics and products.

The gas stations pay nothing for the GSTV installations; the business model is 100% advertiser supported. "Data show that 40% of all gas customers go into the station's convenience stores, but it's 50% at GSTV stations," he said.

Gas retailers are happy because they get more traffic in the store aisles, where profit margins on the items are higher than the margins on gasoline. Other benefits of the unique GSTV viewer demographics:

The viewer often has a credit card in his or her hand.

And no other broadcast outlet delivers an audience of 100% drivers.

"Of people watching TV at home, only 81% drive or own a car, with us it's 100%," Leider said. "We have big partnerships with auto insurance companies; 100% of drivers, everyone in our audience, have to have insurance."

Ready to expand

When GSTV was put up for sale last year, Leider said, it drew interest from "all the venture hubs in Boston, New York, San Francisco," Leider said, "but Rockbridge really loved the fact that, hey, here's a growing, successful Detroit-based media company. It just fits in with everything they're doing."

GSTV was outgrowing its headquarters space in Birmingham, its home since 2009 — and Leider was eager to make the move to Detroit. "The city of Detroit is a talent magnet right now," he said. A week after closing on the GSTV sale, he was touring five or six Gilbert-owned buildings downtown. Next month, GSTV staff starts moving into newly renovated digs at 1201 Woodward, a building that dates to 1891 and once housed a Kresge store.

The interaction and linkage with the Gilbert-Quicken family of companies was an added plus. Gilbert's Greektown Casino-Hotel and Quicken Loans are GSTV advertisers.

"That company is exciting..." Gilbert said of GSTV in an interview, noting that he was pleased while filling up his car on a recent Sunday to see a GSTV broadcast at the pump showing an ad for Greektown, which Gilbert's Rock Gaming acquired in 2013.

Making a concept work

GSTV didn't invent the TV-at-the-pump business. Several oil companies had toyed with the idea 15 or 20 years ago. But their timing wasn't quite right. A good-quality TV screen that costs $200 today, he said, might have cost $4,000 15 or 20 years ago, and the connectivity for data and programming wasn't as advanced.

Also, Leider said, the oil companies wanted the retailers to pay for the costly installations. That was a hard sell.

By 2006, the price of TVs was falling, and Murphy Oil asked if Leider — a former ad agency guy with Doner and J. Walter Thompson in Detroit — would try a 90-day pilot program in five gas stations alongside Wal-Mart stores in the Dallas area.

"We knew within 45 days that we had a winner," he said.

GSTV has a few smaller TV-at-the-pump competitors today, but remains the dominant player in that space.

How can a few minutes of TV chatter at the gas pump can such a formidable marketing tool?

Leider explains it this way: "Sure, it's only 5 minutes, but there's no DVR, no one can fast-forward through the ads we have. Engagement levels are high. People watching TV at home are watching three or four things at once, they've got their laptops on, they've got their dog, they've got the baby."

It all starts to sound pretty convincing — at least until filling stations become extinct when we're all driving plug-in electric vehicles or riding in driverless cars.

But for now, Leider said, "More people watch GSTV than 99% of the programming that's on broadcast and cable TV right now. I want to be the largest video network in the country in the not-too-distant future."

Contact Tom Walsh: twalsh@freepress.com, also follow him on Twitter @TomWalsh_freep.

Gas Station TV by the Numbers

• TV at the pump in 3,000 stations in 45 states
• 52 millions viewers per month
• Audience demographics: 100% drivers, median age 40, average household income $70,000
• Employees: 80
• Growth: tripled number of advertisers since 2010

Source: GSTV