Dynamic digital signage has emerged as the “Next killer application” for the new generation of sign technology in the advertising industry. A digital signage system, which is usually composed of a server or PC, a monitor or TV and software, is capable of delivering full-screen, full-color content to multiple locations. Cost of implementation has been reduced significantly over the past two years, making it possible for digital signage to be in the mainstream marketplace. This is evidenced by the extensive usage of digital signage displays at airports, museums and shopping centers. The growth rate is projected to increase significantly in the next few years as the technology matures.
Dynamic digital signage advantages
One advantage of dynamic digital signage over printed materials and static signs is the ability to change messages in “real time” and enable just-in-time marketing implementation. Another advantage is the unlimited content that can be posted at every display location, which is particularly valuable when space is at a premium. Display sites can also be networked together so that store managers can select target sites demographically and tailor their messages to that audience. Product and brand promotions can now be done in a more efficient manner and at a much lower cost compared with traditional ways.
Large retailers adoption of digital signage
National retailers such as Macy’s, The Gap, and Foot Locker see the potential of leveraging digital signage technology to increase sales and have already adapted the use of dynamic digital signage to promote their own brands nationwide.
Third party advertisements are being displayed in targeted locations to increase revenue. As an example, McDonalds is placing their ads in Foot Locker’s in-store video network. Wal-Mart is upgrading its vast in-store television network at their 2,600 locations to promote products sold within their stores. According to Wal-Mart, their TV operation captures some 130 million viewers every four weeks, making it the fifth largest television network in the United States after NBC, CBS, ABC and Fox.
Advertisers are willing to pay $137,000 to $292,000 to show a single commercial for a four-week period, depending on the length of the ad and the number of stores where it is shown. This illustrates the positive effect on purchase decisions at the point of sale when the right message is delivered at the right location at the right time. The implementation of digital signage by large retailers has validated the benefits of this new technology. Furthermore, the rapid decline in costs for LCD, plasma and projector displays bring digital signage into mainstream business.
Independent retailers embark on digital signage
Digital signage is no longer the exclusive domain of national retailers. Independent storeowners can access new opportunities because advanced platforms are available today, which overcome the barriers in terms of price and implementation. Besides in-store promotions, storeowners can sell ad space to both local and national advertisers to increase revenues.
Value Added Resellers (VARs) such as sign shops and hardware providers can offer services to businesses wanting a hands free operation. Services including hardware installation, content creation and content management provide more ways to bring in businesses for VARs. Cross advertising helps in the promotion of local businesses whose ads are viewed by local customers that shop or seek services in the same area.
Subscription service lowers the cost
Most business owners associate the implementation of digital signage with big investment in hardware and software. With the latest software technology, any PC and monitor can be turned into an electronic display system. “Application Service Provider” (ASP) is a technology that delivers software over the Internet as a “Subscription Service”.
There are many distinct advantages using the ASP model; it allows small to medium sized business to access sophisticated full-featured software, low initial cost, no software installation, no maintenance and software upgrades are being done for you. The system uses simple hardware and the application can be accessed from any PC on the Internet making ad-posting and content management for multiple stores feasible. System reliability is much higher when the platform is maintained by a professional service provider as in the ASP model.
Businesses subscribed to ASP use the software by paying a low monthly fee rather than spending thousands of dollars in building their own systems. Depending on usage, the fee would be as low as a hundred dollars a month. This also gives them the tax advantage when the entire subscription fee can be written off versus the typical extended depreciation term of purchased assets. In addition, they save on the cost of technology ownership and conserve resources for their core business.
Content generation and management
In order for digital signage to become a mainstream product, the software must be tailored to non-technical people and should not have to rely on outside specialists to create and maintain the content. A few key issues associated with using signage software include: content creation, content management and distribution. The ASP model, along with innovative applications, can sufficiently reduce these barriers for any business to employ digital signage.
ASP allows customers to start using the software by signing up for an account through the web site, much like signing up for an email account. Once the account is created, customers can start posting their own messages within minutes from their own PC or any remote PC. A simple and intuitive interface is needed to let first time users grasp the concept and start using the software with minimal training.
Content creation generally requires someone who has knowledge in graphics design which can add to the cost for employing digital signage. This can be addressed by providing advanced applications for composing dynamic content automatically with the input of raw images and type-in text. The advanced application would also provide the ability to edit content easily and changes can be updated to various display locations in seconds. This is especially useful for store managers who have to monitor the selling rate of discounted items and vary the percentage discount accordingly.
Dynamic content generation is also useful for emergency alerts, news broadcast and special announcements at the facilities. Most platforms accept graphics, movie and flash files in common formats. Users set the display schedules and locations ahead of time and tending the content becomes a simple task.
Digital signage can be used for a wide variety of businesses. They include restaurants and bars, retail stores, shopping malls, trade shows and conference centers, company lobbies, grocery stores, medical facilities, hotels and motels, theaters, casinos, airports, museums, schools and learning centers. People related to this market such as sign shops and hardware providers may consider this market as a new business opportunity.
The path to establish the business is easier than most people think and the initial investment is low enough for small vendors to consider. By partnering up with digital signage software providers, local shops can offer a total solution to their customers with high system value. Additional services such as content management can also be provided to customers who want a hands free operation. Low software subscription fees along with declining hardware costs make the entry into this market attractive.
So how big is the digital signage market and how does it change the landscape of the advertising industry? According to the data from CAP Ventures, the total ad spending in 2003 is $149B. Traditional advertising channels such as TV, newspaper, radio and magazine made up 80% of the entire budget and digital signage occupied less than 1%. But things are changing rapidly. Advertisers realize that the effectiveness of the traditional channels such as TV is losing steam due to a number of factors. Consumers have become more sophisticated and are attracted more to products that are tailored to their personal needs or tastes.
Broadcasting ads through traditional media only capture a small percent of the audience that the ads are intended to target and miss the rest. Since media ad space is very limited, it makes ad placement expensive and benefits more directed to much commoditized or nationally branded products.
The Return On Investment (ROI) hardly justifies placing ads in these channels. In addition, technologies such as TIVO allow viewers to skip over the ads entirely and channel surfing becomes a habit practiced by most viewers. This further declines the effectiveness of advertising using broadcasting methods. Advertisers are now turning to other avenues that bring them better results with lower spending. They realize that influencing purchase decisions at the point of sale is far more effective than any other places.
Most retailers who implement digital signage displays at their stores are seeing positive results. Digital signage is a better tool for the job since it can display individual messages at selected locations. Advertisers can profile their audience ahead of time and put up the right message at the right place. The digital signage market will experience double-digit growth in the next few years and will become a major channel with size comparable to traditional media. With Wal-Mart getting into the full swing of action in implementing digital signage, non-believers should take a second look at this potential market and prepare themselves to engage in this new business!