October 13, 2008
Digital Signage: Going Gets Exciting and Bumpy
This is the first in a multi-part series of RetailWire discussion articles on the growth and deployment of digital signage and kiosks at retail.
Walking the floor at Digital Signage Expo East in Philadelphia last month, we were taken with the high degree of optimism expressed by exhibitors and show attendees alike. Most were willing to share that 2008 had been a challenging year but there are clear indications that this is an industry on the verge of exponential growth.
The business, we were repeatedly told, had matured to the point of no longer having to justify that it “worked.” Instead, the industry’s issues centered on consolidation, content, business models, retailer investment, measurement tools and network expansion.
Consolidation was on the top of many minds.
Chris Riegel, chief executive officer of STRATACACHE, predicted, “About half the companies in this sector will not be in existence in the next six to 12 months… not because the marketplace is invalid but because companies were either venture capital backed or poorly managed.”
Mr. Riegel added, “The key point I would say is (retailer) customers should take out of this is that it’s going to be kind of a bumpy ride. Make sure that you’re doing the proper due diligence on whatever companies you pick to partner with. There’s a lot of small guys in this emerging sector that are just going to implode.”
Mike Abbott, president of ADFLOW Networks, said his company and others have learned lessons from the mistakes of others.
“There was a period of time when promises were being made,” said Mr. Abbott. “(Digital signage) suppliers would say we’re going to put it in, it’s not going to cost you (the retailer) a nickel and we’re going to share the revenue. Guess what? It didn’t prove to be that good. Many of those companies that made those promises are not in business anymore.”
Messrs. Riegel, Abbott and others believe in-store digital media is poised for big things even as the industry goes through a shakeout.
“We’re getting to an inflection point where there is going to be a huge spike in adoption of digital media. That’s the good news,” said Mr. Abbott. “The bad news is that no one knows when that is going to happen and some folks that have made fairly aggressive bets may see their window closing. The tough reality is that when you take VC (venture capital) money that needs to be realized in three to five years and you’re at year six or seven, you’ve either burned through that money or may find that the VC investor has goals that are different than yours.”
Linda Hofflander, chief marketing officer at Wireless Ronin Technologies, is among those excited about the prospects of digital media at retail. She said adoption will pick up steam as merchants, brand marketers and agencies go through the normal learning curve associated with the deployment of the technology in retail stores.
“When you’re looking at digital signage measuring, for example, you really have to take a step back and determine your motivation,” Ms. Hofflander told RetailWire. “What is it you’re trying to measure? Are you looking at it because it’s an advertising model? Are you looking at it for sales conversions? Are you testing your ad messaging?”
Coming next: Digital Signage: This Year’s (Business) Model
Discussion Question: What do retailers interested in pursuing the upside opportunity of in-store marketing need to know about digital signage networks and vendors before jumping in with both feet?
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Sitting in the middle of this digital signage space, I agree with the theme of this string. Consolidation will happen. Recent cases in point: BroadSign is downsizing. Wireless Ronin’s sales projections are off and their stock has dropped.
The underlying issue really hasn’t changed. No one knows who will pay for all this digital signage. So for now, the solution providers are forking out the capital and taking on all the risk. I continue to see one example after another where the retailer not only won’t PAY for the system, but they also expect to BE PAID a percentage of ad revenues generated by the solution provider. So right now, solution providers are carrying many of the costs to deploy their very own retailers’ networks. How much money do these solution providers have in the bank at this point? Not much, in many cases.
Problem is, especially in these early days, advertisers aren’t flocking to these networks. All the start-up, standalone companies whose business plans and funding were predicated on healthy income and profits generated through ad sales are experiencing a rude awakening. In my humble opinion, digital signage will only truly start to become powerful when retailers realize that this is a business tool for them to drive their stores’ performance–and when, as a result, these retailers start to put a lot more of their own skin in the game. More along the lines of merchandising than broadcast advertising.
It’s a classic example of how it’s going out there right now. The retailer doesn’t want to spend any money, so they sign away the rights to critical real estate in their very own stores to a third party solution provider. Not only that, the retailer puts the provider in a financial bind from the onset. Do you think that the provider will always have the retailer’s best interests in mind when they’re simply trying to cover their substantial investment to deploy the retailer’s network on their dime (site surveys, hardware and software procurement, install and deployment, content development, deployment and management, network management and service, etc.)? Meanwhile, the solution provider likely has a very short financial runway, likely being VC-funded, and several years into their plan (with a horrible burn rate).
I remain hopeful that we’ll start to see retailers making more of an investment in digital signage. Yet I was amazed recently when I spoke with a major franchise retail operator who was putting out an RFP that put all the costs (and financial risk) on the the supplier. From what I understand of the RFP, the “winning” supplier would not only handle every aspect of the implementation and carry all the costs, but they would share a percentage of revenues with the retailer AND yield a considerable amount of content control to the retailer. In this example, the underlying problem of “who pays for it” persists.
All of that said, the studies prove out that the ROI is there for digital signage. However, retailers and advertisers are fearful of taking on risk right now. Ironically, if these players were to start investing in this medium, the level of risk would drop considerably. I think this will eventually happen, if only because the aforementioned consolidation will hit, and the surviving solution providers will not be willing to give digital signage networks away any longer.
How’s THAT for a Monday morning rant?
Consolidation in this case is actually good news for the digital signage industry. Established players are fundamentally sound and the fly-by-nights that have sought to cash in on the opportunity will go by the wayside.
Another likely scenario to look for is major technology companies, not currently in the space or at best on its periphery, will start coming in and buying up those that give them the opportunity to capture what many see as a major growth opportunity. Just imagine if 1% of CPG firms advertising dollars going to other media were put to store marketing. P&G has already said they’re going to be putting 10% against in-store. Others will certainly follow the leader.
If we took the portion of trade dollars that are passed through to shoppers and add in shopper marketing monies, what would the pie chart of brand spending look like? Do we think shopper directed marketing monies would equal half of total marketing spend? I ask this because I don’t really know the answer but want to relate this to the way media is, in general, planned. I thought this might be insightful.
I like digital signage and it does add a certain edge to the selling floor. But there seems to be too much focus on this. I really think that this can be done in house for much cheaper with better results. Retailers know their business much better than any third party marketing firm that knows nothing about retail or the retailer’s customers.
I was in Walmart on Saturday and they had LCDs strategically placed throughout the store with advertised items and promotions flashing across the screen. Sounds to me like all we need is the hardware, someone who is really good with PowerPoint and a bunch of screens. No real justification for hiring a company to do it for them. And if the industry will be gutted in the near future, I would advise retailers to NOT hook up with an outside company and just formulate a plan to do it themselves.
One other addition to my earlier comment: While much of digital signage is centrally controlled, I disagree that content production is something that should be brought in-house. Even Walmart doesn’t handle its in-store network itself. Digital signage may be little more than PowerPoint presentations for the function of corporate communications, but its strength at store-level is as a dynamic medium that delivers production values and interactivity way beyond traditional POS.
I would second ‘retailveteran’ on the content. Content–QUALITY content–has been a real bottleneck for retail media networks, whether in-house or through a third party. It has taken several years to understand what kind of content works, in which kind of context, and a lot of the “bumpiness” in the industry to-date has come from doing content poorly.
I’ll also add, consolidation is inevitable and a positive for this industry. There are too many third party networks out there that serve the most ridiculous niches–funded by VCs and a prayer. For retailers, you have to consider the role that the screens will play across all of your marketing and messaging efforts–how digital signage will work with kiosks, how the ad campaigns that you and your manufacturers run will bring the message into stores, how all of these elements work together in a brand-building way. You can’t do that with a piece-meal approach to different in-store media, and ad buyers will never get on board until a network has critical mass–no matter how much effort is done on the aggregation side.
So in addition to the standard due diligence that any user should do before investing in any technology or tech company, retailers should really examine any digital signage investment in the context of the role it will play as part of an integrated marketing effort. If it just builds yet another silo, then it’s probably not a good solution.
There are many current and a bunch of new media alternative technologies in-store that can absorb the Shopper Marketing influx of dollars when it DOES occur. The financial issues faced by retailers and suppliers at the moment will probably hasten the defection of dollars from traditional media and toward the two viable alternatives, one of which IS Shopper Marketing in-store.
How many of these dollars will find their way to in-store “glass” is an open question, but the “glass” value chain is working hard on trying to prove their ROI. Some, such as PRN are moving the screens closer to the action (above end-aisles and the like) some are simply looking for penetration. All want to come out of pilot/test/rollout/additional implementation with numbers better than traditional alternatives (TV, Newspaper and Magazine.) For the moment, the old story about campers running away from the bear comes to mind. You don’t have to be fast…(or have that great an ROI), just faster than the other campers.
At the risk of dating myself, this discussion brings about the tag line from a long ago commercial…”Where’s the Beef?”
I have yet to see any strong empirical evidence which suggests that there is a massive payoff for in-store advertising, whether it be the old fashioned retailer “inter company TV” or the new LCD advertising medium.
Consumers are overstimulated as it is and to build expectations that a bevy of strategically placed LCD screens flashing ads and promoting in-store products are going to accelerate sales and purchasing decisions is akin to a successful snowball fight in Hades. Pointless.
While I may be painting this with a bit of a broad brush, I do believe and agree that this market is over ripe for consolidation and in a time of tight margins could be one of the first victims of budget tightening.
Retailers looking to pursue the upside advantages of digital signage need to resolve a few questions before they begin:
1. Who will own and underwrite the network? As the article suggests the third party route is a two-edged sword, and if a retailer believes that digital signage is a strategic system (as Walmart does), then ownership and control should probably rest with the retailer. This also will speed integration with other systems. If the application is not viewed as strategic, then the third party option may be best. An “eyes open” approach is recommended either way.
2. What is the objective of their network? A network deployed to primarily support a retail brand and influence a shopping experience is fundamentally different from a network deployed in order to generate advertising revenue.
3. What roles do I want to assume in-house, and which do I want to outsource? From content development to network management to reporting to ad sales to project management and more, digital signage requires care and feeding. Understand the full scope of the various roles, and decide which are best to keep in-house, and which may be best to outsource.
4. What network architecture makes sense for us? There are many architectural models in the marketplace, and a cross functional team should understand the differences and how some may be more appropriate for retail than others.
5. Which vendor(s) understand retail and retail IT?
6. How do we cut through the hype and positioning of the technology vendors to make an intelligent choice? Clearly, there is no shortage of sound bites and claims of superiority in the intensely competitive digital signage solution space. The fact is that there are real differences between approaches, architectures, functionality, cost effectiveness, scalability, relevant experience and product road maps among the vendors. Understanding your own requirements and conducting some research is the best place to start. Insist on “Show” as well as “Tell,” and view the relationship as a partnership, because it can not end at the purchase for ongoing success to be ensured.
7. How will we address content? Putting technology aside for a moment, it is important to realize that “garbage in, garbage out” is an operative mantra for digital signage. Your approach to a content strategy, including the type, length, quality and refresh interval will all be very important in terms of customer perception. The best technology can not make lousy content more engaging or relevant. Invest time, energy and capital in content and content strategy.
Begin the process with a vision of where you want to be, and let that guide your actions as you proceed. The benefits are there, and execution is ultimately the number one critical success factor.
Retailers need to know the financial health of the company being considered and its long term plans to support the display system. Retailers need to judge whether the potential supplier has the ability to stay economically viable and adopt to upgrades/changes in the technology. If, as the article states, half of the exhibiting companies will not be here in a year, this is a pretty risky bet for any retailer, especially in the current economic climate. Caveat emptor.
The grass isn’t always greener on the other side but that doesn’t mean it still isn’t pretty darn green when you get over there.
In talking with people for this article, I didn’t get the idea that any were trying to get others to drink the digital signage Kool-Aid and promote the notion that the opportunity here was too good and true at the same time.
In fact, the three individuals quoted were quick to point out that good results happen in most cases but not all. There is quite a bit of learning that has taken place when it comes to the dos and don’ts of digital signage and kiosks.
Each also emphasized the need for retailers to have some skin in the game when it comes to network costs. The combination of revenues from advertising and sales lift along with other benefits we’ll discuss in future pieces on this topic made a compelling case for retailers to make the investment in the technology.
Also, it should be noted that costs are not nearly as prohibitive as in the past with sign costs coming down quickly. Research in a variety of store environments has made a ROI case for digital signage in locations from small sandwich shops all the way up to Walmart.
First I’d like to suggest that readers review the last paragraph of Dr. Weitz’s comment above, which I regard as an excellent, sober and succinct point of view on this topic.
There is a perspective within the out-of-home digital advertising industry that seems to advocate extension of the traditional television media model to the in-store environment. This is based on a belief–no a need–to perpetuate the practice of reach, frequency, CPM and gross rating point measurement that is familiar to entrenched media agencies.
This approach ignores the reality that the in-store communications environment and experience are fundamentally different from other situations where advertising and content may be observed. Shopper media are best at influencing and informing shoppers in the act of locating and selecting products. This is a task-oriented mindset, not an entertainment focused, leisure mindset. Measurement should therefore focus on behavioral and attitudinal changes caused by such media, not on audience metrics. In other words, how much more product did you sell? And by the way, this is NOT TV!
So the consolidation of networks is in my opinion a mere sideshow to the real story. Larger networks may resemble channels that are easier to sell and administer, but they will not add any actual value until and unless they make the strategic choice to measure what really matters. The focus must turn to the retailer’s objectives, not the media planners. Oh and did I mention, this is NOT TV?
Well, this whole area brings back the axiom “If it sounds too good to be true, it probably is.” The whole idea that somehow advertising revenues could pay for the digital network and signage seems overly optimistic (but as technology prices decline, maybe it will reach the break even point).
To me, the advantage of digital displays should be their ability to quickly adapt to circumstances and instead of just being another vehicle for presenting the “central promotion plan” they would become an outlet for timely consumer messages. Custom promotions could address overstocks in particular stores (a whole new angle on the “blue light special”) or allow stores to lessen the impact of shortages by directing customers to other options. Signage can support local ad programs based on individual store inventory levels instead of fixed time periods, so stores can recover from “snow days” by letting the ad run instead of putting left over merchandise away in the backroom until it goes stale.
This approach also means something else very important to a “new industry.” Since it is uncertain which companies will survive the consolidation period, by the retailer insisting they have some ability to support the displays, they are insulated from the failure of individual companies. The retailer can continue to maintain the promotion messages as long as the equipment is in place.
Riegel and Abbott certainly want us to believe that the digital advertising industry will be booming soon because they own companies in that arena. Sure Walmart can afford to place the equipment in their stores but what about the other retailers such as Kroger, Safeway, Ahold? They are the leaders but do they have that kind of capital?
Plus, there’s the ROI. We are certainly not currently able to determine what part of marketing spending is appropriate or reasonable for manufacturers. And can retailers be convinced of its impact on sales? Looks like another media opportunity to keep open the rift for both parties.
With all due respect to the contributor above, there is a whole lot more to digital signage than “some hardware and somebody really good with PowerPoint.” That is tantamount to saying that all you need for POS is a cigar box and someone really good with an adding machine.
Perhaps it would be instructive to actually understand how these networks actually work and possibilities that are unleashed with networked, IP-addressable media players. Assuming that an internal resource using off-the-shelf software designed for other purposes can produce a solution that even approaches the effectiveness and capabilities of the many solution offerings in an industry that has collectively invested millions of dollars and hundreds of person-years to develop applications could hardly be considered sound advice based upon an understanding of the options.
I apologize for submitting two responses, but I just read the comments referenced here, and could not validate such thinking by not responding.
Ms. Hofflander makes an excellent point. Digital signage will provide an excellent opportunity for retailers to improve their revenues. But retailers need to decide on their objective for digital signage. Is the objective to build the retailer’s brand image and sell more merchandise or is the objective to generate revenue from in-store advertising? The answer to this question will determine the level of involvement the retailer has in operating a digital signage network and developing and controlling the content.
My view is that retailers should focus on using the digital signage network to build their brand image and generate more sales rather than operating the system as an advertising vehicle. If retailers do not control the content, the advertising on the signs might actually turn off customers rather than enhance the shopping experience.
Retailers need to keep one major point in mind. It’s all about providing value to the customer and no “silver bullet” is going to overcome a no value/low value situation.
From the standpoint of pursuing the upside opportunity of in-store marketing, most retailers won’t make the effort to host or become involved. Heck, sampling is and has been one of the best marketing tools ever invented but retailers won’t even use this proven winner. It requires some work beyond opening the doors and turning on the registers.
I guess digital signage fits the bill when it comes to today’s retailing. With regard to networks and vendors, just stick with the old adage, “Nobody ever got fired for buying IBM” and apply it to the market. Vendors with deep pockets and industry experience should be relied upon to ensure maximum value. What do retailers interested in pursuing the upside opportunity of in-store marketing need to know about digital signage networks and vendors before jumping in with both feet?
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Sitting in the middle of this digital signage space, I agree with the theme of this string. Consolidation will happen. Recent cases in point: BroadSign is downsizing. Wireless Ronin’s sales projections are off and their stock has dropped.
The underlying issue really hasn’t changed. No one knows who will pay for all this digital signage. So for now, the solution providers are forking out the capital and taking on all the risk. I continue to see one example after another where the retailer not only won’t PAY for the system, but they also expect to BE PAID a percentage of ad revenues generated by the solution provider. So right now, solution providers are carrying many of the costs to deploy their very own retailers’ networks. How much money do these solution providers have in the bank at this point? Not much, in many cases.
Problem is, especially in these early days, advertisers aren’t flocking to these networks. All the start-up, standalone companies whose business plans and funding were predicated on healthy income and profits generated through ad sales are experiencing a rude awakening. In my humble opinion, digital signage will only truly start to become powerful when retailers realize that this is a business tool for them to drive their stores’ performance–and when, as a result, these retailers start to put a lot more of their own skin in the game. More along the lines of merchandising than broadcast advertising.
It’s a classic example of how it’s going out there right now. The retailer doesn’t want to spend any money, so they sign away the rights to critical real estate in their very own stores to a third party solution provider. Not only that, the retailer puts the provider in a financial bind from the onset. Do you think that the provider will always have the retailer’s best interests in mind when they’re simply trying to cover their substantial investment to deploy the retailer’s network on their dime (site surveys, hardware and software procurement, install and deployment, content development, deployment and management, network management and service, etc.)? Meanwhile, the solution provider likely has a very short financial runway, likely being VC-funded, and several years into their plan (with a horrible burn rate).
I remain hopeful that we’ll start to see retailers making more of an investment in digital signage. Yet I was amazed recently when I spoke with a major franchise retail operator who was putting out an RFP that put all the costs (and financial risk) on the the supplier. From what I understand of the RFP, the “winning” supplier would not only handle every aspect of the implementation and carry all the costs, but they would share a percentage of revenues with the retailer AND yield a considerable amount of content control to the retailer. In this example, the underlying problem of “who pays for it” persists.
All of that said, the studies prove out that the ROI is there for digital signage. However, retailers and advertisers are fearful of taking on risk right now. Ironically, if these players were to start investing in this medium, the level of risk would drop considerably. I think this will eventually happen, if only because the aforementioned consolidation will hit, and the surviving solution providers will not be willing to give digital signage networks away any longer.
How’s THAT for a Monday morning rant?
Consolidation in this case is actually good news for the digital signage industry. Established players are fundamentally sound and the fly-by-nights that have sought to cash in on the opportunity will go by the wayside.
Another likely scenario to look for is major technology companies, not currently in the space or at best on its periphery, will start coming in and buying up those that give them the opportunity to capture what many see as a major growth opportunity. Just imagine if 1% of CPG firms advertising dollars going to other media were put to store marketing. P&G has already said they’re going to be putting 10% against in-store. Others will certainly follow the leader.
If we took the portion of trade dollars that are passed through to shoppers and add in shopper marketing monies, what would the pie chart of brand spending look like? Do we think shopper directed marketing monies would equal half of total marketing spend? I ask this because I don’t really know the answer but want to relate this to the way media is, in general, planned. I thought this might be insightful.
I like digital signage and it does add a certain edge to the selling floor. But there seems to be too much focus on this. I really think that this can be done in house for much cheaper with better results. Retailers know their business much better than any third party marketing firm that knows nothing about retail or the retailer’s customers.
I was in Walmart on Saturday and they had LCDs strategically placed throughout the store with advertised items and promotions flashing across the screen. Sounds to me like all we need is the hardware, someone who is really good with PowerPoint and a bunch of screens. No real justification for hiring a company to do it for them. And if the industry will be gutted in the near future, I would advise retailers to NOT hook up with an outside company and just formulate a plan to do it themselves.
One other addition to my earlier comment: While much of digital signage is centrally controlled, I disagree that content production is something that should be brought in-house. Even Walmart doesn’t handle its in-store network itself. Digital signage may be little more than PowerPoint presentations for the function of corporate communications, but its strength at store-level is as a dynamic medium that delivers production values and interactivity way beyond traditional POS.
I would second ‘retailveteran’ on the content. Content–QUALITY content–has been a real bottleneck for retail media networks, whether in-house or through a third party. It has taken several years to understand what kind of content works, in which kind of context, and a lot of the “bumpiness” in the industry to-date has come from doing content poorly.
I’ll also add, consolidation is inevitable and a positive for this industry. There are too many third party networks out there that serve the most ridiculous niches–funded by VCs and a prayer. For retailers, you have to consider the role that the screens will play across all of your marketing and messaging efforts–how digital signage will work with kiosks, how the ad campaigns that you and your manufacturers run will bring the message into stores, how all of these elements work together in a brand-building way. You can’t do that with a piece-meal approach to different in-store media, and ad buyers will never get on board until a network has critical mass–no matter how much effort is done on the aggregation side.
So in addition to the standard due diligence that any user should do before investing in any technology or tech company, retailers should really examine any digital signage investment in the context of the role it will play as part of an integrated marketing effort. If it just builds yet another silo, then it’s probably not a good solution.
There are many current and a bunch of new media alternative technologies in-store that can absorb the Shopper Marketing influx of dollars when it DOES occur. The financial issues faced by retailers and suppliers at the moment will probably hasten the defection of dollars from traditional media and toward the two viable alternatives, one of which IS Shopper Marketing in-store.
How many of these dollars will find their way to in-store “glass” is an open question, but the “glass” value chain is working hard on trying to prove their ROI. Some, such as PRN are moving the screens closer to the action (above end-aisles and the like) some are simply looking for penetration. All want to come out of pilot/test/rollout/additional implementation with numbers better than traditional alternatives (TV, Newspaper and Magazine.) For the moment, the old story about campers running away from the bear comes to mind. You don’t have to be fast…(or have that great an ROI), just faster than the other campers.
At the risk of dating myself, this discussion brings about the tag line from a long ago commercial…”Where’s the Beef?”
I have yet to see any strong empirical evidence which suggests that there is a massive payoff for in-store advertising, whether it be the old fashioned retailer “inter company TV” or the new LCD advertising medium.
Consumers are overstimulated as it is and to build expectations that a bevy of strategically placed LCD screens flashing ads and promoting in-store products are going to accelerate sales and purchasing decisions is akin to a successful snowball fight in Hades. Pointless.
While I may be painting this with a bit of a broad brush, I do believe and agree that this market is over ripe for consolidation and in a time of tight margins could be one of the first victims of budget tightening.
Retailers looking to pursue the upside advantages of digital signage need to resolve a few questions before they begin:
1. Who will own and underwrite the network? As the article suggests the third party route is a two-edged sword, and if a retailer believes that digital signage is a strategic system (as Walmart does), then ownership and control should probably rest with the retailer. This also will speed integration with other systems. If the application is not viewed as strategic, then the third party option may be best. An “eyes open” approach is recommended either way.
2. What is the objective of their network? A network deployed to primarily support a retail brand and influence a shopping experience is fundamentally different from a network deployed in order to generate advertising revenue.
3. What roles do I want to assume in-house, and which do I want to outsource? From content development to network management to reporting to ad sales to project management and more, digital signage requires care and feeding. Understand the full scope of the various roles, and decide which are best to keep in-house, and which may be best to outsource.
4. What network architecture makes sense for us? There are many architectural models in the marketplace, and a cross functional team should understand the differences and how some may be more appropriate for retail than others.
5. Which vendor(s) understand retail and retail IT?
6. How do we cut through the hype and positioning of the technology vendors to make an intelligent choice? Clearly, there is no shortage of sound bites and claims of superiority in the intensely competitive digital signage solution space. The fact is that there are real differences between approaches, architectures, functionality, cost effectiveness, scalability, relevant experience and product road maps among the vendors. Understanding your own requirements and conducting some research is the best place to start. Insist on “Show” as well as “Tell,” and view the relationship as a partnership, because it can not end at the purchase for ongoing success to be ensured.
7. How will we address content? Putting technology aside for a moment, it is important to realize that “garbage in, garbage out” is an operative mantra for digital signage. Your approach to a content strategy, including the type, length, quality and refresh interval will all be very important in terms of customer perception. The best technology can not make lousy content more engaging or relevant. Invest time, energy and capital in content and content strategy.
Begin the process with a vision of where you want to be, and let that guide your actions as you proceed. The benefits are there, and execution is ultimately the number one critical success factor.
Retailers need to know the financial health of the company being considered and its long term plans to support the display system. Retailers need to judge whether the potential supplier has the ability to stay economically viable and adopt to upgrades/changes in the technology. If, as the article states, half of the exhibiting companies will not be here in a year, this is a pretty risky bet for any retailer, especially in the current economic climate. Caveat emptor.
The grass isn’t always greener on the other side but that doesn’t mean it still isn’t pretty darn green when you get over there.
In talking with people for this article, I didn’t get the idea that any were trying to get others to drink the digital signage Kool-Aid and promote the notion that the opportunity here was too good and true at the same time.
In fact, the three individuals quoted were quick to point out that good results happen in most cases but not all. There is quite a bit of learning that has taken place when it comes to the dos and don’ts of digital signage and kiosks.
Each also emphasized the need for retailers to have some skin in the game when it comes to network costs. The combination of revenues from advertising and sales lift along with other benefits we’ll discuss in future pieces on this topic made a compelling case for retailers to make the investment in the technology.
Also, it should be noted that costs are not nearly as prohibitive as in the past with sign costs coming down quickly. Research in a variety of store environments has made a ROI case for digital signage in locations from small sandwich shops all the way up to Walmart.
First I’d like to suggest that readers review the last paragraph of Dr. Weitz’s comment above, which I regard as an excellent, sober and succinct point of view on this topic.
There is a perspective within the out-of-home digital advertising industry that seems to advocate extension of the traditional television media model to the in-store environment. This is based on a belief–no a need–to perpetuate the practice of reach, frequency, CPM and gross rating point measurement that is familiar to entrenched media agencies.
This approach ignores the reality that the in-store communications environment and experience are fundamentally different from other situations where advertising and content may be observed. Shopper media are best at influencing and informing shoppers in the act of locating and selecting products. This is a task-oriented mindset, not an entertainment focused, leisure mindset. Measurement should therefore focus on behavioral and attitudinal changes caused by such media, not on audience metrics. In other words, how much more product did you sell? And by the way, this is NOT TV!
So the consolidation of networks is in my opinion a mere sideshow to the real story. Larger networks may resemble channels that are easier to sell and administer, but they will not add any actual value until and unless they make the strategic choice to measure what really matters. The focus must turn to the retailer’s objectives, not the media planners. Oh and did I mention, this is NOT TV?
Well, this whole area brings back the axiom “If it sounds too good to be true, it probably is.” The whole idea that somehow advertising revenues could pay for the digital network and signage seems overly optimistic (but as technology prices decline, maybe it will reach the break even point).
To me, the advantage of digital displays should be their ability to quickly adapt to circumstances and instead of just being another vehicle for presenting the “central promotion plan” they would become an outlet for timely consumer messages. Custom promotions could address overstocks in particular stores (a whole new angle on the “blue light special”) or allow stores to lessen the impact of shortages by directing customers to other options. Signage can support local ad programs based on individual store inventory levels instead of fixed time periods, so stores can recover from “snow days” by letting the ad run instead of putting left over merchandise away in the backroom until it goes stale.
This approach also means something else very important to a “new industry.” Since it is uncertain which companies will survive the consolidation period, by the retailer insisting they have some ability to support the displays, they are insulated from the failure of individual companies. The retailer can continue to maintain the promotion messages as long as the equipment is in place.
Riegel and Abbott certainly want us to believe that the digital advertising industry will be booming soon because they own companies in that arena. Sure Walmart can afford to place the equipment in their stores but what about the other retailers such as Kroger, Safeway, Ahold? They are the leaders but do they have that kind of capital?
Plus, there’s the ROI. We are certainly not currently able to determine what part of marketing spending is appropriate or reasonable for manufacturers. And can retailers be convinced of its impact on sales? Looks like another media opportunity to keep open the rift for both parties.
With all due respect to the contributor above, there is a whole lot more to digital signage than “some hardware and somebody really good with PowerPoint.” That is tantamount to saying that all you need for POS is a cigar box and someone really good with an adding machine.
Perhaps it would be instructive to actually understand how these networks actually work and possibilities that are unleashed with networked, IP-addressable media players. Assuming that an internal resource using off-the-shelf software designed for other purposes can produce a solution that even approaches the effectiveness and capabilities of the many solution offerings in an industry that has collectively invested millions of dollars and hundreds of person-years to develop applications could hardly be considered sound advice based upon an understanding of the options.
I apologize for submitting two responses, but I just read the comments referenced here, and could not validate such thinking by not responding.
Ms. Hofflander makes an excellent point. Digital signage will provide an excellent opportunity for retailers to improve their revenues. But retailers need to decide on their objective for digital signage. Is the objective to build the retailer’s brand image and sell more merchandise or is the objective to generate revenue from in-store advertising? The answer to this question will determine the level of involvement the retailer has in operating a digital signage network and developing and controlling the content.
My view is that retailers should focus on using the digital signage network to build their brand image and generate more sales rather than operating the system as an advertising vehicle. If retailers do not control the content, the advertising on the signs might actually turn off customers rather than enhance the shopping experience.
Retailers need to keep one major point in mind. It’s all about providing value to the customer and no “silver bullet” is going to overcome a no value/low value situation.
From the standpoint of pursuing the upside opportunity of in-store marketing, most retailers won’t make the effort to host or become involved. Heck, sampling is and has been one of the best marketing tools ever invented but retailers won’t even use this proven winner. It requires some work beyond opening the doors and turning on the registers.
I guess digital signage fits the bill when it comes to today’s retailing. With regard to networks and vendors, just stick with the old adage, “Nobody ever got fired for buying IBM” and apply it to the market. Vendors with deep pockets and industry experience should be relied upon to ensure maximum value. What do retailers interested in pursuing the upside opportunity of in-store marketing need to know about digital signage networks and vendors before jumping in with both feet?