Hardware, software and expert advice for digital signage and kiosks
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Hardware, software and expert advice for digital signage and kiosks |
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WireSpring BlogDigital Signage Cost Estimates and Price Guidelines
Author: Bill Gerba on 2008-11-13 14:43:49 About once a year, we try to figure out what it actually costs to build a digital signage network. Based on feedback from our customers and website visitors, these studies have grown to include not only the obvious things like hardware, software, and installation, but also the "softer" costs like content creation and staffing. You can find our latest cost estimates and all the historical ones below.Most current cost estimates: An Updated Budget for Digital Signage Hardware and Software In this study, we show that a typical digital sign will cost about $6k over 3 years. Click the link above to view all the details. Older cost estimates:
Learn about our FireCast product line for digital signage networks. Have other pricing questions? Get instant pricing and trial info for our products or leave a comment below. An Updated Budget for Digital Signage Hardware and Software
Author: Bill Gerba on 2008-11-13 14:15:14 It's become a tradition here at WireSpring to put together a budget for a "typical" 100-venue digital signage network each year. Our goal is to capture both the upfront capital expenditures as well as the ongoing operating expenses that a network owner would face over a three-year period. With a slowing global economy and tighter access to capital than ever, we felt that this year's update should also include a bit more background on the payroll and other costs that networks of this size typically face, in the hopes that companies thinking about shrinking, expanding, or starting out from scratch will have a better idea of what the "typical" competitor might look like.Where do we get our numbers? While our previous cost estimates and ecosystem components have closely matched those from other industry analysts (so we don't think we're too far off the mark), the myth of a "typical" network is more strained this year than ever before. More vendors and network owners are choosing to implement screens with new formats and more varied locations, injecting more diversity into the projects. Plus, the idea that there's a standard staffing requirement for any digital signage network is pretty ridiculous. While we and others have proposed a list of key positions that need to be filled when creating a digital signage team, some networks are still very heavy on content production, while others might be composed almost entirely of sales folks. Still, as we looked across a wide array of networks -- representing not just our products but also our competitors' solutions -- we were able to get a reasonable feel for what most companies needed as far as the human resources side of things. What's the cost of a typical 100-screen digital signage installation? Enough with the introduction and disclaimers. You want to see the numbers, right? (If you're reading this in an email you'll either need to turn on images or visit http://www.wirespring.com/weblog to view the tables on the web.) Well, here they are:
How have things changed since our last pricing study? Before we get started with the analysis, all of the usual caveats from past years apply. Namely, this is an aggregate budget, so it's not meant to reflect any one company's products. It also doesn't distinguish between traditional software licensing versus software-as-a-service (SaaS) products. Installation assumes a two-man team arriving at a venue that has existing power lines (so no high-voltage work required). That said, the cost of installing a 100-screen network has dropped about 16% in the past year. The biggest savings came from dramatic price reductions on large LCD screens, which now run about $1,000 for a 40" screen with a three-year warranty (which is a good idea in general, and may be a requirement if you're leasing your equipment). Digital signage-specific products like software and player hardware also saw a significant percentage reduction, reflecting increased competition in the market and cost efficiencies in the underlying technology. Installation and management services had much more modest (or nonexistent) reductions, indicating that perhaps these areas are leveling out. Here's how the money is spent on a percentage basis: 
To cover these expenses, you would have to allocate about $157 per screen per month, not including content and additional personnel costs. If that sounds like a lot, consider that it's down more than 33% from 2004 (the first year that we started tracking costs) -- even after upgrading to LCD screens from older plasma technology and adding in additional funds for warranties. (Note: to ensure an accurate comparison, we removed the 24/7 tech support line from the 2004 numbers, since this was not included in subsequent years.) As one might expect from a relatively new high-tech industry, the capital costs have been falling for a while: 
What about personnel costs? Once you get into content and staffing, things become a little more fuzzy. We took a look at budgeting for digital signage including content production costs last year, and those numbers are still pretty fair. If anything, they may have dropped a bit since the economy is so bad and many production companies are feeling the pinch. This being the first time we've looked at staffing numbers, I can't offer a comparison. As the "average" 100-screen network takes somewhere between 7 and 15 people to run, it's also hard to come up with a baseline for staffing costs. But if we assume that the average salary is $50K, and the average staff size is 10 people, that's another $500,000 in salaries and associated costs every year, for a total of $1.5M for our three-year budget. Doing the math, that adds another $41,666/month in expenses, or $417/screen/month. Added to the $157/month in capital expenses, the "average" screen in a "typical" 100-screen network costs about $574/month. Notice that I'm qualifying all of these numbers, since there's no such thing as typical or average in this wacky industry. Since most people out there are focused on ad-supported digital signage networks, I'll put all this into perspective. In past articles, we've learned that advertisers in the right markets may be willing to pay the rate of $130-$150 per screen (or venue) per month. That would mean that your network has to place about 4 paid ads on each screen every month to meet the expenses outlined above. Anything on top of that is gravy. I'm not an ad sales guy, so I have no idea how feasible such an expectation is, but I hope this will provide some food for thought (and discussion) for those of you who are. So, what do you think? Are these estimates in line with your expectations and experiences, or are they totally off? What else needs to be included? P.S. If you want to see how our estimates have changed over the years, we've created a page that lists all our articles about digital signage budgeting, cost estimates and price guidelines. This is also a handy page to link to if you want to point your friends or clients to our latest pricing data, since we'll be updating the page whenever we add another article in the series. Digital Signage Research: 4 Expert Analysts Forecast the Future
Author: Bill Gerba on 2008-11-07 11:08:16 Do you ever get the feeling that market analysts can sight a buoyant industry from far off, kind of like how sharks can follow a faint trickle of blood underwater for miles? Or maybe piranhas would make for a better fish analogy: upon detecting a particularly fat prey, market analysts lunge in for a feeding frenzy. Whichever you prefer (or perhaps you can come up with a better one), over the past two or three weeks I've come across more "research companies" that I've never heard of. These firms are busy publishing more reports on our industry than I would ever have thought existed. The good news, I suppose, is that these new reports generally agree that our market will continue to grow, even through a protracted recession. But I doubt you'd need to drop $1000+ on one of these tomes to figure that out.Since everybody is keeping a close eye on industry growth during these times of economic uncertainty, I thought it would be nice to put all of the predictions from these recent reports in one place. That way, we can all read about them, agree or disagree with the analysis, and then in a year or so look back at them and laugh about how terribly inaccurate they were. Here are the predictions made by these four analysts, in no particular order: Goldmedia (source)
First of all, not all reports are created equal. While PQ has been following this market for a while, and has indicated that current predictions more or less match ones from previous reports (thus suggesting they might not be completely off-the-wall), some of these other guys don't have that luxury. One of them had several grammar and sentence completion mistakes right in the summary, so I can only imagine what the quality of their "data" is like. Second, while most of the reports talk about market size, that means different things to different analysts. When I've purchased reports in the past, I've found that a given report may or may not include things like consulting, internal costs reported by host venues and retailers, non-advertising marketing-related expenditures, and so on. Often the report doesn't even clarify what is and isn't included. Consequently, all that I find these reports useful for is figuring out what the rest of the digital signage industry is telling the analysts. For example, if the reports suggested a general downward trend, I'd know that my counterparts at competing companies and networks were probably having a bad year and feeling pessimistic. The generally positive outlook I've been reading about tells me that despite all of the economic messiness, we're still more or less headed down the same path we were on a year ago, which is a pretty good sign in my book. One last note: Investors, I know there are a lot of you circling around out there looking for a place to park the money you don't want to put into the public markets right now. I suggest you ignore the fine details in these reports. If you want a more accurate feeling for the market, I encourage you to get in touch with somebody from a reputable company that has been serving the digital signage industry for a while. We're relatively few in number, but we have (I believe) a far more reliable gauge of what it's really like out there, and where things are likely to go in the near future. After all, we have skin in the game, and if we're way off base, our businesses suffer. Do your own experiences match what the analysts are saying? Has 2008 been good, bad or neutral for you? What do you think a protracted recession will mean for your business and the industry at large? OVAB Audience Metrics Guidelines Make Digital Signs Accountable - But Will Advertisers Care?
Author: Bill Gerba on 2008-10-31 14:19:53 Earlier this week, the Out-of-home Video Advertising Bureau (OVAB) released their first "Audience Metrics Guidelines" for the digital out-of-home industry. Hoping to establish the standard currency for measuring ad exposure in diverse out-of-home networks, the bureau certainly had a tough challenge ahead of them. Combined with the fact that network operators, ad agencies and marketing support vendors needed to agree on the standard metric and measurement techniques, it's a near-miracle that OVAB was able to publish anything. But whether or not their first attempt at a unified measurement criterion is the right one remains to be seen."AUA" is the new "OTS" As you may have already read elsewhere on the web or in OVAB's full report (PDF), the bureau created a new metric called the Average Unit Audience. This metric accounts for the different dwell times, traffic patterns and ad durations found on the hundreds of disparate networks out there today. OVAB defines the AUA as "the number and type of people exposed to the media vehicle with an opportunity to see a unit of time equal to the typical advertising unit." Seems straightforward enough to start. Using traffic information supplied by the venue and manual or electronic counting information to give an estimate of the number of people that might happen past a digital screen, we can calculate a simple audience number. From there, we cross the typical duration of stay in an area where the screen is visible with the average duration of an ad in the screen's content loop to determine the number of opportunities to see that there might have been. Interestingly, "manual or electronic" counting procedures means that Nielsen's PRISM and POPAI's MARI could both yield the necessary underlying data. However, there's an additional component that will prove more difficult to get, and that's the percentage of potential viewers who actually noticed the screen. Short of doing exit interviews or using electronic glance measurements, that number is probably going to be more expensive -- especially for smaller networks -- to come up with. The other potentially tricky component of the equation is the type of audience that might be coming past the screen at a given location. To help provide a standard understanding of what an audience type is, OVAB gives us a demographic questionnaire that could presumably be filled out by each venue, or perhaps by a third party measurement company. What if you had a party but nobody came? You can make your own decision as to whether to incorporate OVAB-appropriate measurements into your own network and tool set. The roughly 40-page document is a bit on the dry side (I fell asleep twice while reading it), but quite straightforward, and ultimately is a very good first draft of a straightforward industry metric. There's another question that's been on my mind, though: what if all this talk about measurement is just a stalking horse for the media planning companies and agencies that have been reluctant to dive into digital out-of-home, and in particular, marketing at-retail? With established standards for measurement -- presumably ones that have been blessed by those companies most likely to make purchasing decisions based on them -- advertisers should no longer have an excuse to not buy time on participating networks. Only time will tell if this is really the case. Well, time and transparency, that is, since we're going to have to rely on OVAB-compliant networks telling us whether their sales have improved or not since adopting the standards. That, or we'll have to get agencies and buyers to tell us that yes, they are buying time now, and yes, the metrics made all the difference. Neither seem particularly likely to me, but OVAB has every incentive to get the word out that their chosen approach is working, so perhaps they'll be able to persuade member companies to disclose their successes and failures. Is it time to switch your selling strategy? By now, you're probably wondering whether it's worth it to modify your existing ad sales strategy to utilize OVAB's standardized metrics. You might even be asking yourself if there's any value in measuring digital signage in the first place, or if you should focus on behavioral analysis instead. Considering that we're coming into a very busy time for retailers, we're in a recession, and these metrics are brand-spanking new, I don't think you should rush to adopt them. At least, not yet. If you're already reasonably successful at selling screen time, don't change a thing right now. If you're struggling, you should identify what's making advertisers reluctant to sign up with you. Because I guarantee that if you go up to an advertiser and say "do you need more metrics? What if I did this extra measurement for you?" they'd all say "yes!" After all, your additional work is free for them, and prevents them from having to make an actual decision. But if it's not really the thing they're after (which might be better placement, lower prices, etc.), you've just done a bunch of work for no gain. Who should think about adopting the standards right away? This one seems easier to answer. If you use a network aggregation service like SeeSaw, you should probably adopt the standards. That will help them place more ads on your screens, and make a better case to advertisers in general. If you have a large regional or nation-wide network, you should consider adopting the standards. Not in place of what you're doing already, but as a supplement to help you gain a foothold with national advertisers. If you already do a lot of business with national advertisers, you might want to consider adopting the standards, if only because they're the most likely to work with media buyers who are more familiar with OVAB. But there are real costs associated with this level of measurement, and as Suzanne Alecia, OVAB's President, noted, audience measurement standards will continue to evolve. With that in mind, you might want to consider waiting for revision 2.0. Now that the wait is over, what do you think? Will the OVAB standards usher in a new era of ad buying by big agencies? Or will buyers and planners find some new reason not to invest big in our industry? In-Store Marketing Is About "Relevance", Says Tim Manners
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Author: Bill Gerba on 2008-10-24 11:21:47 While sitting on a plane recently, I had the opportunity to crack open a copy of Relevance, a new book by HUB Magazine's Tim Manners. Two hours and about 250 pages later, I realized that for the first time in recent memory I actually enjoyed reading a business book. This was quite gratifying, since the aforementioned plane was still sitting on the tarmac at JFK waiting for an electrical storm to clear. But back to the book: While some new "classics" like Purple Cow and Who Moved My Cheese? share interesting and occasionally novel ideas, on the whole they still feel a bit dry, and maybe even a little condescending. Relevance neatly sidesteps these problems by incorporating little vignettes and pearls of wisdom from dozens of top researchers, retailers and marketers. At the end of each anecdote, Manners steps in to sum up how it relates to the greater topic of relevance.Actionable insights... No, really. Anything with the word "actionable" in the title has to be silly business make-believe language, right? Usually, yes. But Relevance does actually deliver commentary and perspective that you can put to work in presentations, seminars, and even blog articles ;) For example, the book's very first chapter leads off with observations from Mike Linton, former CMO of Best Buy and current CMO of eBay. In a sentence, he more or less states that customer profiling is passé, and Best Buy doesn't bother with it. Marketing gurus from Netflix, Starbucks and even Walmart then chime in to agree that yes, demographics aren't nearly as important as they once were in determining in-store marketing strategy. Soon after reading the chapter, I used a two-page clipping to lead a two-hour seminar on customer profiling, tracking, and in-store privacy. People can (and will) argue with me all they want. But it's much harder when behemoths like these are espousing the very same argument. Less is more -- but it might not be easy In another segment, Manners talks about how electronics giant Philips decided that the best way to make customers happy with their advertisers was to simply advertise less. They tried to sponsor a "moment of cinema silence" by buying all of the available pre-roll advertising time in movie theaters in Boston and Minneapolis. Unfortunately, that particular plan failed when Screenvision (who runs the cinema ad service) thought they were mocking the concept of in-cinema ads. But continuing to think out of the box, Philips went on to buy all of the ad time on an episode of 60 Minutes -- only to "donate" every minute back to the show so they could air longer segments. (Presumably, there was a "Sponsored by Philips" bug on the screen at some point.) They also used a similar approach for NBC's Nightly News with Brian Williams, cutting the typical seven minutes of ad time down to just one minute. I've successfully recanted this story a number of times when discussing ideal programming and advertising loop lengths for digital signage networks, and I think it's especially relevant when we're talking about waiting rooms and other long dwell-time areas. Connecting with customers means going beyond traditional advertising 
One last example of a useful anecdote comes from the book's chapter on advertising. While Starbucks has been down as of late (what hasn't?), it's hard to argue that they're not one of the most successful restaurant chains in the world. According to former Starbucks CMO Anne Saunders, "it really is about connecting with someone in a more intimate, experiential way that we think will have a longer-lasting ability to build affinity than a thirty-second TV commercial or an ad." Despite the company's recent hardships, I believe this is still relevant to today's media planning discussions. As you might imagine, quotes like these are pretty useful when talking with retailers and brands about the power of marketing at-retail, whether it be with sampling, POP displays or digital signage.I've only covered three of probably close to 100 vignettes in Relevance, but I could go on at length about the other quotes, stories, facts and figures that I've pulled out of the book in the few short months I've had it. If you're a regular reader of Cool News of the Day or HUB Magazine, you'll probably find much of the material in Relevance familiar. Taking a cue from Seth Godin, Manners vetted most of his material in these two outlets before turning the content into a book. So if you have the time and inclination, you can probably dig up a fair amount of the source material for free, right over the web. But there are still some situations -- like when you're stuck on a plane going nowhere, for example -- when having a good, old-fashioned book in hand is hard to beat. Has anyone else read Relevance? Have you put its recommendations to use in your own marketing? LEGAL STUFF: The WireSpring Blog is written by Bill Gerba but may periodically include articles by guest authors. The author of each article is clearly identified at the start of the article. The opinions expressed in each article are solely those of the author, and do not reflect the official opinions of WireSpring Technologies, Inc. All blog articles are copyright © 2004-2008 William F. Gerba or the guest author, as appropriate. All content besides the actual article text, e.g. surrounding branding and informational content, is copyright © 2000-2008 WireSpring Technologies, Inc. All rights reserved. Except as provided in WireSpring's Republishing and Syndication Policy, no blog content may be reproduced, in whole or in part, without WireSpring's express written consent.
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What's this page about?
We created this journal to help share useful info about digital signage and self-service kiosk projects. Our articles typically focus on project planning, industry research, ROI analysis, and high-profile deployments. We post new, original articles about once a week.
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Bill Gerba is CEO of WireSpring and maintains an active role in the digital signage and self-service kiosk industries. An industry advocate since 2000, Bill is the chairman of POPAI's Digital Signage Awards and a member of the group's Education and Advocacy Committees. He is a frequent speaker at industry conferences (including the Digital Signage Expo) and has been featured in numerous publications. If you would like Bill to provide feedback for a story you're working on, or you want him to speak at your event, please contact us.
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