Digital Signage Insider Blog

Analyzing the RMG-Symon and CARE Media-Saddle Ranch Mergers

Bill Gerba

This past week brought two more stories of consolidation (and potential growth, I guess?) in the digital signage industry: RMG Networks completed their long-planned acquisition of Symon Communications, and Care Media Holdings (operators of KidCARE TV, PetCARE TV and Women's HealthCARE TV) bought content production company Saddle Ranch Digital as CEO Phil Cohen took the reins of yet another network. While both deals are interesting for their own reasons, I think that in terms of strategic value, one has a far better chance of success than the other. And rather than wait to discuss these transactions in the context of a larger M&A roundup (see our 2008-2010 M&A list and our 2011 M&A list), I'd like to dive a little deeper into these deals while the ink is still fresh.

The RMG-Symon shell game

RMG was formed when IdeaCast (previously owned by probably the most profitable DOOH company ever, National CineMedia) merged with Danoo (which was funded by VC mega-firm Kleiner Perkins Caufield & Byers). The company quickly streamlined their operations, focusing on a suite of reasonably competitive digital signage products and services, and (more importantly, for now) the operation of several large though heterogeneous DOOH networks.

Image credit: Images Money on Flickr

A few months ago, it came to light that RMG would "go public" by completing a merger with an already-public but not actively operating shell company (if you've heard the term "shell merger" before, that's what it means). While the more public and popular means for launching on the NASDAQ or another public exchange is to do an initial public offering, shell mergers let you bypass some of the costly mechanics while still achieving basically the same end result: the ability to raise money on the public market, and the ability to provide shareholder liquidity. Both of these are important for RMG, since their CEO Garry McGuire already indicated that RMG expects to achieve 100% growth through acquisitions (which takes cash or reasonably liquid stock), and also because VC firms like Kleiner Perkins really like to get their money back, as do management teams that get paid reams of stock while a company is still private.

Of course, going public has its challenges, perhaps the most important of which is that fickle investors can tank your share price if they don't like what you're doing. A low share price makes it harder to raise money or provide liquidity for existing investors, which of course defeats the purpose of going public in the first place. To that end, RMG announced a while back that they would be buying Symon Communications, a pretty successful (and by our industry's sad metrics, large) player in the digital signage software field. Symon brings a steady cash flow that will let RMG smooth things out as they continue to expand. This week, the newly combined company announced the merger was complete, and the company is trading at about $15/share as of this writing.

Cohen's gambit

Meanwhile, in what was probably a much smaller deal, CARE Media Holdings, a DOOH network operator, announced that they'd be acquiring Saddle Ranch Digital and also taking a controlling interest in AMHN. Saddle Ranch has provided content for CARE's networks for a while now, but was rumored to have few other profit-generating customers. CARE CEO Phil Cohen, being a content guy himself, probably picked up the company (or its staff and assets, most of which he was already using anyway) on the cheap. He then turned right around and made himself CEO of AMHN, which if I had to guess, will be able to make use of some of the same content creation services.

Two ways to integrate

The CARE-Saddle Ranch deal is a classic example of vertical integration, where a company can gain efficiencies by taking a critical function that was previously outsourced and bring it in-house. In this case it's unclear whether CARE intends to continue selling Saddle services to new customers or whether they'll just continue to service existing ones. But my guess is that between the CARE and AMHN networks (Phil Cohen's new digs), there were enough potential savings by bringing the creative talent home to make that a non-issue. Likewise, by taking the reins of another set of DOOH networks, Cohen stands to gain more efficiencies, even if he never formally brings them under the CARE Media umbrella. As we've learned from past WireSpring pricing and staffing surveys, DOOH networks actually scale up pretty well from a workforce perspective. So while it can be an expensive proposition to start a new network, growing it -- even significantly -- doesn't tend to require a linear increase in staffing expenditures.

On the other hand, while RMG can certainly grow through acquisitions, that strategy doesn't necessarily lead to the growth and sales numbers that shareholders in a new public company expect to see. To wit: picking up Symon made good business sense from a cash flow perspective, but it has little strategic value since RMG already has (and sells) a software platform. They'll now either have to do double the work on software maintenance, or do a rip-and-replace of one of the two platforms. And either way, digital signage software sales are not going to be enough to keep them in the public limelight. It's also unclear how successful their current DOOH strategy has been, or whether they'll be able to gain the necessary traction with agencies and advertisers. The market has been rough on media companies lately, and agencies have not been kind to the DOOH sector (or outdoor in general), so I don't envy RMG management for having to juggle the task of growing their small (by NASDAQ standards) business into a large and stable company, while still meeting quarterly targets well enough to keep shareholders happy.

RMG's approach probably has greater pure upside potential in terms of the raw number of dollars that might ultimately be generated, but from my perspective it's also much, much riskier and failure-prone. On the flip side, CARE's buy-and-integrate approach certainly doesn't work in every situation, but I think that given the unique dynamics of their current portfolio of networks, and the way our industry functions (and is wholly reliant on great content), CARE has chosen a safer path without sacrificing the upside potential.

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What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.

Why I Didn't Go to Sign Expo, and Maybe Never Will

Bill Gerba

Dave Haynes, the DailyDOOH crew, and others have given a good deal of attention to the 2013 ISA International Sign Expo that was held in Las Vegas last week. As the world's largest show about signage, I'm actually a little surprised that there hasn't been more talk about it in our industry in the past. However, since the people who exhibit at that show have traditionally sold things like vinyl wraps or very large, expensive inkjet printers, most of us haven't spent much time focusing on it. This year, that seemed to change a bit, though to be honest, I'm not quite sure why.

Selling digital signage to traditional sign guys is harder than it looks

On the surface, the idea of a digital signage vendor exhibiting at the Sign Expo makes perfect sense. After all, you'd be in a huge pavilion full of throngs of people already well-versed in selling signage. They'd be ripe prospects for converting to digital, right? Right?

Well... not so fast.

There are a few reasons why the static signage guys haven't jumped into the digital signage industry with gusto, and a few reasons why they're not particularly likely to do so in the near future. Here are the big three:

Image credit: rharrison on Flickr

Problem #1: Technology

This is perhaps the easiest challenge to see and understand. Traditional sign guys have real skills, whether they're painting pinstripes, brushing vinyl, or dangling from a cherry picker while hanging a new storefront sign. What many of them still lack, though, is a comfort level with technology. Consequently, a lot of us in the digital signage space have tried over the years to come up with solutions to make the tech side of our business more accessible, whether that means writing braindead-simple software, bundling in easy content creation capabilities, or offering integrated bundles that negate the need to buy screens, media players, etc. separately.

Still, for many, it's a problem. But it's not the problem...

Problem #2: Content

By now you've probably figured out how I feel about digital signage content. It's the single most important element of any network, bar none. So traditional signage guys, who for decades have focused on nothing but the execution of great signage content, should be able to easily transfer their expertise to the digital world, right?

Maybe, but maybe not. While plenty can use Photoshop or Illustrator to make great artwork, few have experience with motion graphics, and fewer still understand the nuances of making effective content for digital screens. Since most of these guys have been involved in selling signage content (since what are most static signs other than just a display of their content?), they're not going to be willing to outsource this element to production companies. And since many actually make money on content sales now, it's not like they'd want to. Which leads us to problem #3...

Problem #3: Money

Our industry's full of creative business people. So it's fair to presume that we can fix problems numbers one and two. Number three, however, is a tougher nut to crack. And the reason stems from my comments on content above. A traditional signage shop that specializes in, say, laminated four-color signs understands a cost structure that is dramatically different from what we in the digital industry know. These folks have to make a big, big capex to get their business started, by purchasing a four-color press or large-format inkjet printer. Once that's done, the cost of producing additional signs is quite low. Ink, paper, substrates and coatings make up only a small fraction of the cost of the finished sign, making each individual sign an extremely high margin item for the shop.

Indeed, in our experience, most small sign shop owners were unhappy with anything less than 65% or 70% gross margins on their sales. And what's more, to many this percentage was actually more important than the actual dollar amount. This makes selling a digital signage package tough, since the packages have to be very cheap to begin with in order to make the final sale price reasonable. Coupled with ongoing training (which many franchise companies require for franchisees), technical support and the like, that doesn't leave much for the hardware and software vendors putting the packages together. Software or content subscription services can alleviate this, but they can be a tough sell to a group not accustomed to service-oriented products. Finally, considering that digital signs are still pretty expensive on a per-square-foot basis compared to most kinds of static signage, many traditional sign shops are only going to encounter a limited number of deals where they make sense.

So when you combine a low volume proposition with limited desire to sell (due to lower-than-usual gross margins), a different content business model and the additional complexity of a digital system, you can see that penetrating the static signage industry is not quite as straightforward as it first seems.

All that said, I expect that some portion of static signage vendors will become successful digital signage salespeople. After all, they still have access to the one resource that matters: customers who need signs. But if I had to guess, it's still going to be several more years before even the largest franchise organizations have any kind of meaningful deal flow when it comes to signage of the digital variety.

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What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.

A Fresh Recipe for a Supermarket Digital Signage Network

Bill Gerba

A while back, a colleague asked me to vet a business plan for an ad-funded digital signage network to be installed in a major US grocery chain. It had all of the "must haves" for such a network, including a good-sized pilot, plenty of screens in desirable DMAs, and a nod to social networking with some quasi-interactive content. In short, it looked like just about every other big-box or grocery chain network out there. That got me thinking: there have been lots of failures in the grocery space. LOTS. And there's currently a ton of mediocrity. But I have a hard time pointing towards anybody who has truly succeeded in making a great digital signage network for grocers. So when speaking with my colleague about past issues and my concerns about the plan, I laid out an alternate, best-case scenario that I thought would offer the greatest chance for long-term success. We've done these thought experiments with a number of customers over the years, in dozens of different industries. So if you find this sort of analysis useful (or at least entertaining), perhaps I'll make this type of article a regular feature on the blog.

If I were starting a supermarket digital signage network, here's how I'd do it

Image credit: danielle_blue on Flickr

To begin with, grocery and big-box networks fall into one of two general categories. The first group is internally-funded networks, where the venue owner owns and operates the signage network outright, such as experience, branding and private label networks and private label merchandising networks. The second group is externally-funded networks that are monetized by advertising revenue, where a dedicated company owns (in whole or in part) and operates the network, even though it is physically located in another company's venues. There are numerous examples of both types of these networks, but for the purposes of this exercise I'm going to assume the latter case, since they seem to be more popular with the folks I talk to. In these scenarios, we know that getting venue buy-in is absolutely critical. Thus, the first things that I'd do prior to developing a new network would be to:

Get the grocer to pony up most or all of the funds to equip a statistically significant number of stores (at least a dozen, preferably 25 or more) with screens. Instead of blanketing the store, target one specific area for now, preferably one where the retailer has a good number of private label products in place.
Get the grocer to commit to providing data (ideally register receipts, but at the very least info on sales of the advertised products and average basket size) about those stores with the screens, and an equal number of similar stores that don't have the screens for a control group.
Get the grocer to select 5-6 of their private label products that are being sold near the area where the screens will be placed.

I, the network owner, would then:

Develop 2-3 different socially-enabled ads or featurettes for each of the products, as well as prepare any secondary content that may be necessary to support the usefulness or attractiveness of the screens. I'd obviously be working from our extensive list of content best practices.
Deploy the content to the screens, and prepare different experiments. For example, run one type of ad on half the screens, and another on the other half during the course of the pilot (ideally 3-6 months).
Gather the grocer-supplied sales data to determine if any product sales lift is evident, or if there was any change in average basket sizes.

Why this approach makes sense

By starting out focusing on just one area of the store, and by using the private-label products that the grocer controls all of the data for (including their profitability), I'd stand the best chance of getting information about performance early enough to make changes (since I certainly wouldn't find the most efficient mix of content on the first try). Also, by starting with private label products (which are much higher margin than name brand products), I'd stand a better chance of enticing the grocer to expand the pilot if the results are good. And finally, since the pilot is deployed in such a small number of stores, I know I would have a very hard time attracting third-party advertisers -- and it would be like pulling teeth trying to get any information back from them (or the grocer) about results. The grocer would have no such concerns in our hypothetical pilot scenario: they're not going to care about DMAs if it's their pilot, since they use their own internal groupings. And because they have skin in the game (in the form of partly or fully capitalizing the cost of equipment), there's a much greater chance that they'll contribute the necessary resources to make the pilot -- and any subsequent expansion -- a success.

Finally, if the results do look good, you can choose how you'd want to expand, either by outfitting the same specific area in the rest of their locations, or by adding more screens to the other areas of the pilot stores and doing a second pilot phase.

For what it's worth, if you or someone you know is planning a grocery or big-box project at the pilot stage, I'd be happy to give you a great deal on software and media players in exchange for getting access to the resulting performance data and being able to write about it here on the blog. (After all, my last article about a grocery store pilot was more than 7 years ago!) I love my research, you know, and seeing how a properly-run supermarket pilot progresses would help me prove (or disprove) a number of theories that I've been pushing around.

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What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.

Revisiting DOOH Pricing, Ad Sales Experience and Build-vs-Buy

Bill Gerba

As many others (myself included) have noted in the past, you can tell when someone is really busy by the frequency of their blog posts and social media updates. Last year I tried to buck that trend, forcing myself to produce about one blog post per week for the whole year regardless of how otherwise occupied I was. This year I seem to be unintentionally going in the opposite direction, but that's OK, since when I do find time to write, I've amassed a whole bunch of things to talk about. That said, here are three topics I wanted to revisit that should be of interest to those working in the digital signage industry or a related field.

On the subject of DOOH pricing, CPM, etc.

My last post was over a month ago, but it was an important one, discussing the results of our most recent survey on DOOH advertising pricing. After publishing that article, I got a number of calls and emails from operators of what I'd consider to be fairly large DOOH advertising networks. All of them wanted a more detailed analysis of the numbers, and an opinion on whether they were reliable. However, none of them contributed to the results by filling out the survey in the first place. All seemed a bit... irritated on the phone (it's harder to pick out that nuance in an email). One possible explanation might be that our data suggests that some DOOH advertisers are overpaying for their current placements, which could theoretically drive actual pricing done. But if that were the case, I'd be expecting more holiday cards from big brands thanking us for helping them lower their ad spend.

Image credit: Quinn Dombrowski on Flickr

Also, while the average (mean) price for DOOH ads sold on a CPM/Viewers basis fell 36% (from about $12 in 2011 to $7.65 in 2012), I don't think "the bottom has dropped out of the DOOH market" (partially because there wasn't much of a market to drop out of in the first place). However, I do think that many operators have lowered their expectations about what their screen time is worth, and I believe that this is actually driving growth in the industry by opening up the medium to a much larger body of potential advertisers. And the fact that both capital and operating costs for setting up and managing a DOOH network continue to fall doesn't hurt much, either.

"I have no idea about ad sales..."

Not one but two VC-backed startups called in recently to chat about their plans to launch the next world-dominating, advertising-funded digital signage project. Neither management team included any experienced ad sales people. One of them didn't even know what media buyers and planners were. But despite that, they both mentioned Coke, Pepsi, Apple and Nike as potential advertisers. Yikes. I've been saying this about once a year since around 2006, but not having ad sales experience is the #1 reason why DOOH advertising networks fail. Maybe it's time for yet another refresher article on the subject :)

Build-vs-buy, redux

Likewise, I had a build-vs-buy conversation with a pretty business-savvy group recently. Way back in 2010, I figured the market was mature and established enough to put this kind of inane discussion to bed, but I was wrong. And I see that Ken Goldberg was lucky enough to have a similar discussion (and blog about it) just recently. All I have to say is this: if you're thinking of writing your own software from scratch, you should probably pick a less saturated market.

In the digital signage world, the more things change, the more they stay the same. On the downside, that means that there are still loads of crazy people in our industry. But on the upside, it also means that costs continue to fall, and our approaches for identifying and moving past all of the crazy people remain relevant. And once we put the crazies aside, we find that the opportunities are bigger, more varied, and span a much larger swath of vertical markets than before.

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What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.

DOOH Average CPM Drops to $7.65: Survey

Bill Gerba

Is it too late to still say Happy New Year? I've been on a blogging/social media hiatus since December, so it might be a faux pas, but I'll do it anyway. Fortunately, this first post of the new year for me should be a good one, as it's finally time to discuss the results of our most recent survey on DOOH ad pricing. I know these results proved quite popular last year, so hopefully this followup will garner the same response and thoughtful analysis. While we had fewer results to work with than last time (with just over 100 responses), I think the data still speaks to the top-line trends in the industry.

The 5 things you want to know

Once again, advertisers and network owners alike sell on overall audience size or reach, with 57% of respondents indicating this to be their primary price and decision driver. Of these, most also take into account the number of venues and the number of screens involved.
Interestingly, the number of buyers/sellers who suggested that "specific demographic characteristics" were important nearly doubled, to about 28%.
Transactions based on CPM/Viewers are still king, with most buyers and sellers agreeing that the $1-10/CPM range is the sweet spot. However, the average (mean) price/CPM dropped to only $7.65 from $12 last year. While the number of respondents indicating they bought/sold media for less than $1/CPM fell to only about 4% this year, many fewer reported buying/selling for $16 or more, bringing down the average.
I don't know if this is indicative of industry-wide practices, but only about 10% of respondents were able to answer a question about buying/selling media on a per-screen, a'la carte basis (versus buying across the whole network at once). However, 50% of those who did answer indicated that they paid the highest pricing -- over $140/spot/month per screen.
Over half (52%) of respondents are now primarily buying/selling spots that are less than 15 seconds long. While this means that networks now have more inventory to sell, it probably also partially accounts for the lower price/CPM above.

How about a pretty graph?

I'll have more charts for you in an upcoming article, but for now, here's a look at how the responses stacked up in terms of CPM/Viewers pricing:

Loaded questions and answers

When writing up analyses for these kinds of surveys, I always include a section on caveats, and this time is no exception. For starters, while last year's survey produced over 175 responses, this year's only garnered 102, and many of those were incomplete (largely due to the inclusion of the a'la carte pricing question mentioned above). While that's still a pretty big number, with these kinds of surveys more responses do tend to produce better data.

Second, this blog skews pretty heavily towards hardware/software/service providers, integrators and the like. So almost 40% of the responses came from industry vendors, who may or may not have a clue about DOOH advertising pricing (though of course our screener questions ask about this). Fortunately, 26% of responses came from network operators, and those directly involved with ad purchases and sales accounted for another 24%, so I don't expect the numbers to be entirely off-base. (I'll try to provide a better breakdown of responses by job function in a future article.)

Finally, even though a reasonable number of respondents did identify themselves as media buyers/sellers, a quick perusal of their email addresses (for those who left them) produced a list of agencies and networks that I haven't heard much about, and several of the big names were noticeably absent. This could simply be because they chose to remain anonymous, but that wasn't the case with last year's results.

Despite these caveats, my initial analysis of the data and comparison with last year's results gives me enough confidence to at least present the top-line findings. I think there are some interesting results that will pop out of the questions about the media mix and who exactly is doing the buying and selling (and who wants to be) as well, but those will have to wait for another article.

A quick note about the DSE show

Like many of you, I'll be at DSE in Las Vegas next week, giving a talk on best practices for digital signage content creation. Feel free to drop me a line if you'd like to meet up.

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What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.

Survey: Updating Our DOOH Ad Pricing Metrics

Bill Gerba

Last year, after more than a decade of giving advice on how difficult it is to launch an ad-funded digital signage network without ad in-house sales expertise, we decided to conduct what I think was the first ever industry-wide poll on buying and selling digital out-of-home (DOOH) advertising. Since starry-eyed startup entrepreneurs and seasoned veterans alike seem to be continually enamored with the thought of buying and selling media on the 4th (or 5th) screen, we hoped to learn what media was being bought and sold for, what business models buyers and sellers preferred, and what kinds of ads were most likely to be shown. From that survey, which was widely circulated and responded to, we discovered that DOOH ads sell for an average CPM of $12, DOOH media buyers and sellers prefer reach-based pricing, and the median CPM Viewers price, which is reasonably representative of what's being bought and sold in the real world, was around $6.50.

Let's take the survey!

Just like last year, I'd like to tap the wisdom of the DOOH crowds to continue answering some of the most pressing questions in the industry, namely:

How much does DOOH advertising cost,
How are most people buying and selling it,
How would they like to buy and sell it, and
Which factors make inventory more or less valuable

If you're involved in the DOOH industry, then you want to see this data. And by spending just a few minutes filling out the questionnaire below, you'll help us paint a picture of how your peers and partners perceive the DOOH advertising ecosystem, including where the value lies. As with all of our surveys, if you provide your email address on the survey form, I'll send you all of the data once the survey period has ended.

Who should fill it out?

Who should fill out this survey? You, your coworkers, your clients, and your friends! In fact, feel free to pass along this article to anyone you think might be interested.

How do you fill out the survey?

If you're reading this article in a web browser, the survey should appear below. If you don't see it, simply click this link to take the survey.

When can you expect to see results?

The survey will run until the end of the year, and we're planning to publish a series of blog articles with results and analysis in early 2013.

We're always on the lookout for new topics to cover in future surveys and articles. Got any topics you'd like to suggest? Leave a comment and let us know!

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What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.

Using Twitter Hashtags to Measure the Digital Signage Industry

Bill Gerba

Like a lot of people, I tend to look at January 1st not as an arbitrary date, but as the official starting point for doing things I really ought to have done during the past year. One easy place to see this in action is in my use of Twitter. I generally don't ever tweet personal stuff, so virtually everything in my Twitter stream is business related. And since I started using the service in late 2008, my usage patterns have looked something like this: January - lots of tweets every day, multiple conversations; February/March - at least one tweet/day, and perhaps a retweet or reply as well; April - November, steady decline in the frequency of tweets; December: meta-tweets about lack of recent tweets, prognostication about next year. This year, though, I got the feeling that the overall volume of digital signage-related tweets was decreasing, so I turned to my friends at the DailyDOOH for guidance, knowing that they are pretty neurotic about tracking metrics like that. True to form, DailyDOOH's Andrew Neale quickly turned around a spreadsheet full of data to pick apart.

What can the hashtags tell us?

If you're talking exclusively about digital signage-related tweets, then at the very least we've been roughly stagnant for the past half year:

The most important tag to look at is #digitalsignage, which is clearly industry-centric and unlikely to be confused with other terms (unlike, for example, #DOOH, which people sometimes use to evoke a Homer Simpson-esque response to something). After considerable growth between September 2011 and July 2012, we've seen a decline in the latter half of this year. #DigitalOOH (again, likely to be very industry-centric) as well as digitalsignage (without the # sign) and #DOOH have all been flat as well. The one exception to this trend is the AV industry-oriented tag #avtweeps, which has seen nearly 100% growth over the past year, I think largely due to that industry getting organized and more involved with Twitter in 2012.

Are tweets a reasonable proxy for industry activity?

Probably not, but there might be an inverse correlation between the two. According to our Digital Signage Sentiment Index for Q4, the industry has seen modest but steady growth throughout this year. Other proxies, like commercial LCD shipments and AV equipment sales, have similarly crept up over the past 12 months. So if anything, the decrease in industry-related tweets might be correlated with people spending more time doing actual work and less time talking about it on social networks. I know that's certainly what happens in my case: come January 1, I return from an end-of-year break and have plenty of time to chat online while business spins back up. By mid-quarter, things are already busy enough that I have to start dropping nonessential activities, and microblogging can take up more time than you might think.

I don't have any practical advice or actionable insights to offer with this little analysis. It was merely something that piqued my curiosity, and I thought might be interesting to other industry observers. At this point, I'd normally say something like "leave a comment with your own thoughts," but as the graph suggests, you're much too busy for that :)

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What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.

Digital Signage Sentiment Index for Q4 2012: Concerns About 2013

Bill Gerba

It's been several weeks since we posted our latest digital signage sentiment survey, so I suppose it's about time we discuss the results -- and the future of the poll. As a quick refresher, when we looked at last quarter's survey, we were finally able to suss out trends for both the growth of the industry and the overall sentiment of the survey takers. The short version: industry growth is in the high single-digits, though respondents are generally and consistently more optimistic than that. With this quarter's data, we can do more of the same. But is the DS Sentiment Index telling us anything useful? Things that we couldn't already guess? And is there any point in WireSpring trying to keep tabs on it all?

Analyzing the survey results

As always, we start with a review of the data. Unfortunately, we had many fewer respondents than normal this quarter -- only 55, as opposed to the 80-100 that we have gotten in the past. While this number is still large enough to produce a statistically significant result, it's just not as satisfying as a bigger number would be. In any event, here are the charts:

Despite a smaller sample size, the general composition of the respondents was the same: vendor-heavy. Consequently, the results probably represent many of the same people as in times past, despite fewer survey-takers. The trend graph, however, tells a different story:

While respondents felt that business has improved since last quarter, they are a bit less optimistic going into 2013. I'm surprised about this for two reasons: first, people generally get all gung-ho about kicking off a new year, which I would expect to produce more optimistic results than normal. Second, as we mentioned last time around, our survey takers tend to be a pretty optimistic group to begin with, so if they're largely predicting a slowdown, that illustrates an uncommon hint of pessimism.

Let's ignore the future for the time being and focus on the present. Respondents expected modest growth this quarter, and were treated to a nearly 6% increase. While that might not sound like a lot, it represents almost half of the growth for all of 2012. Unfortunately, that does mean that our "actual" growth for the year is in the 12% neighborhood. That's pretty respectable, but it's nowhere near the 24% growth that respondents should have experienced based on their optimistic quarterly survey submissions.

Going into 2013, it does look like the current crop of survey takers are expecting some slowdown in growth (if not a possible contraction). We still don't really have enough data points to gauge the accuracy of such a prediction, but as noted before, past results have generally been optimistic, which may give some cause for concern. For those who read into these kinds of things. From a blog survey. From an industry vendor. Of course, this pessimism may be attributable to respondents' concerns about the fiscal cliff or other macroeconomic issues, rather than anything pertaining to our industry or their own businesses in particular.

Should we keep doing this poll? If not, who should?

While I enjoy ruminating on the progress of the industry, I wonder if we should bother continuing to do these surveys in 2013 and beyond. From a business perspective, this data doesn't give me or my colleagues at WireSpring many useful or actionable insights. And since I don't like to sugar-coat the data, I feel like discussing potentially distressing results like the above might create a self-fulfilling prophecy, especially if it causes some companies to put their digital signage projects on the back burner. For better or worse though, this is still the only survey that I know of that continuously monitors not only the current state of the industry, but also tracks past results to see how honest we're being with ourselves.

Now, if somebody at the Platt Retail Institute could run a regression analysis on their past Digital Signage Index surveys, or if Exponation could do the same with their Quarterly Business Barometers, I could easily give this up. Unfortunately, Platt's data isn't free (unless you're a DSF member), and I haven't gotten a Quarterly Business Barometer survey in a while, so I don't even know if Exponation is doing them anymore.

What do you think? Are these Digital Signage Sentiment Index surveys useful to you? Should we keep running them in 2013 and beyond? Leave a comment and let us know!

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What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.

Avnet, Ingram Micro, Tech Data Rated as Best AV/IT Distributors

Bill Gerba

About a month ago, we asked our readers to tell us who their favorite AV or IT equipment distributor is. If you've been involved with any large-scale IT rollout, chances are that you've run into challenges sourcing equipment from these logistics and warehousing behemoths. And while none of them are perfect, some are certainly better than others. We collected almost exactly 100 responses to our survey, and were expecting to see a broad range of responses in a normal bell-curve distribution. In other words, we were NOT expecting to see one company capturing such a large percentage of the votes.

I don't know if Avnet was actively asking their customers to fill out the survey or if people have just had uniformly great experiences with them, but if there was a "winner" of this poll, it was them. (As a brief note, I don't think WireSpring has ever worked with Avnet, so this isn't an advertisement -- and your mileage may vary.) Avnet had literally triple the number of votes of their next-closest rival, Ingram Micro, and nearly double the votes of the bottom half of the companies combined.

Long story short, when choosing an IT or AV equipment distributor in the future, don't necessarily ask yourself who got the most votes in this poll. But you might want to ponder why distributor XYZ barely got any votes at all. I think that's a lot more telling.

Updating the Digital Signage Sentiment Index for Q4

While we're on the topic of surveys, we're eager to get your feedback on the industry's performance this quarter. Since our analysis of the Digital Signage Sentiment Index for Q3 2012, the Platt Retail Institute released their own findings, indicating that their indexes reached the lowest levels since they began tracking the data in late 2009. As we noted last time, while many of our survey respondents reported a flat Q2, the average growth during that period was actually a very respectable 7%, and the outlook for Q3 was a positively rosy 13.1%. How did things really turn out? You tell us: take our 3-question, 30-second Q4 survey, and we'll post the tabulated results right here next week.

You know the drill...take the survey!

As always, it's our hope that your honest answers to our quick, 3-question survey will give a genuine perspective on how the digital signage market is really behaving. And of course, if the good karma of helping out fellow industry folks isn't enough, we always publish the results, including simple regressions against past data, for free right here on the blog.

Help us find out if any of the first three quarters' predictions came to pass. At only 3 questions long, this survey is super-quick to complete, and will continue to serve as a free and open barometer for the industry -- as well as a source of historical data.

If you're reading this article in a web browser, the survey should appear below. If you don't see it, simply click this link to take the survey.

What has the Digital Signage Sentiment Index taught us so far?

The main point of our quick-but-frequent polling is to figure out whether the digital signage industry at large is a good predictor of its own growth. We continually ask you, the reader, to tell us how your business is actually doing right now, and how you think it will do in the future. As we collect these data points over time, we can get a picture of whether or not we're optimistic, pessimistic, or realistic as a whole:

Perhaps the most interesting thing we've learned this year is that while our respondents keep predicting that double-digit growth is right around the corner, the reality is more modest, with periods of low single-digit growth being the norm for the digital signage sector. I'm curious to see if that trend continues to be reflected in the latest quarter's responses, and I look forward to sharing the survey results here on the blog next week.

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What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.

Analyzing the Historic M&A Deals in Digital Signage and DOOH

Bill Gerba

It's a little early to start writing about the mergers and acquisitions that have happened in the digital signage and DOOH space for 2012, since there are still a couple of months left in the year. However, I recently had the opportunity to speak on this topic at the Strategy Institute's Digital Signage Investor Conference, and it would be a shame to just let the data I gathered sit around and gather dust. So today, I'd like to take a look back at some past deals, talk about why companies in our space have so much trouble making a successful exit, and consider some strategies to bolster the odds when it comes time to sell.

Early bellwether deals

Back in 2005, we were stunned when Thomson (now Technicolor) bought PRN for $285M. At the time, it was the largest deal our industry had seen, and over 7 years later I think that still might be the case. In 2006, it was equally amazing to see tiny digital signage software company Wireless Ronin go public on the NASDAQ exchange and soon have its shares trading at $10, giving the company a $70M valuation on gross sales of just a few million dollars.

I mention these deals not necessarily because they were the biggest or the best, but because they represented a time when digital signage was thought of as a strategic benefit for forward-looking companies. For me, a strategic deal is a deal in which the newly-merged entity is in some way greater than the sum of its original parts. From the buyer's perspective, this is good since it opens up new markets, exposes them to new opportunities, and otherwise allows them to grow in a way they previously could not. From the seller's perspective, this is good since they are able to get top-dollar for their firm -- or what I call a "strategic valuation" -- calculated based on the strategic value of the asset, not simply some multiple of sales or earnings.

What does the landscape look like today?

We've written two articles in the past that simply attempted to list out all of the relevant deals in our space. At first glance, the transactions on our 2008-2010 M&A list and our 2011 M&A list look impressive. For example, from 2008-2010 there were roughly 42 high profile deals in our space, but in 2011 alone there were 33 and as of October there were already 32 in 2012. From a pure numbers perspective, that seems like a lot. However, upon taking a deeper look, many of these deals were done by unhealthy companies who had little option but to do something -- anything -- or go out of business. In fact, when we recategorized the deals by type, we found that most fell into one of three categories: strategic deal (as defined above), asset sale (where the company is no longer operating, but has IP or hard assets that another firm purchases), and restructuring (includes private equity raises, recapitalization and bankruptcy restructuring). Separating the deals out into these categories gives a better picture of what the deal flow in our industry has really looked like:

In short, from 2008-2010 there were 42 "high profile" deals, 19 of which had some apparent strategic value to the buyer. 50% were network-centric, 50% were vendor-centric. However, of those 19 strategic deals, 10 were deals of necessity, making "true" strategic acquisitions of healthy companies account for less than 25% of high-profile dealflow. In 2011, we noted 33 "high profile" deals, of which 15 had some apparent strategic value. Once again, the majority (9 of 15) were deals of necessity rather than deals of strength. And in a shift from previous years, most of the deals (78%) were vendor-centric, rather than related to DOOH network owners or operators. That trend continued in 2012, where noted 32 relevant deals so far, 15 of which were strategic. Once again, the majority (8) were deals of necessity.

While some acquirers have tried to think strategically over the last 5 years, most have been merely opportunistic, tucking in small companies who have fallen on hard times, or purchasing the assets of the many who couldn't quite make it. PE firms have continued to invest funds, but the money has primarily gone to existing portfolio companies. The net result is that very few deals in our space create entities that are greater than the sum of their parts.

Taken from another perspective, it seems likely that many vendors, who generally can't just "scale up" to boost profits, started to peter out in the second half of last decade. With commoditization and a vicious race-to-the-bottom in play, many of the 600+ started looking for a way out, many of them much too late. Companies that are so far gone as to look for mergers or acquisitions of necessity don't do well at the bargaining table, but they might be the lucky ones. A cursory look around the industry suggests that there will be more to come, and with interested buyers already having made their acquisitions, this will probably translate to more simple wind-downs and bankruptcies.

What can be done?

At this point in the market cycle, DOOH network owners and digital signage vendors are unfortunately left with big, scary choices if they still want to achieve a successful exit at a maximal valuation. For DOOH network owners, we feel that the biggest chance for success comes from building scale early on, and as quickly and continuously as can be practically maintained. In other words, if there's cheap money out there, use it to build front-loaded scale. For digital signage vendors and ecosystem players, the quest to find a strategic buyer will likely only be fruitful if you identify a growth niche where your technology plays and focus 100% of your efforts on it (unless you really think you have sufficient resources to pursue a dual-path, I suppose). For all parties, we recommend that you of course keep primary business objectives front-of-mind, but don't lose sight of what potential acquirers might be interested in.

What's to come?

I hate making predictions, because they always end up being wrong to some extent or another. But I know people love reading them, so here are 5 that I think are reasonable for the near-term:

For firms that are financially solid but continue to play primarily in the "vanilla" digital signage space, it will continue to be a buyer's market for some time to come.
Those companies meeting the minimum revenue and EBITDA requirements of private equity firms (say, $5M gross and $1M net) may not have trouble finding buyers, but also may not be thrilled with the prices being offered.
For network owners, workflow and customer agreements will be second only to earnings for getting the attention of potential buyers.
For vendors, IP assets will play a bigger role -- but only when the potential acquirers are large companies.
There will be more consolidation -- and overall, the deal flow will probably continue to look like it has for the past few years.

What do you think about these predictions? Do you have any predictions of your own that you'd like to share? Leave a comment and let us know.

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What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.

Survey: Who's the Best Distributor for AV and IT Equipment?

Bill Gerba

We've all been there. A customer has a tight deadline. They need a whole bunch of equipment shipped across the country -- screens, media players, cables, extenders, whatever. So, we get on the phone with big, nationwide AV or IT distributor #1, only to find that some of the parts we spec'ed are out of stock. No problem, we think. We call our rep at reputable distributor #2, but learn that some of the parts are hundreds of dollars more expensive, and they don't carry one of the brands we need. With the deployment date quickly approaching and the customer getting antsy, we do what we can, invoking multiple distributors, ordering some of the parts from Amazon or Buy.com or Newegg, and even getting employees to stop by Best Buy on the way to work to make sure we have everything the project requires. There must be a better way.

Navigating the distributor labyrinth

It's amazing to me that we're in the second decade of the 21st century, and we're still forced to navigate the labyrinth that is the IT equipment distribution channel to deploy a relatively simple digital signage project. And while we do have some great relationships with companies who have come through in the clutch and proven their worth on more than one occasion, even our go-to favorites have arcane and archaic practices to follow, unwritten rules to memorize, and so, so many different forms to fill out.

I've started to wonder whether our experiences are typical of working with every distributor in the AV/IT segment, or if there's one that stands out among the rest. With that in mind, I put together a one-question poll to find out what our readers think (and my apologies for the US-centric answers). You'll be able to see the latest results right after you enter your response. If you're reading this article in a web browser, the survey should appear below. If you don't see it, simply click this link to take the survey.

Working smarter, not harder

Over the 12+ years that WireSpring has been in business, we've experimented with all kinds of things to make the logistics of digital signage deployments easier. At various times, we've controlled larger and smaller portions of our customers' supply chains to see if that would make a difference. We've also tried working with a preferred distributor to streamline our processes and gain access to cheaper and steadier inventory. But in the end, our experiments always turned out to be a wash (or worse), and we'd fall back to the standard practice of maintaining accounts with several different firms, making sure to farm out some business to all of them just to stay fresh in their minds.

That said, I'm sure that there must be things that we can improve upon, and I'm equally certain that we're not the only ones looking for a better way. So if you have a moment, please fill out the one-question survey above, and tell us about your best -- or worst -- distributor experiences in a comment below. Maybe, just maybe, we can all learn some tricks that will make working with IT distributors just a little bit less Byzantine.

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What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.

The Role of Digital Signage and DOOH in a Multi-Screen World

Michael Arnett

I was planning to take this week off from blogging when Aurora Dynamic's Michael Arnett emailed me some thoughts about Google's recent study of what they're calling the "multi-screen world." Considering that the search giant recently indicated that they'd be downplaying the importance of ad clicks (at least on mobile devices) in favor of more elaborate ways of tracking customer purchase behavior, Michael's analysis of what this all means for the digital signage industry seemed especially well-timed. I added a few thoughts of my own (in italics) to his analysis, but I think the heavy-lifting with regard to how to best use this information will be left to you.

A few weeks ago, Google released the results of their multi-screen study (PDF link) that was undertaken in partnership with Sterling Brands and Ipsos. The study summarizes the cross-platform digital screen usage of consumers, including TV, PC/laptop, Smartphone and Tablet. Their research took place in Q2 2012, and involved over 1,600 participants aged 18-64 in 3 US cities tracking nearly 8,000 hours of their own screen viewing and usage habits. While the individual results are quite granular, the overall takeaway is this: a consumer's location, time, goal and attitude had a significant effect on choosing which devices were used. As you might imagine, such a finding can have considerable implications for those of us who deploy or manage digital signage networks.

What kinds of behavior did the Multiscreen World survey uncover?

One of Google's prime objectives in this study was to gain a deeper understanding of a consumer's daily media behavior with respect to using multiple screens to accomplish their tasks. In typical Google fashion, emphasis was also placed on learning of a consumer's online user search practices over various devices. While the above-linked report is full of detailed results, these are the ones that stood out to me:

On-screen Media vs. Other

90% of all media interactions are screen-based
The other 10% involve traditional print sources + radio

In short, consumers are exposed to far more screen-based messages than non screen-based ones, which makes sense when you consider the raw size of the TV viewing audience, and that those who report watching less TV today than 5 years ago have almost universally traded those TV-viewing hours for just-as-ad-laden Internet viewing hours.

Sequential Screen Usage

90% use multiple screens sequentially to accomplish a task over time (i.e. use one screen then graduate to another)
98% moved between devices that same day
Social networking is the 2nd largest screen activity (72%) after browsing the Net (81%). Shopping online was the 3rd (67%).
Smartphones are the most common place for starting online activities (65%), although more complex activities are started on a PC/laptop

When you consider that a) by the end of 2012 over 50% of US cellphone users will own a smartphone, and b) Facebook just announced their billionth user (that's billion with a 'B'), none of the above results should be surprising.

Simultaneous Screen Usage

81% use Smartphone and TV at same time
66% use Smartphone & PC at same time
66% use PC and TV at same time
Internet Browsing (44%) and Social Networking (42%) are the second and third most frequent activities performed during simultaneous usage, after e-mailing (60%)
Most simultaneous multi-screen usage involves multi-tasking (78%)
92% use PC and Smartphone at the same time to do different things
The balance of simultaneous usage is complementary (22%)
36% use PC and Smartphone to do related things

This is probably one of the newer behaviors uncovered and targeted by this survey. Multiple devices are used simultaneously, with smartphones being the most frequently used companion devices. While I can understand using a smartphone and a TV at the same time (since the former is interactive and the latter typically is not), I personally don't see the point of using a laptop and smartphone at the same time. I'd have to guess that it's largely for photo taking/sharing purposes, or maybe SMS texting people who can't be reached via IM.

TV as Source of Search Inspiration

77% of TV viewers use another device at the same time in a typical day
TV inspires online searches on other devices
17% of TV viewers conducted an online search after seeing a TV commercial

From the previous set of results we know full well that most TV viewers are no longer giving their full attention to the program that they're watching. It seems like we could stand to learn a lot more about what the true nature of the relationship between TV "inspiration" and actual conducted searches is, though.

Online Shopping Spontaneity

Most online purchases, regardless of screen type, are unplanned
81% of all online purchases made by Smartphone are unplanned
58% of all online purchases made by PC/laptop are unplanned

The deck is stacked a bit in the above examples, since a 99-cent ringtone from your cell carrier and a $2,500 TV from amazon.com both count as purchases, even though one is far more likely to be bought on impulse than the other. Even so, it's clear that the frictionless commerce provided by various Internet outlets has been a boon for those who rely on unplanned purchases.

What does this mean for the DOOH industry?

All that said, what lessons can we logically extrapolate from these results? From my perspective, even though the Google study didn't explicitly focus on digital out-of-home networks, the data does implicitly support what many of us have been championing for some time now:

Viewers/users have already migrated toward practicing cross-platform convergence.
Consumer smart phone usage and, with that, hands-on Internet accessibility, should be leveraged by digital screen marketers at the point of maximum sales influence (or virtually anywhere for that matter).
Using effective call-to-actions in your digital screen ads that reference other screen channels is likely to yield follow-ups, immediate or otherwise, from viewers, and generate further exposure to your brand.
Leveraging social media in your digital screen messaging is likely to engage a number of additional viewers.
Those who place ads and build campaigns need to be cognizant that traditional media channels are increasingly competing for viewer attention.
Digital screen messages that encourage viewers to follow-up online could yield a surprisingly high number of impulse online purchases.
The presence of digital signs and interactive touchscreens are consistent with today's multi-screen, digital media consumer habits and expectations.

Michael Arnett is an independent consultant focusing on sales and business development within the digital signage space. His company, Aurora Dynamic, is based in Montreal. (Aurora Dynamic is not affiliated with WireSpring.)

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What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.

Revisiting the In-Store Tracking and Consumer Privacy Debate

Bill Gerba

Back in 2008, I started to take a serious look at the issue of viewer privacy as it relates to digital signage networks. At the time, we were just starting to see the proliferation of companies like VideoMining and TruMedia, who promised to be able to isolate the demographic attributes of passing shoppers and possibly even identify shoppers individually. That seemed like a creepy and potentially privacy-violating concept to me. So together with other digital media veterans like Laura Davis-Taylor and Carre Dawson, and with the backing of POPAI, the global association for marketing at-retail, I started to think long and hard about things that retailers might do to stay honest in the eyes of their customers, and how consumers might protect themselves. Fast-forward to today, and not a whole lot has changed, but interest in the field remains. That's why I was glad to have a chance to sit down with TIME Magazine's Christopher Matthews recently to talk about the growth of in-store tracking devices, and why more retailers aren't using them (yet).

What have we learned so far?

On the surface, it might be hard to understand why more retailers haven't jumped on the video tracking bandwagon. After all, virtually every retail chain already uses video surveillance to improve security and loss prevention. Yet retailers, once eager to start tracking, mining and catering to shoppers using video recognition, have remained wary of potentially violating their customers' privacy and thus encouraging them to shop elsewhere. We had some fun with this concept back in 2009, when we looked at whether digital signage is invading people's privacy. In that article, we illustrated how retailers risk falling into the "uncanny valley" by knowing too much about every shopper's habits and buying preferences. I think the graphic we made 3 years ago still illustrates the concept perfectly today:

How should out-of-home venues protect consumer privacy?

Many retailers have been hesitant to implement in-store tracking systems, probably due to concerns about scaring away their customers or opening themselves up to legal action by individuals or privacy advocacy groups. However, several organizations have come forward with suggestions of how to mitigate potential risks to consumer privacy, while still allowing marketers to collect and use data. POPAI's Code of Conduct was one of the first, though others like the Center for Democracy and Technology and the Digital Signage Federation have proffered similar guidelines since then. The long and short of it is, if you plan to collect, store, process or use any kind of surveillance-like data gathering (especially with technology that can uniquely or individually identify consumers, which we'll cover in a minute), then you really ought to:

Disclose data collection methods: Put up signs, make pamphlets available, put up a web page. I know that this will be anathema to retailers, but a consumer's expectation -- which is mirrored by the FTC's own recommendations to related industries -- is that the more potentially privacy-invading the tracking technique, the more good you can do by plainly disclosing it ahead of time.
Get customer consent to be monitored: This isn't going to be practical in all cases, but again, giving people a modicum of power inside your venue translates to an improved sense of trust and a stronger customer relationship.
Know the difference between unique and individual identification: In short, unique identification means that you can track an individual apart from other individuals as they travel through the venue. Individual identification means that you can take that tracking data and correlate it to a specific person, either via some personal information like a name or address, or via an account number.
Allow customers to opt in (or opt out) of more intrusive monitoring practices: Like getting consent, this probably isn't going to be practical or even possible in many cases. But the opt-in (and even more so, the opt-out) is the thing that will hopefully keep this type of tracking out of the hands of regulators.
Practice cross-channel and cross-domain marketing constraints. Imagine a scenario where a cross-retailer loyalty program can track an individual as he goes from the supermarket to the dry cleaner to an apparel store to a big-box retailer. Such a system would clearly be able to collect a vast amount of personal information. Just as the FTC is currently trying to limit the ability of Internet marketers to track consumer behavior over a large variety of Internet properties, they will likely try to do the same thing in the real world at the first sign of trouble.

Are people really concerned about their privacy?

My gut feeling is that for most people, the answer is still "No." As I mentioned in the TIME article, people are used to being tracked 24/7 by all of the services running on their smartphones. For many of these people, it probably seems completely normal that retailers and others would use that data or take measures to collect even more data. From my personal perspective, though, the thought of involuntarily losing even more privacy is unnerving. After all, turning off my cellphone and not using apps that constantly track my whereabouts is pretty easy. Having to switch supermarkets or something similar would be much more inconvenient. But it's certainly possible that my opinion is the exception rather than the rule. Maybe I'm too close to the issue, and as such am unable to deviate from the course I've been pursuing all this time. Maybe I have too much unjustified mistrust of those who are collecting, collating and using all of this data. Or maybe at the ripe old age of 34, I'm just too out of touch with the mindset of today's younger consumers to understand what's important.

That said, TIME is currently running a poll to ask readers what they think. Surprisingly, a glance at the early survey results showed that nearly 40% of respondents agree that certain kinds of tracking do cross the line, and would be considered intrusive invasions of privacy sufficient to force the shopper to change his behavior and shop elsewhere. While I'm sure the adverse selection effect is in play (i.e. people interested in privacy are more likely to read the article and fill out the survey), it's still encouraging to think that the notion of privacy might not be completely dead yet.

Is in-store privacy something to worry about, or am I just being paranoid? Leave a comment and let me know!

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What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.

Using Digital Signage to Amplify Word-of-Mouth Marketing

Bill Gerba

Last week, Nielsen published an article analyzing how much consumers trust -- or don't trust -- various forms of advertising. Not surprisingly, word-of-mouth is way up at the top of the list at 92% trusted, while the category most related to our industry -- billboards and outdoor advertising -- is down in the middle of the pack at 47% trusted. While we're still better off than the mobile space (where the trust rating is only 29-33%), that's still nothing to write home about. However, I think that rather than trying to boost the overall trustworthiness of out-of-home messaging, we're probably much better off trying to come up with ways to have our messages influence and amplify the more trustworthy means of communication.

The big picture

With advertising, rule number one is always "make your message trustworthy." As we can see from the chart above, trust seems to stem from the personal connection the individual can make between the message and its originator, and how closely related the individual is to the originator. It's kind of like Google's PageRank algorithm for the real world -- if you trust a message enough to say it, and I trust you, then by power of association I'll trust the message too. And if more people that I trust also trust your message, some of their trust will "flow" into the message as well, and I'll trust it even more. It's the big reason why Oprah's book club sells so many books.

How can digital signage networks use this to their advantage?

I'm going to dust off our old sales funnel chart for illustration, since the argument works just as well for non-sales messages as it does for sales messages:

Digital signs can influence every stage of the funnel, from awareness (for example, by advertising the presence of a brand-new product) to sales (by displaying promotions and calls to action at the point-of-purchase). Where they haven't been great so far, though, is in connecting with other types of advertising. Sure, we've seen some examples of TV and print campaigns extending themselves onto DOOH networks. I've seen a couple of clever corporate communications campaigns that use the same corporate avatar across all media. But when it comes to taking things like personal recommendations, consumer opinions and editorial content (the top three most-trusted forms of advertising) and bringing them to the point of decision, we've been terrible. This type of content also excels at leading the viewer through our funnel, from awareness to preference or even identification, depending on how much they trust the content.

I'll admit, making personalized recommendations appear on a screen inside a retail store would be a technical challenge, not to mention a potentially serious invasion of privacy unless the proper opt-ins and opt-outs were in place. But bringing relevant, timely editorial and consumer opinion content to the screen -- precisely the kind of information you'd likely find on the retailer's website -- should be a no-brainer, and would instantly make the DOOH spots more valuable to a campaign.

On the flip side, I've seen some pretty effective viral/social marketing campaigns that started out as OOH campaigns. There have been countless "confrontational" billboard campaigns, where an advertiser will intentionally put up a ridiculous or outlandish message, which will inevitably get photographed, Tweeted and shared on Facebook, and quickly reach far more people than it ever would as just a billboard. As an added benefit to the advertiser, the people doing the Tweeting and Liking are implicitly giving some of their trust to the message, which makes their own friends and followers a little bit more likely to extend trust themselves.

Building a foundation of trust

Whether or not your screens are meant to sell products, they're almost definitely meant to sell ideas. And the ideas your viewers will trust most are those that have already been judged by their family, friends and colleagues. Consequently, identifying these trustworthy messages and making them a part of your campaign can considerably improve the effectiveness of your messages, which is something we touched upon in our recent article about earned media. If and when it becomes possible to filter the larger message stream and show only the opinions generated by the people closest to your viewer, advertisers will have to walk along the rift of the uncanny valley, taking care to seem concerned and interested, but not creepy and overbearing. Until then, though, a modest and effective compromise is to use other sources of opinions that your viewers may already trust. By bringing in timely, relevant data like customer feedback, opinion pieces and editorials, digital signage owners can reap some of the benefits of these high-trust sources, and put that content to work at the point when it's most relevant to the viewer.

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What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.

Need a Digital Signage Cost Estimate? Try Our New Calculator

Bill Gerba

As we approach the fourth quarter of 2012, I've been busy going through all of our major data sets in preparation for 2013, including the results we've taken from our Digital Signage Sentiment Index, our studies on content creation, and of course, our digital signage pricing surveys. But as I paged through through the 7+ years of accumulated pricing data that we've collected, I realized that it's difficult to put all of that information to good use. While someone already familiar with the industry could probably do a quick search of the WireSpring site and come up with exactly the numbers they need, they might not know how to apply them. And for those folks who aren't as up-to-date on the digital signage ecosystem, I imagine simply finding the right data set could be a challenge. So, I decided to take a day or so, dredge up what I learned when building our LED Billboard Cost Estimator, and put together our brand spankin' new Digital Signage Project Cost Estimator!

Some features and caveats

First, the features. Based on the pricing data we've assembled, we have tried to generate sane estimates for reasonably small to reasonably large projects. This covers all of the major capital costs, and some typical operating expenses like remote management, technical support, and connectivity. We've also expanded from our traditional definition of a digital signage network (e.g. "100 40-inch screens mounted on the wall or suspended from the ceiling") to take smaller screen sizes and different mounting options into consideration. This is all new, so there are probably some bugs that will need to be ironed out. But so far, the preliminary feedback on the cost calculator has been positive enough for us to feel that it's worth making it available on our website.

That said, we do ask that you take the estimates with a grain of salt. And if you have specific questions or believe that some of our numbers are flat-out wrong (or you can think of ways to improve them), I hope you'll either email me (billg at wirespring dot com), or leave a comment in this blog article -- I do actually read them all.

What's in store for the future?

This is definitely a 1.0 version of the cost estimator. I already have plans to include more inputs for things like content creation, staffing and other vital areas that people seem to have difficulty estimating. We also plan to do regular maintenance updates using the data from our annual pricing studies, in order to keep things relevant and up-to-date.

On the output side, we also plan to add more in-depth content to the PDFs that are generated. Right now, we include a few of the more important and useful pricing tidbits from the blog. Over time, we hope to add more detail on the pros and cons of different mounting options, placement recommendations that might affect pricing, various services that could be outsourced or in-housed to save money, and better information about keeping the beast fed with fresh, up-to-date content.

We need your input! What do you think of the cost calculator? Is it useful? Are the numbers reasonable? What would you like to see in the next version? Leave a comment and let us know!

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What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.