WireSpring Blog

An updated budget for digital signage and in-store TV systems

Author: Bill Gerba on 2006-11-03 12:05:31

UPDATE: While this article is still an excellent introduction to preparing a budget for a digital signage network, we've since updated our pricing estimates and recommendations:

September 2007: A new look at the costs of digital signage networks and content

Back in September of 2004, we wrote a blog article on budgeting for a digital signage project that examined the different cost components of deploying digital signage networks in retailers, banks, and other venues. Despite using pricing data that's now over two years old and being intentionally generic about the products and services included in the price list, that article continues to be one of our most frequently read and cited, which tells me two things: first, there are a lot of people out there who are interested in deploying digital signage, but many of them are still in the planning stages. Second, many of those people are reading out-of-date information. We can't do much about the first issue, but we'll try to address the second one by providing up-to-date pricing (as of November 2006) and other things we've learned from our most recent experiences in the digital signage industry.

The updated digital signage budget

The basic costs from our first article were divided into four categories: hardware (screens, mounting hardware, media players), player software, remote management software and installation/project management services. These are still relevant today, but here's how I'd break them down now (once again, assuming a single screen for 3 years):

Cost of digital sign for 3 years
40" LCD screen	$2,500
Player hardware	$1,500
Ceiling mount	$250
Player software	$500
Management software & tech support	$1,800
Installation	$1,400
Initial project management	$300
Total	$8,250

Let's start with the obvious changes. We switched out the old 42" plasma screen for a 40" LCD screen at the same price point. While we could have lowered the price of the plasma to the $1100-$1200 range instead, our experience in the past few years has been that the retailers embracing digital signage networks consider them to be fixtures much like their shelving units and product displays. With a requirement of a 3-5 year life expectancy for the screens, public display-quality LCDs seem to be the best choice right now. Media player and software costs have remained relatively static over the past few years (though the quality and capabilities of both have gone up), but the cost of ancillary equipment like mounts and stands has dropped sharply. The installation and project management fees of $1,400 and $300, respectively, are now on the high side of things, but prices for these kinds of services fluctuate a lot based on unit volume and install complexity, so I've opted to leave them alone.

Another change in this revised budget is the elimination of the 24/7 tech support line for end users (e.g. retail store staff). While the need for such support services may vary from customer to customer and project to project, our retail and financial customers have consistently gravitated towards having their own in-house support desk handle first level support tasks (e.g. "is the screen plugged in?"), escalating only the more significant issues to the supplier's help desk (in this case, us). We see this as another sign that clients are recognizing the potential of digital retailing and taking responsibility to make sure that their systems work to their fullest potential. (You could argue that there are other direct or indirect costs associated with having the retailer's help desk take on this responsibility, but putting a hard cost on that is beyond the scope of this article.)

Other costs to consider (Internet connectivity, content production, etc.)

Our original article also listed related costs like Internet connectivity and hardware replacement, but we've seen significant changes in how customers are handling these items. For example, many internally-managed retail networks and mall networks will utilize existing Internet connectivity at no charge, while ad-supported networks might have to run their own DSL or cable lines (and pay the associated costs). As always, sharing the burden of responsibility for these networks makes them grow stronger, and a lot can be learned about what the host perceives as the real value of the network simply by looking at what costs they're willing to share. As for hardware replacement, many media player companies now sell industrial devices with a low-cost 2 or 3 year warranty, so much of the replacement cost can be accounted for in a predictable fashion.

There are other ongoing costs as well, with content production and content management being the most important -- and most variable -- of them. For example, a content feed containing frequently-updated news, weather and sports can cost anywhere between $5 and $50 per screen per month, depending on frequency of updates and quality of content. When it comes to advertising clips, many product manufacturers will provide pre-made TV spots (if they have them), but this content is far from optimal for in-store use, and often has to be heavily modified or even scrapped altogether. A 15-second spot can cost anywhere from a few hundred dollars (for a simple slide show or Flash animation) to $30,000-$40,000 for a professionally shot piece by a video production company, to even hundreds of thousands of dollars for an elaborate and effects-laden specialty ad (though I'd imagine that this is overkill for nearly all in-store applications). With a trend towards making digital signs into visual merchandising tools that enhance the shopping experience, expect your host to demand some number of minutes reserved for promoting the retailer itself, though they may be willing to compensate you for that screen time.

Adding up the numbers

The old cost calculation gave us a total of about $335 per screen per month over 36 months, not including essentials like content creation. Our new total, reflecting trends that WireSpring has observed firsthand, comes out to about $230 per screen per month. (These figures don't include interest charges.) Most of the $105 difference assumes that some of the responsibilities (and some of the costs) will be shared by the host venue or other related parties, which again reflects much of what appears to be happening in the industry right now. Digital signage networks are becoming more complex in terms of ownership, management and responsibility. Media companies, retail groups, and merchandising specialists are partnering with AV integrators, content creators and technology firms, with each group providing capital or services for the network and handling their area of expertise. These "shared responsibility" scenarios usually help reduce the risk for everyone involved, as costs are shared and no one is forced to take on a task that they're not comfortable with (e.g. the retailer's IT department writing their own content management software). However, be careful to avoid making things too complex, since more people are bound to be involved in tasks like approving the content. That said, as costs fall and the industry becomes more mature, I think we'll continue to see a shift in the "traditional" business model, with retailers and other host venues taking more of a hands-on approach to digital signage networks. By eliminating extraneous costs (to get a nice, clean budget like we've outlined here) and delivering compelling content, a modern network should be able to deliver measurably better ROI than what was possible even a few short years ago

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