The Digital Signage Insider

Well, even though I've spent a lot of time ruminating over which ad agencies are best positioned to provide digital media networks, my prediction that WPP would be the first media mega-conglomerate to embrace digital signage has turned out wrong.  Publicis Groupe beat them to it, announcing that they are deploying an ambitious in-mall signage network with Simon Properties Group this year.  While Simon has run numerous indoor and outdoor digital media experiments over the past few years, none of the in-mall networks had made it past the trial phase until now, making this deal between "a giant advertising company" and "a giant property company" (as the New York Times puts it) even more noteworthy.

In recent years, Simon's corporate office (and Brand Ventures group) were probably overwhelmed by vendors offering technology and rich media solutions that could be placed into their malls to improve visual appeal, advertise products and drive foot traffic. As a result, Simon tinkered with a wide array of disparate solutions, from wireless barcode scanners that could be carried from store to store, to elaborate touch screen wayfinding kiosks, to a food court entertainment channel. While some of these programs still exist in a limited fashion today, none have received the full backing of the corporate parent to spread into the vast (and heretofore untapped) group of nearly 300 malls, outlets and shopping centers.

Thus, part of what makes the Simon-Publicis deal unique is simply the fact that Simon has decided to go along with it.  They've been testing the business model and digital signage technology in their Roosevelt Field mall on Long Island since 2004, carrying ads for consumer brands like Cingular Wireless, Coca-Cola, Garnier, Nintendo and Visa along with retailers like Aropostale, EB Games, Gap, PacSun and Subway.  Dubbed the OnSpot Digital Network, Simon and Publicis expect to roll out 50" and 126" digital screens to 17 Simon malls in the Chicago, Los Angeles and New York markets first.  Following that, they'll take the network to an additional 33 malls in Boston, Philadelphia, Washington, Atlanta, Dallas, Houston, Minneapolis, San Francisco, Seattle, Miami, Orlando and Tampa.  Of course, that's only 1/6th of Simon's total reach, so if things go well I'd expect them to continue the rollout until every last mall and shopping center is connected.

The Times was also kind enough to give us some insight into the potential cost of advertising on the network:

A 30-second commercial to appear on the estimated 2,000 screens in the 50 malls will cost $350,000 a month. That is about what ABC charged advertisers last fall for a 30-second spot during an episode of the hit series "Grey's Anatomy," according to data compiled by the trade publication Advertising Age. In a comparison involving outdoor advertising, billboards in prime locations in Times Square can rent for $200,000 to $300,000 a month.

The screens will run in an eight-minute loop, with half of the loop featuring entertainment content, and the other half displaying commercials (thanks VisualStore). From these two nuggets we can extrapolate that there will be an average of 40 screens/mall, and a spot will cost about $175/screen/month, which is in line with some of the other large digital signage projects that I've seen in the past.  If Publicis fully books the four minutes of 30-second commercials, they'd generate $2.8M/month across the network.  What we don't know is whether they'll allow for (or are capable of) locale-specific booking, dayparting, intra-mall booking, etc., and if so, how that will affect pricing.

Meanwhile, marketing conglomerates WPP, Omnicom and Interpublic -- as well as media channel owners/buyers JC Decaux and ClearChannel -- have been running their own experiments across the globe for years now, and it's still unclear how or if the Simon-Publicis announcement will affect them.  One thing's for certain: with 2,000 screens (and many of them an exotic 126" model), the cost of this 50-site digital signage trial will be quite significant, so Simon and Publicis are backing this venture with a lot of cash.  Clearly, somebody inside their organization thinks that they stand to make quite a bit of money with this network, and if the numbers work out, their competitors won't stand still.  So who will be the next to step up to the plate and take a swing at the market?  I still think WPP has a good number of options, and some of their companies are well positioned to stir things up in a big way.  Meanwhile, ClearChannel has been running some very visible trials, as well as a number of smaller networks for years now, and they certainly have the reach to make something happen.  They also recently spun out their ClearChannel Outdoor unit, which could indicate that this division will live by a different set of goals than its parent.  Omnicom has stayed relatively quiet through it all, though a number of their companies have experimented with large-scale interactive kiosk networks.  JC Decaux of course has handled the UK's Tesco network since its inception, though the reportedly mediocre performance of this in-store network may have left a bad taste in their mouth.

I could go on speculating all day here, but I don't think that would be a terribly valuable exercise, so I'll leave it at this: Publicis has thrown down the gauntlet, and one or more of the other media giants will take up the challenge in a big, public way.  There are a large number of companies that have the knowledge, reach and financial wherewithal to deploy a big network and operate it profitably.  As the relative "perceived" risk of doing so continues to decrease with each new successful network deployed, it's only a matter of time before digital signage is widely accepted as a viable advertising and messaging medium by brands, retailers and agencies.  As the NYT article noted, "[a]dvertisers and agencies are buzzing about 'the third screen,' referring to the screens of cellphones, which many consumers now look at almost as much as they do TV or computer screens. The formation of OnSpot underlines the growing interest in what could be called the fourth screen, meaning all the screens that consumers see outside the home, in stadiums and arenas; the lobbies of movie theaters; public gathering places like Times Square, Piccadilly Circus or the Ginza; inside elevators in office buildings; and in airport terminals and train stations."