Why do so many digital signage projects fail?

Author: Bill Gerba on 2008-07-11 08:09:27

For about a year now, I've been giving a presentation at trade shows and conferences called "The top 5 reasons why digital signage networks fail." I've covered this topic in various blog articles, so none of the reasons should come as much of a surprise. Still, without fail, people come up to me after I've given the talk and ask, "Are you really sure that those are the reasons?" Typically, that's followed by an explanation of their new startup business model and their defenses for why they won't succumb to any of the aforementioned problems, despite already exhibiting a number of the common warning signs. Over the months, I've refined my analysis and put more things on our list of DOs and DON'Ts, but the five reasons we've looked at continue to accurately predict failures. (I'll let you know when we figure out the factors that can predict successes). So, it was with much interest that I picked up a white paper written by Chris McIntyre-Brown of Futuresource Consulting, who came up with his own list by studying about 100 digital signage networks in Europe. While Chris and I agree on a number of points, there are some interesting differences that I can't reconcile.

Futuresource: Less than half of digital signage networks are successful

The Futuresource report (PDF format) looked at 100 digital screen networks in various European countries in order to "understand more of the intangible issues surrounding [the industry's] development." Their overall finding was that, "of almost 100 projects evaluated in depth by Futuresource during the research, 9 failed completely to meet any of the objectives set and 10 were deemed to be only partial successes. Add to that the fact that for a significant proportion it was too early to judge success, the risk of potential failure was high." Later in the report, they clarify what happened to the rest of the networks: "Although 40 of the projects evaluated were considered successful, for a further 30 it was deemed too early to determine the level of success." While it may not be fair to assume that all of those final 30 networks are in danger of imminent failure, WireSpring's own data suggests it wouldn't be much of a surprise if they were (more on that in a minute). Futuresource goes on to propose these five points as the most common reasons for early network death:

A lack of clear ROI modeling
The lack of advertising proof points (metrics)
Too much network fragmentation and not enough scalability
Project complexity
Little understanding of content requirements

To counter these problems, Futuresource suggests the following remedies:

Engage Top Management but ensure key checks and balances are in place and key stakeholders are on board
Encourage Finance Department involvement
Embrace the complex approval process
Set objectives
Set non-financial as well as financial objectives
Budget for the cost of measurement
Build in content experimentation
Understand the full roll out cost implications
Commit resources to adding / developing internal understanding
Recognize that advertising rates are related to value for the advertiser
Plan in detail and then plan again

WireSpring: Ad-funded network + Lack of ad sales experience = Early network death

I'm sure regular readers of this blog will find a number of Futuresource's suggestions to be pretty familiar. We've been encouraging companies to engage in shopper marketing experiments, budget for both upfront and ongoing network costs, expect and learn to navigate project complexity, and set goals with measurable milestones. As I wrote last November, we looked at 6,000 inquiries that WireSpring received over a 4 1/2 year period to determine what caused so many networks to fail. Based on this data, our '5 crucial steps that can make or break your digital signage project' turned out to be:

Know your business model
Understand your goals
Build a solid team
Avoid common pitfalls
Learn from past mistakes

While content strategy, measurement and network "fragmentation" (the remaining items on Futuresource's list) are all important, many companies encounter such severe problems at the outset that they rarely get to the point where they have to worry about these more advanced concerns.

And of course, I couldn't write an article like this without mentioning my favorite (internally-generated) statistic: if you don't have experience selling advertising and you plan on deploying an ad-funded network, you're going to fail. How sure am I of that? Oh, about 96% sure, based on a final sample of 631 networks. I've said it before and I'll say it again: if you're thinking of starting a network whose primary revenue stream comes from showing advertisements, the number one thing you can do to improve your odds of success is to hire an experienced ad sales team, partner with one, or outsource that side of the operation to a competent organization.

Are we focusing too much on advertising?

One final thought upon reading Futuresource's research. They suggest that "[while] other models are equally valid, and quite often the most interesting, it is the advertising model that will really drive the development of digital signage." I don't agree with this, and neither does Frost & Sullivan. According to Frost's 2007 research, deployments of non-advertising displays are outpacing those of advertising units at the rate of 1.5 to 1, and their current installed base is nearly twice as large. Still, ad-funded networks get the lion's share of attention in the media and have captured the imaginations of entrepreneurs and Fortune 500 companies alike, so I can understand why it might seem like they'll be shaping the industry in the future. But with all the unique and innovative non-advertising applications that I've seen, I find it hard to believe that advertising-based networks will be as dominant as people think.

Do you have any crucial DOs and DON'Ts to add to the list above? Leave a comment below to share your thoughts.

Comments (5)

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2008-07-11Larry Blaney writes:

Bill,

I agree with your assessments. Basically it comes down to common sense fundamentals. A movie can have great action, special effects, but if the story(writing) is poor, it will never meet expectations and leave the viewer wanting more. Digital Signage is not about the newest display or player platform, it has to be about accomplishing the required goal/objective and most of the time, which has to do with content. 2D digital signage has become irrelevant due to repurposing media assets rather than recreating target messaging to meet goals. Time is well spent defining the goals and objectives of the project and then spend the rest of the time developing the content. The technology piece is rather insignificant in the design of a successful signage project.

2008-07-11Laura Davis-Taylor writes:

Great points as always Bill. And I'd like to add my support against advertising-based networks being the chosen leaders in this industry. I almost wish we'd stop using the word advertising in relation to digital signage and start thinking about it as communications--it seems that anything advertising is beginning to carry a somewhat negative impression and I hate to pigeon hole us with it.

A point James Bickers made in the newest edition of Retail Customer Experience mag comes to mind. He was sharing that he took his 5 year old shopping at Wal-Mart and he said, "Daddy, how come there's TV but they only play commercials?" Touche.

2008-07-13Gary Halpin writes:

Completely agree with Larry and Laura's comments. I've always talked about the two most important elements (IMHO) for a network. The content and the merchandising of the network. I think almost everyone (or almost everyone) these days understands that If the monitors are 20 feet above people's heads, or the network tries to encompass a huge footprint, then they're going to have a tough time.

But I'd like to comment on the content part a bit. Great content is a process, which starts with a creative strategy, then conceptualizing ideas on that strategy, which should involve a lot of brainstorming and vital feedback before moving to the execution phase of producing the end content. I've seen some of these vitals parts skipped, with a rush to go right to the execution, and again, IMHO, this spells trouble. Let me put it this way. Would a company spend $3-5M on an ad campaign by just cutting a :30 for air without completely understanding their target market, developing a specific strategy, hearing different concepts, or seeing scripts & storyboards?

2008-07-25mary anne fleisher writes:

I totally disagree. If you think radio, tv and newspapers are going to give up on local advertising, think again. They will reclaim their footprint in their markets through digital sign networks. They already have sales staffs on the ground who know where the money is. Everyone wants the big cpg money. Local is so easy to get. Move over tech heads the media is coming.

2008-07-25Bill Gerba writes:

Larry: Yup, totally agree. Even today there are networks out there running little more than reformatted TV clips and commercials. It doesn't work (in most situations), so why spend all that time and money building out the network if that's how you're going to use it? Doesn't make any sense to me. Fortunately, more people are avoiding this pitfall these days, and I continue to see a larger volume of high-quality digital signage content as I make my informal surveys around the country.

Laura: Awesome anecdote ;) I heard recently that Wal-Mart is heavily investing in version 2.0 of Wal-Mart TV, so I hope (and expect) they'll start to remedy that particular problem and a number of others!

Gary: I think you touch on an important point. Even today digital in-store media isn't considered along with all of the other media components of a major brand campaign, and that's a big problem. We seem to get stuck with the leftovers -- both in terms of creative and in terms of budget -- which makes it hard for lots of these networks to shine. Until digital in-store is put on a level playing field with TV, cable, internet, etc. (weighted by reach or whatever), that's not likely to change.

Mary Anne: TV and radio are fighting back, though the results so far have been pretty anemic. Maybe if Google makes good on its threat/promise to somehow deliver targeted TV ads via cable boxes we might get more relevance out of the medium. However, it hasn't happened yet, and that means there's more in play for alternative out-of-home like digital signage.

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