The Digital Signage Insider
WireSpring's blog featuring tips and analysis from a team of industry experts

Digital Signage Sentiment Index for Q1 2012: Cautious Optimism

Author: Bill Gerba on 2012-02-01 09:00:02

Two weeks ago, we called upon members of our industry to spend a few seconds filling out a three-question survey on the health of the digital signage sector. We gathered a pretty respectable 155 results and ran the numbers, and now the results are in. The good news: there's reason for optimism. The majority of folks not only said that they're better off this quarter than they were last quarter, but they also think next quarter will bring even more growth. Let's take a look at our first Digital Signage Sentiment Index and see what else we can learn from the responses.

Charting the results

A picture's worth a thousand words, so here are 3,000 words worth of pictures:







To begin with, the majority of the respondents describe themselves as digital signage services companies or network operators, which matches the sort of folks we expected to fill out the survey. In assessing their expectations for the current quarter, just over half indicate that this quarter will be stronger than last quarter. While about 30% expect modest growth of 1-20%, about 11% expect to see growth of 40% or more -- quite a feat if it comes to pass. What's more, when asked to prognosticate about next quarter, an overwhelming 75% expect additional growth, with 10% predicting growth in excess of 40%. (While I didn't do a proper cross-tabulation, a quick-and-dirty analysis does show that today's biggest optimists are also most optimistic about the future).

In both cases, those who don't expect to grow much in the near future expect to stay mostly stable, with only 9% expecting a decline this quarter and a bit less than 10% expecting a decline next quarter. While there's not much more to be gleaned from these results right now, I think they'll serve as a great base when we repeat the exact same survey next quarter and begin charting the trend over time. Plus, I'm really looking forward to seeing if our findings with this quick-and-dirty industry poll wind up mimicking the curve we've been tracking by plotting the predictions of professional analysts who follow the digital signage segment.

Finally, I would like to point out that while the digital signage sentiment index may seem similar (though much more simplistic) to industry barometers regularly released by both the Platt Retail Institute and Exponation (the folks behind the DSE), our methodologies are completely different. Our little survey is meant to be a quick gauge of optimism, and with time will hopefully illustrate whether our collective predictive abilities are any good. And who knows -- maybe this effort will spur the other two groups to do some retrospective analyses of their own data, since both have been conducting surveys for years now.

Looking forward to the next installment

If you were one of the 155 respondents who took the survey last month, thanks! And if not... shame on you! But you'll have a chance to make amends in a few months when we do the whole thing all over again. And if you didn't contribute (or just have something to say), feel free to leave your own predictions in a comment below.

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Ideal Length of a Digital Signage Message: 22 Characters or Less

Author: Bill Gerba on 2012-01-25 09:26:59

After getting some help from Steve Whitehead at Amscreen, my presentation on content best practices for the 2012 Digital Signage Expo is nearly ready. While preparing it, I looked back at many of the other content-related presentations we've put together, and I was generally pleased to see that the recommendations we made four or five years ago still hold true today. However, I was even more pleased at the two or three places where I could go in and make refinements to some of our old adages. Of those, the most useful and potentially important is about message length. As it turns out, just a few characters can have a pretty big impact on whether your on-screen message gets read or not.

What is a word?

In our pioneering (if I do say so myself) research using Amazon's Mechanical Turk last year, we discovered that increasing message length by a few words can dramatically affect recall:



But after reading some unrelated research about email marketing, I began to wonder what's more important: the number of words, or just the sheer amount of space the words take up? After reevaluating the data, I came to the conclusion that it's actually both. Very long phrases are still hard to remember, and the number of characters that make up a phrase seems to affect whether the viewer will try to read the phrase in the first place.

The ideal digital signage message length is 3-5 words, totaling 22 characters or less

The graph above suggests a pretty significant falloff in recall at the five-word mark. But upon further review, it was our particular choice of words that made the difference: messages that contained five shorter words fared just as well as four-word messages containing a similar number of characters, with 22 characters or less representing the sweet spot for recall. This makes sense, since the corresponding number of words falls well within our built-in psychological limit of seven plus or minus two elements.

Whether adding a few extra characters is really going to prevent your messages from being read and remembered probably has a lot more to do with the content on your screen, the quality of the message and the environment that your viewers are in, rather than just the number of characters. But if you wanted just a little more evidence that short, succinct messages are more likely to get remembered, consider this it.

A little housekeeping

Last week, we presented a quick 3-question survey that's designed to measure the pulse of the digital signage industry. If you haven't done so yet, please take 30 seconds to fill out the Digital Signage Sentiment Survey. We plan to publish the initial results in the next week or so and make it a quarterly tradition that we can all benefit from!

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Digital Signage Market Stats: Too High, Too Low or Just Right?

Author: Bill Gerba on 2012-01-18 13:19:21

Like many of you, I got an email from the Platt Retail Institute this week telling me that their latest quarterly report on the state of the market was available for purchase. Similar to some reports published by the DSF, the Platt report measures people's confidence levels about the current state of the digital signage market and its expected near-term growth. I like these kinds of things because they can offer a bit of perspective as to the overall health of the market. One thing I don't really like, though, is that it's very hard to gauge how accurate they are, and how they fluctuate over long periods of time. I'd like to do a little something to help correct that, but it also got me thinking about all of the other digital signage market statistics we hear thrown around. Specifically, I wondered, is there any way that we might use various research firms' numbers to keep them honest?

So, who provides some numbers we can look at?

From our article on digital signage growth rates a few months ago, we found three pretty good sources of digital signage industry statistics -- both ABI Research and IMS Research have been running the numbers on the nuts-and-bolts side for several years, and PQ Media has done a great job following the DOOH advertising industry. Each group has published at least two reports in the last few years, and each group has provided some of the critical baseline numbers and growth projections in their executive summaries and press releases, meaning it won't cost me $50K to research the numbers for this blog post.

In short, assuming that these guys didn't go back and doctor the numbers in earlier reports to reflect later findings, and also assuming that all three continued to use a consistent methodology for measuring whatever it is that they measure, all three were reasonably decent at predicting growth and growth rates. It almost disappoints me to say that the level of ridiculous hyperbole found elsewhere in our industry just wasn't present here.



As you can see, ABI Research, who had the biggest chronological gap between comparable data sets (4 years), actually underestimated market growth in 2008 -- to the tune of 32.5% in 2010 and 35.8% in 2011, assuming the methodology remained the same. If the trend holds and their future predictions are reasonably accurate, the market will continue to outperform their original expectations for the next several years. IMS Research, on the other hand, had highly consistent results, with predictions from their 2011 survey differing by only a few percentage points from their 2010 numbers. Given that their data sets are only one year apart, that is not at all surprising. Finally, in the DOOH space we see PQ Media showing bullish predictions for 2009, only to have the economic realities and corresponding growth challenges cause a massive 22% correction once the numbers were considered again in 2011. The rest of the overlapping data was much closer, and PQ's ongoing CAGR estimate of around 10% is considerably more conservative than earlier predictions.

The three research firms study somewhat different things, but they're all tempered by the overall market penetration of digital signage systems. Consequently, we can observe that PQ was generally bullish, ABI was generally bearish, and IMS was somewhat neutral. (In each case, we're talking about the precision or conistency of their predictions, rather than accuracy, since we don't have any way of verifying how their historical data is being calculated.) Generally speaking, then, the research firms are not putting out wildly hyperbolic data.

What can we do with the research data?

While each of these research reports offers a lot more than just broad industry size and growth predictions, the true value of these things comes over time, as we can compare the predicted size and growth numbers with their historical counterparts. Further, we can compile several different firms' numbers together to create a composite. This is meaningless in terms of dollar amount, but may more accurately illustrate the overall growth and direction of the industry:



I hope to keep this chart up-to-date as the various research firms publish new data in the coming years. However, given the differences in things being measured and the sporadic publication dates, this composite figure probably isn't going to be too helpful.

Introducing the Digital Signage Sentiment Survey

With this in mind, I would like to introduce a new survey which we'll conduct a few times each year. At only 3 questions long, it should be very quick to complete, and will hopefully serve as a barometer for the industry -- as well as a source of historical data. So without further ado, I present the Digital Signage Sentiment Survey, which will yield our first-ever Digital Signage Sentiment Index!

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.


We'll publish the results in the next week or so, and then do similar follow-up surveys throughout the year. With this information in hand, we should be able to gauge the level of industry optimism at any given point, and see how the current levels compare to how we've felt in the past.

Do you work with industry research firms or purchase their reports? If so, how do you use the data? Do you feel that it provides a competitive advantage? Leave a comment and let us know!

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Amscreen and Its Advertisers Show That Great DOOH Content Works

Author: Bill Gerba on 2012-01-11 09:43:08

With Digital Signage Expo 2012 coming up, I've started working on my presentation, which is unabashedly titled "Everything you need to know about making digital signage content." Because I've figured out 100% of it. No, honest. OK, all kidding aside, this year's pitch is an amalgamation of past presentations on making effective digital signage content, refreshed with a dose of new research and recent content. Finding good content, though, can be tricky. Don't get me wrong -- there are hundreds of examples of pretty content out there on the web, and there's no shortage of designers out there who would be happy to show off their works to an eager audience. But finding effective content... now that's a different story, mostly because so few people actually know how (or if) their content is effective at all. Thankfully, just as I was preparing to harass some of my usual go-to people for examples of content that delivered results, British DOOH network Amscreen came to the rescue via a tweet. It seems they've been having a good year, and were eager to show off some of the content that helped get them there.

What can effective content do for your business?

How about boosting sales? Yes, I know it's so often talked about that it's almost a cliche. But seriously, good content can really boost sales of advertised products. It can also more effectively deliver corporate communications and safety messages, inform guests and visitors about local or time-sensitive events and explain important topics about health and personal wellness. But our friends at Amscreen built out their network to sell stuff, and that's just what their content does. To wit, based on the market research that Amscreen has so generously posted online, the following vendors found real benefits from advertising at or near the point of purchase:

• Red Bull achieved a 20% sales lift of advertised products.
  
  
• Budweiser achieved a 29.1% sales lift across their brand during a DOOH campaign.
  
  
• Coca-Cola achieved a 36.6% sales lift of advertised products during a two-week campaign for Coke and Coke Zero products.
  
  
• Lucozade achieved an astonishing 49% sales uplift of advertised products (though admittedly, these products were sold immediately next to the screens at the checkout counter, so they probably represent the best possible scenario for using digital signage advertising).

What does great, effective DOOH content look like?

Thankfully, Amscreen's customer successes are based on content that looks like it should -- simple, strategic and easy-to-read. This makes me glad for two reasons: first, more independent corroboration gives me further proof that I haven't been barking up the wrong tree with regard to content creation for the past few years. Second, it means that at least a few major brands now have incontrovertible proof that when done correctly, DOOH advertising can be extremely effective, and doesn't need to be expensive (on the content creation side, anyway -- I have no idea what Amscreen charges for placement).

For example, let's take a look at some of the spots that appeared on the Amscreen network:





As you can see from these examples, making effective DOOH content isn't exactly rocket science. In general, you want to get your message on screen as soon as possible, make it as short (succinct) as you can, and leave it there for as long as possible. Throw in some high-contrast imagery, maybe a few key features or benefits and a call to action and that's about all you need. Yes, it's nice when you showcase some true creative genius and make content that's both effective and beautiful. But if I were an advertiser, I'd be a lot more concerned about getting something that worked, rather than something that was just pretty.

The road to digital signage failure is paved with excessive eye candy and a lack of ad sales experience. While the content used by Amscreen's clients is certainly attractive (and they obviously have the ad sales thing down pat), it's clear that the visual elements are there for practical reasons, not just whimsy.

Do you have an example of great, effective DOOH content that you'd like to share? If so, leave a comment below -- and include a link to the content if you have one. (Email/RSS subscribers, click through to http://www.wirespring.com/blog to comment.)

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How Many Ads Do You Need to Sell to Keep a DOOH Network Afloat?

Author: Bill Gerba on 2012-01-05 09:36:49

I'm prepping the latest version of our annual digital signage pricing survey, and as always, the process starts with reviewing our articles and analysis from past years. This time, I also had the data from our recent DOOH advertising survey swimming through my head. As a result, I realized that we'll finally be able to make some observations about what it takes to fund an advertising-based digital signage business. If you're thinking about starting a digital signage network, or if you're a fan of our budgeting articles, or if you're just really bored, then read on.

What does it take to fund a 100-screen network?

First, the usual caveats apply. As we always note in our digital signage budgeting articles, there's really no such thing as a typical digital signage network, whether it's 10, 100 or 1,000 screens. And the variable costs of things like content, venue profit sharing and the like can considerably affect what it truly costs to own and operate a network. Still, there's no denying that regardless of size, it has consistently gotten less expensive to build out a network over the years. That's why it's so befuddling to find so many DOOH networks continually starting up and shutting down. I mean, if the enabling technology keeps getting more affordable, and there are all these experts and Internet sites out there to warn people about common pitfalls and explain how to pick business models and optimize content performance, why aren't more networks surviving?

Well, if the results of our DOOH pricing survey are accurate, a big part of the problem may simply be picking a pricing system that both the buyer and seller are comfortable with. As we learned, most buyers and sellers want to base pricing on some kind of reach-based metric like CPM Viewers. However, when asked how they tend to buy/sell DOOH ads, only 28.6% indicated that they currently use this approach, while 24% buy or sell on a spot-by-spot basis, and 22.1% buy or sell on a screen-by-screen (or venue-by-venue) basis.

We also learned that the median CPM Viewers price of $6.50 might be representative of what's being bought/sold in today's market, but a single number can't really capture the wide variety of networks and media prices that are out there. Consequently, buyers and sellers alike have trouble making meaningful price comparisons and can't mentally shop a DOOH sale or purchase against other kinds of media.

Let's talk numbers

We noted last year that the "average" 100-screen network takes an average of 9 people to run, with an average salary of $52.5K per employee. That's equivalent to $39,375/month in expenses, or $394/screen/month. When added to the $103/screen/month in capital expenses we calculated from our survey results, the "average" screen in a "typical" 100-screen network costs about $497/month after salaries are factored in. In other words, a 100-screen network would need to earn just under $50,000/month to stay afloat.

Regardless of how you choose to price it, the figures above indicate that each screen in the network needs to earn about $500/month. Using CPM Viewers-based pricing and our median figure of $6.50 CPM, we can thus calculate a wide range of break-even scenarios (assuming that ad buyers are buying on a month-to-month basis, there are 30 days in a month, and each viewer sees every ad once during their visit):



By combining this information with a basic knowledge of venue traffic profiles, we can get a better understanding of how the break-even analysis plays out in real world scenarios:

• For a network in low-traffic venues that sees only 1,000 visitors/venue/month, you'd need to sell a whopping 77 units of ad time on each screen to break even. If those are all 15-second spots, that amounts to over 19 minutes of commercial air time (double if the spots are 30 seconds long).
  
  
• Moderate traffic venues like retail stores and specialty markets might serve 150 customers each day, or around 4,500 per month. Screens in these locations would need to sell about 17 units of ad time to break even.
  
  
• Meanwhile, a reasonably high-traffic QSR location might serve 1,500 customers a day. A network built in these types of venues would only have to sell about 2 units of ad time on each screen to break even, since each ad would be shown to about 45,000 people/month.
  
  
• Finally, a high traffic venue like a popular supermarket can easily serve over 2,500 customers per day. Assuming that all of them came across the DOOH network's screen, that owner would only have to sell one ad-unit of time to break even. Of course, at these high volume locations, ad buyers may be less comfortable paying the full CPM price, especially in situations where it's unlikely that all customers will actually see the screen.

How should lower-traffic venues respond?

While CPM Viewers pricing clearly works out favorably for the seller at high-volume locations, there are tens of thousands of screens deployed in venues that don't get anywhere near the several hundred visitors per day needed to make the model affordable. For these networks, a flat price-per-spot-per-month model probably makes more sense. Looking back at our DOOH survey data on the matter, clients reported being willing to pay anywhere from under $20 to more than $140/spot/screen/month, presumably depending on factors like the desirability of the location, screen size, etc. Still, the math here is easy: at $20/spot/month, a network owner would need to sell about 25 spots/screen/month to break even. At a whopping $140/spot/screen/month, he would need to sell less than 4.

Of course, most network owners aren't aiming for a break-even scenario. They want to be profitable. And as you can see from the numbers above, the different pricing strategies can have a pretty significant impact on what it takes to reach profitability. They also differ on things like promotional techniques: "giving away" a $140 spot to a good customer is obviously less desirable than giving away a $20 one (even though the cost basis is probably the same: close to zero). And lowering the CPM for a "bonus" ad might cause a client to question why the CPM would be "higher" for all of his fully-paid spots.

Still, there's plenty of creativity in the industry when it comes to pricing ads on digital signage networks, and I'm pleased to see that the above combination of our two survey data sets doesn't fall far from my own observations, and the comments I've received from our customers. This makes me particularly excited about our upcoming 2011/2012 digital signage pricing survey. I don't get the feeling that costs have changed that much since our last survey, but I've been wrong about that kind of thing before. And later in the year, we'll be following up with another survey on content generation, in order to get a more complete picture of what it takes to build and run a network of digital signs, whether for advertising or other purposes.

Do these break-even estimates match up with your expectations? Leave a comment and let us know! (If you're viewing this in your email or RSS reader, click through to http://www.wirespring.com/blog to comment.)

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