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:

1. A lack of clear ROI modeling
2. The lack of advertising proof points (metrics)
3. Too much network fragmentation and not enough scalability
4. Project complexity
5. 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:

1. Know your business model
2. Understand your goals
3. Build a solid team
4. Avoid common pitfalls
5. 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.