Making the case for optimism
Yes, it's in my best interest to be optimistic. I want people to buy my digital signage software and media players, so I have to encourage them to go out and start networks, right? Well, there's at least a smidgen of data behind my conclusion that 2009 will be at least OK, hopefully good, and possibly even great. Putting aside all of those analyst reports that say we're on track for double-digit growth, the most important thing to remember is that out-of-home and Internet are the only slices of the ad spending pie to make consistent gains over the last three years. Of the two, Internet advertising is of course much larger, but OOH is growing at the fastest rate. Even long-time stalwarts of above-the-line marketing like Advertising Age have come around on the prospects of OOH, and particularly digital and interactive signage. In fact, they just published the results of some OgilvyAction research indicating that in-store signage (of the non-digital variety) is actually more effective than price reductions when it comes to stimulating impulse purchases.
If that kind of data is too macro-level for you, let's try an anecdote from the conference. Most people felt like third quarter sales practically came to a halt at the end of August. By October, they were panicking about dismal prospects for the end of this year and the beginning of next. But many agreed with my own observation that instead of falling flat, fourth quarter sales were actually picking up, and if anything, January and February of 2009 were looking pretty good. Is that rigorous data that you can set your own sales forecasts to? No. But I heard this story from people who are living and breathing the industry. They sell their products, services and ad spaces every day to make a living. Since they had no reason to sugar-coat things for me, nor I for them, I'm taking that as a pretty good sign of recovery.
Where to look for opportunities
During my presentation (the last spot on the last day, yuck), I outlined four areas where WireSpring is finding good growth right now. These include small networks, new screens attached to existing "properties", non-advertising networks, and non-retail networks. Here's why each category is a good target:
- Small networks - We've seen strong and accelerating growth for networks with less than 25 unique channels of content (typically spanning less than 25 venues), and we expect this trend to continue well into the future. VARs like them because they have a lot of clients that fit that profile. Angel investors like them because they can fully fund them out of pocket. And entrepreneurs like them because they're manageable with a small team, for less money. And heck, there are just a lot of places where you can put 25 or fewer screens, period.
- New screens on existing properties - I'm seeing a lot of opportunities to attach digital signs to existing real-world properties like ATMs, kiosks and even heart defibrillators. This makes sense, since all of those things require similar infrastructure to digital signs (i.e. power, Internet connectivity, etc.), and their owners are now looking for more ways to generate revenue from their existing investment.
- Non-advertising networks - PQ Media indicated last year that non-advertising networks are being installed faster than advertising networks. New objectives and innovative business models are allowing these networks to skirt tough questions about ad sales and efficacy in order to focus on goals that aren't directly tied to filling advertising space.
- Non-retail networks - Retailers may lose their taste for spending money after the holidays if sales aren't good (and they're not looking too great right now). But growth in other sectors -- particularly health care and corporate communications -- remains strong.
Slow growth is better than no growth
I can't say that 2009 is going to be the super-duper banner year that everyone was hoping for. But like PQ Media and others, I do expect the industry as a whole to grow. It'll be less growth than in recent years, but still a positive number (I'm guessing 7-9% right now, but it's really just that -- a guess). What I am sure about, though, is that if we're all on the sidelines waiting for conditions to improve before putting new plans into action and helping to get new business off the ground, nothing's going to happen. So in a way, it really does pay to be an optimist, doesn't it?
Are you brave enough to post your predictions for 2009? Leave a comment below and we'll see how well you did by this time next year! :)