The Digital Signage Insider

Digital Signage Benefits: Quantifying the Value and Advantages

Published on: 2009-02-25

When trying to explain the benefits of installing an ad-funded digital signage network, I'm often asked the same question again and again: "Isn't it just an expensive way of replacing my printed ads?" The extreme focus on price might have something to do with the fact that I live in Mexico, where we've seen the exchange rate with the US dollar rise 30% in just a few months (and most things you need for a network are priced in dollars). But I think it has more to do with the fact that people still compare the cost of installing the network with the cost of printing ads once. While the benefits of digital signs might be obvious to many of us, there are still plenty of people who don't understand the additional value that digital signage can offer over traditional signage.

Do digital signs really earn more money than traditional ones?

I'll use a project I'm working on right now with 85 stores as an example. Our initial estimate is that it will cost them around $200K for the necessary hardware and software for an 85 store installation, which comes out to $2,352 per store (not including installation and ongoing production costs). If we assume the installation will run nicely for five years -- a fair, even conservative, estimate -- that comes out to merely $39.20 per store per month. Even assuming that the customer makes this initial investment through a financial (leasing) company and incurs some fees there, it seems like a pretty reasonable figure. By comparison, considering the costs of designing and printing ads, shipping them to each location and being sure they are displayed, you'll see that the monthly cost of the traditional method isn't too far away from the cost of buying the equipment for the digital signage network.


Image credit: Gaetan Lee
Production and distribution costs are only a part of the whole equation, though. Another thing you have to estimate is the value of the ads being shown, typically by calculating the impressions -- or opportunities to see -- that you can make at the same space at each store. If you install a digital screen, you'll have the ability to run several ads in the same piece of real estate (but with fewer impressions for each). With a traditional printed ad tacked to the wall, you can't use that same spot for another ad at the same time. While the opportunity to see each piece of content may be lower, the ability to put multiple items in the same high-value location is very compelling for advertisers, so the real value of each spot remains pretty high. I'm not the kind of guy that will tell you to replace all of your printed stuff with digital, but using digital for high-value locations is a great way to squeeze more value out of your high-traffic or high-impact areas, which is more important during our current economic crisis than ever.

What's the secret to getting the most value from digital signs?

If you've made it this far into today's article, you're surely wondering "How can this guy prove I'll make more on the net with digital ads instead of print?" Well, I can't tell you that for sure, but speaking from experience (in a past life I managed the entire Walmart TV network in Mexico), what I can tell you is that the right content mix will absolutely make more sales. And I'm not talking about flashy, expensive, high production value content either. You can use simple tools on your own PC to create the right kind of ads as long as you know the right messages to transmit to your customers.

For starters, in the digital world the "one size fits all" concept is simply wrong. When you have a digital network, you simply don't do a country-wide promotion like you might in a catalog (where all of the "best" items typically have the best placement because you know for sure they will sell well). What we found to be productive was to run specific local promotions with our first-tier items, mixed in with promotions for some of our lesser-selling items (which tended to have a lot of excess inventory). Even better was when we would change our promotions on specific days, weeks or months based on past data about the kinds of shoppers who would be in our stores at the time. For example, the people buying a high-end beauty product around the holidays may have been doing so for a gift, whereas those that bought the same product mid-year were more likely buying it for themselves.

Another benefit of digital signage is the speed it brings to your internal workflow and distribution. When you only have traditional signage to promote your products, the workflow of that system is really slow. In your best scenario, your September catalog has to be at the printers by July to allow enough time to print and deliver it. This means your promotions for September have to be designed and defined somewhere around May. Where is the "opportunity" there? With a digital network you can build your promotions for September even one week or one day before the month starts. Imagine you have a beautiful raincoat in your September catalog, but this year turns out to be particularly warm and dry. Your printed catalog's advertisement is worthless. With digital ads, on the other hand, you can continue to promote summer clothing until the first drop of rain appears (whenever that happens). Just like the guys in New York City that pop up out of nowhere with umbrellas when it starts to rain, digital signage has the ability to be on time with the right message when needed -- and advertisers are willing to pay some premium for that advantage.


Image credit: Kevin Coles
Make sure you try new things

In the end, digital signage is all about the opportunity to let your customers see what they need to see at a specific place and at a precise moment. Like the digital menu boards that show you breakfast in the morning, lunch in the afternoon and dinner at night, digital signs add value by letting you use your most valuable space as efficiently as possible, with less "waste." But there's another advantage that frequently gets overlooked. Because digital signs are often put in the best possible store locations, store owners and networks owners can be reluctant to let certain ads run. When you see traditional signage in a store, 90% of the space is used to advertise products that store owners already know will sell well (even if they don't advertise them). Because it's inexpensive to update content on a well-designed digital signage network, you have the ability to go beyond these "safe" advertisements and try to push items that have great potential, but don't yet deserve the prime poster space. While we continue to find value in selling ad space to A-list advertisers, there's even more to be found in atypical uses. Digital sign networks have turned out to be amazingly useful for moving the products that were sitting in the warehouse, great for temporary promotions, and truly excellent for promoting new arrivals -- all of which were either too expensive or too difficult to accomplish with static posters.

How have you explained the value of digital signage to your customers? Has the process gotten easier over time, or are people becoming more skeptical due to the hype that accompanies many projects?


Comments   

0 kiran 2009-10-08 14:36
nice............!!!!!
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0 Gerry 2011-06-14 13:11
Restaurant/Take-a-way Usage: People eat with their eyes; food shot in HD is truly beautiful, the key for digital signage in restaurants and take-a-ways is the content - with hungry customers waiting to be served, the best you can do is to make everything look appetising. Maybe, youTMve got a new offering that no one knows what it looks like and therefore wonTMt try it. Here you have the opportunity now to reinforce the message by giving them a look. During the grind of a typical day, consumersTM minds wander from one style of food to the next; the hour before lunchtime becomes a mind maze of possibilities. The average Restaurant is loosing out to their larger known counterparts on a daily basis - by not having a selection of their offerings on display. When introduced to this mindset, our screens can have a powerful influence. Animated Window and Outdoor Signage can tempt customers to come inside. Digital Signage is poplar because it is an inexpensive way to display your offerings to passer-by's outside. Motion and change attracts customers to your message - unlike static signs. Like wise for the Take-a-way, just imagine on a Friday night, how you can literally grab those passer-by's by their eyeballs. By placing one of our screens near your window facing out onto the street; displaying a Chinese, Indian dish, or Kebab, these dishes shot in HD are simply both stunning and mouth-watering. And then there is that wonderful added benefit that retail enjoys from digital signage " oewait warping, or the fact that people who are waiting to be served will perceive their wait time as less of a burden if they have something interesting to look at. Another opportunity to upsell a hungry customer; "That looks nice, think I'll have one of those as well" - "People eat with their eyes". Please take the time to visit us at: http://www.clarityinmotion.co.uk Making your message clear
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