The Digital Signage Insider

Digital Signage Market Faces ROI, Cooperation Challenges: Survey

Published on: 2009-06-30

In early May, I asked the readers of this blog to fill out a short survey designed to get a high-level snapshot of the digital signage market. There are lots of deals going on right now, and more companies than ever are doing good, solid work on projects ranging from run-of-the-mill to truly unique. For all those who finally 'get it,' though, there are still plenty who don't, and it's those people and companies that we all need to help educate. I won't pretend that my little 8-question survey (9 if you include email address) is going to miraculously identify and solve every unique question and issue out there. But once you see some of the results outlined below, I think you'll agree that some of us were not asking the right questions to begin with. And many of us probably had a mistaken impression of what the industry's strengths, weaknesses and primary challenges actually look like.

Who responded to the survey?

When the survey closed at the end of May, we had collected 145 results. This is a large enough number to draw conclusions from, but still smaller than I had hoped for. About half of the responses came from inside the US. The other half came from abroad, lead by Canada, the UK and the Czech Republic. Lots of people selectively answered the questions, choosing to leave out some of the open-ended ones (which was expected). But as you'll see, the long form questions provided some very interesting insights that we might have missed if we had limited the survey to simple Yes/No or A/B/C/D questions. Respondents were a good mix of people, with the bulk still being either digital signage vendors or network owners/operators. However, content providers and agencies made strong showings as well:

Answer Percent
Digital signage services company (hardware, software, services, consulting) 38.7%
Digital signage network operator 19.4%
Advertising/marketing agency 13.7%
Content production company 9.7%
PR/communications agency 2.4%
Venue owner (retailer, hospital, bank, etc.) 2.4%
Other answer 13.7%

What's the biggest challenge facing digital signage right now?

To me, the most surprising and illustrative responses came from the very first question: "What do you think is the biggest challenge behind buying/selling digital signage today?" When I've asked this question in the past, the answer has invariably been "it costs too much." But today's digital signage experts think differently:

Answer Percent
Too hard to explain the value 34%
Requires too much cooperation between different disciplines/departments/people 27.7%
Still too expensive 18.4%
Too hard to keep the signs "fresh" with new content 8.5%
Too technically complicated 4.3%
Other answer 7.1%

The most popular write-in option was the difficulty of determining ROI. In my opinion, this is the same as "too hard to explain the value". Maybe I should have said "too hard to quantify the value" instead. Regardless, the key takeaway here is that while the cost of implementing digital signage has plummeted in recent years, as an industry we still have a hard time answering the question "but what does it do?" That's a big problem, since more and more screens are being deployed every day (fueled by hype and decreasing prices). That means that more and more screens will be missing their targets (in terms of ROI or other metrics) and probably getting hung up on the same problems that we've been facing for a decade or more now.

I was also pleased (though not surprised) to see the answer "Requires too much cooperation between different disciplines/departments/people" make such a strong showing. This indicates that digital signage has moved out of its old domain of merely being someone's pet project (without proper organizational support) or getting classified as an IT-specific initiative (without involving other departments). It also gives credence to the idea that more mid-size and larger companies are working on digital signage projects. While we've seen plenty of anecdotal evidence of this, it's the kind of "feeling" that's very hard to get real data about.

Who's doing it right and who's doing it wrong?

When it comes to doing it right, retailers lead the way -- nearly a third of respondents indicated that the retail vertical is doing a good job using digital signage. They were followed by travel/transportation hubs (22%), hospitality (17%) and banking/finance (13%). When asked why, most respondents indicated that these types of venues simply lend themselves well to digital signs, and also noted that most of the time, the content running on such screens was reasonably useful or valuable. On the other hand, about a quarter of respondents said that these places simply "had the most screens," so there's probably some psychological chicken-and-egg going on with the responses. In other words, viewers see the most screens in certain types of sites, so perhaps they assume the screens in those venues must be doing well and are delivering value to other viewers.

I'd love to say that those venues selected as doing the worst with digital signage were entirely different than the list above, but the truth is somewhat muddied. In fact, 25% of respondents indicated that the retail sector was doing the worst! Government/public service and education come in a distant second and third, with 15% and 13% disapproval ratings, respectively. I think we're probably seeing that adverse selection problem again: there are simply so many retail screens out there that a good number of them (though not necessarily a big percentage) are bad, which leaves a significant imprint on the viewing public. Likewise, many people may spend more time in retail environments than in government buildings or schools, thus giving them more exposure to retail screens, and thus more opportunity to mentally critique them. The reasons for these bad screens run the gamut. 31% say the messages they show don't add any value to the environment. 18% say the content gets repetitive and/or annoying. Another 18% say the messages aren't on-target with the screens' audiences. And 17% say there are frequently issues with screen placement.

What's the best digital signage installation you've seen?

I was happy to see so many people fill in a response to the question "What's the best digital signage installation that you've seen?" Nearly 100 people answered, and aside from a few self-serving responses, there was a clear trend: people like digital signage in travel/transit venues. Several people cited the Chicago Transit Authority (CTA), the London tube, and numerous airports as locations where they had seen great digital signage. I think it's easy to understand why this might be: these venues have a real need for automatically updating their signage, and visitors to these locations are already trained to look for it. When I'm at an airport, I need to see gate and time information. Likewise at a train or bus station, I want to know when and where my transportation is going to arrive. Viewers are already looking at these screens, and the screens are providing them with real, relevant and valuable information. Toss in a little news and weather and it's even more useful. Mix in some targeted advertising and suddenly you have screens that are genuinely valuable and placed in areas where people are already seeking them out, which is a great deal for all the parties involved -- including the viewers. That's a hard combination to beat.

How can we act on this newfound information?

That's the $64,000 question, isn't it? Let's start with a few key takeaways. First, no matter which market segment you're in, enough people seem to think that there's plenty of room for you to improve. You may only have to win over your particular set of viewers when managing your own network. But when you're out selling new networks and clients, you'll also need to show how much better you are compared to their general perception of a digital signage network. This industry has now existed long enough for people -- important people holding the purse strings, no less -- to form preconceived notions about digital signs. Often, that's a bad thing. Your work needs to be good enough to change that. Second, the above question about the 'best' digital signage installations really highlights the need for utility. Making screens relevant doesn't necessarily mean making the content brighter or prettier (though it can help). Rather, it means providing viewers with the information they already know they want, not just the info you hope they had never thought about before. If you can figure out what your viewers genuinely already want to see on the screen, and put it there in combination with the rest of your content program, you'll go a long way towards winning them over.

What do you think of the survey results? Are the 'best' digital signs really in the travel/transit sector? Have you seen an amazing project that you'd like to tell us about? Leave a comment below and let us know!


Comments   

0 Lyle Bunn 2009-07-01 11:49
Nice work Bill in your conducting the survey and then putting the responses in context. I am struck by the portrait that is painted of the digital signage industry being at yet another major inflection point.. Having been through the "wild west" land grab, then technology stabilization and more recently the expansion into a more robust and serviceable channel strategy, the challenges of selling the communications application (rather than "the technology" as a better communications devise) is the next major development point. As the market and supply base continues to expand rapidly, the industry risks going off the runway through lack of a strong basis of consultive selling. Without the assurance that networks can deploy and grow on the basis of a strong ROI/ROO foundation, which includes "content" refresh that draws on the inherent playloop and dayparting capabilities of the medium for message targeting, Digital Signage runs the risk of high sales costs and a broadening distribution of revenues as more suppliers join the industry. Relevant education is still gthe key. Keep up the great work Bill!
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0 Dj 2009-07-01 12:04
Hey Bill, you are so damn right, as always. However, the problem being faced in India are: 1) The friction for experiment by Media Buyers. 2) Expectations high right from the beginning. 3) Initially people going totally wrong. but its so good to read you! Regards Dhananjay
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0 Bill Gerba 2009-07-02 12:33
Hi Lyle, Thanks for your thoughts. Speaking of yet another "inflection point," I think the next will be driven by two different engines in parallel: first will be accelerated price declines that should (theoretically) open new markets. The second is increased take-up at the corporate (non-IT) level, which ought to yield more internally-proposed projects. Of course, that last part's good for you, since the first thinga Fortune 500 does before they touch a new project is hire a consultant :) Dhananjay, Funny, I addressed your points #2 and #3 at the first Digital Signage Asia conference in Mumbai back in 2006. The almost entirely-Indian audience was really excited because they felt they'd be able to learn from everyone else's mistakes. Guess it didn't turn out quite that way. Oh well. Point #1 is a problem here in the States too, though some savvy marketers are beginning to demand integrated product mixes that feature digital OOH components like digital signage. Perhaps you'll find the same starts to happen in your neck of the woods soon.
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0 bruce 2009-07-06 13:23
Interesting results, thank you for sharing. Is QSR/Foodservice considered part of the retail market in these results? IMHO, ROI is less challenging with this industry (there are less sales choices, clear day parts, many processes and controls already in place along with historical trends to better measure success or failure with when creating an ROI). I think this industry should be right up there with the others as doing it right and/or wrong. Also, I find that the 100's of solutions to choose from in the marketplace also makes it difficult or "too hard to explain the value" as one of the biggest challenges as well. It is equally important to be able to explain the difference (and or value) of one solution versus another. The silver lining as you mentioned, is that there will be more opportunities for consultants (and solution providers) that do a good job of explaining the value of digital signage, and the solution that best fits their customers needs... Good stuff, enjoy reading your blog, Bruce
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0 Ediz Burla 2009-07-06 21:56
Hi Bill, I can say that the no. of digital signage networks has dramatically increased over the past months in European Countries as well as in Turkey. The numbers are quite same with the survey results above. 32 Percent share of all implemented networks in Europe is the retail point of sales (pos) environment. The transport sector, including airports, railway stations, metro stations and others follow with 26 percent. Leisure is 15 percent and the hospitality is 7 percent. The ad. based solutions represents the largest part of the cake. No doubt it's due to difficulties of explaining value added implementations, in addition to high ROI expectations at customer side. It's important to be able to educate the market and provide all-in-one fee based services.I believe by doing so SaaS will guide client through the best solution fits their needs/objective and it will help to eliminate the failures and leverage the value of digital signage. If anyone would have a chance to visit istanbul-Turkey, I recommend you to visit 3.000 mt2 Teknosa Planet store at Profilo Shopping Center, Mecidiyekoy. Teknosa is the largest electronic retail over 230 shops in TR. This is an amazing project designed by Rattray&Magness collaboration with digital signage by TVeez Marketing Intelligence. Ediz Burla VP Marketing, Odysii Turkey
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0 Matthew Olivieri 2009-07-08 17:56
Hey Bill, What did you think of my idea for the DMV as place that could use Digital Signage? I have also quoted your survey in my latest blog post; would love your comment contribution: http://www.nmotiontech.com/adsembleblog/2009/07/08/kpis-for-digital-signage-ads/
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0 Bill Gerba 2009-07-09 01:58
Bruce: I didn't include a category for QSR/foodservice, but mentally I probably would have considered them either retail or hospitality, personally. I agree, food service venues do have some unique strengths, but of course they bring their own challenges as well -- the ability to sway the purchase decision being not the least among them. As for having to explain the differences between the hundreds of solutions out there... well, welcome to my world :) If you come up with a good solution, I have an employment opportunity for you :) Ediz: Thanks for that corroborating data. I'm glad to see that our experiences with the survey responses match up with the real world! Matthew: I know that there are a lot of government deals taking place right now, so I think somebody has finally figured out that all of that waiting around that takes place in government offices might be made a little more tolerable if the people had something to do. Also, thanks for the mention on your blog!
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0 Patrick Ryan 2009-08-17 20:45
I have built a small network successfully in NY of digital signage ( AD based ) which has surely thrown a few hurdles my way this past year. I would like to hear your thoughts and intelligence on the trends as you see them for the little guys and local & regional advertisers. I find the level of resources and sophistication of the local business people to be a real roadblock. I,m looking for that magic bullet to change the mindset of the small business person and get the buy - in, that could make a great little business between selling the advertising as well as the technology.Any thoughts please call or e-mail me at anytime ,, Thanks , Pat 631-793-9142
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0 Bill Gerba 2009-08-21 14:02
Hi Patrick, I wish there was some magic bullet, but the very fact that you've continued on probably means that you know much more about ad sales to local companies than I do. The only things I might suggest, if you haven't done them already, are trying to hook up with the local newspaper/flyer guys, since they already know all the local businesses, and trying to connect with the community's "buy local" program, if there is one.
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