Last week's blog article about Google entering the digital signage market generated a wide variety of responses, from general disinterest (and suggestions that we're only contributing to the hype) to genuine concern about one party dominating this emerging space. The week that followed was even more eventful for retail media, with deeper insights revealed about Cisco's digital signage plans, word of a Google-powered wayfinding kiosk, and even a hint that Microsoft may soon join the fray.
Google's digital signage patent certainly featured prominently in the headlines, and while professional Google-watchers are quick to point out that many of their patent applications go unused, to others it's quite evident that out-of-home media networks give Google a foothold in the bricks-and-mortar world while playing to their core strengths. Further fueling the speculation was another patent application, this time for a mall wayfinding kiosk that would show Google-supplied ads (see the images posted to Flickr). Our friends at the Kiosk and Self-Service blog suspect that mall wayfinding could be an ideal application for Google's underutilized Froogle offering, and offers yet another way to sell ad space in a retail environment (though I wonder whether even Google can make this sort of application profitable). In the past dozen or so years, we've seen numerous ad-funded wayfinding systems come and go, and the biggest stumbling block has always been ad sales. For the ads to be contextually relevant (and therefore useful), they'll have to focus on mall tenants, who already participate in mandatory cooperative marketing programs. The other entity that could make a wayfinding system work is the mall itself, but they may actually benefit from patrons wandering aimlessly (at least for a little while) before finding their desired destination. And in any event, the malls control the co-op dollars -- so they'll be the gatekeepers for that market segment.
Google shared the limelight with Cisco during the week, even though Cisco's big news about entering the digital signage market has been known for some time now. eWeek ran a great article describing the network company's ambitions, noting that Cisco expects the digital signage market to top $3.6 billion by 2011 (higher than any analyst estimates that I've seen so far), of which they hope to capture about $1 billion. With that kind of optimism, it's no wonder Cisco wants to get into the action, though with a multi-year sales cycle and a very demanding and interdisciplinary list of customer needs, I wonder how long they'll choose to stay the course.
Finally, our friends at RetailCrossing once again pointed out some interesting industry news, this time from Microsoft. According to the Ad Cult blog, "Engineers at Microsoft Corp. have developed a prototype advertising system that uses a small video camera and facial-recognition software to try to determine a viewer's gender and select an appropriate ad to display. The system is intended for use with large video screens in public places, such as shopping malls. It's one of the projects being pursued inside Microsoft's adCenter Labs -- part of the company's effort to come from behind in online ads and other forms of digital marketing." To be honest, I wasn't even aware that Microsoft had a group focused on digital marketing, but given the breadth of their offerings (and fear of all things Google), it's not too surprising. While I'm not thrilled with the early focus of this technology -- or its references to Minority Report, for that matter -- it does show that even the biggest of the big software companies have caught the retail media bug.
How long will the 300+ digital signage ssoftware companies out there be able to survive with major players like Google, Cisco and Microsoft flexing their marketing and technology muscle and leveraging their existing sales relationships? Considering that so many are so small, I think we might see the start of that wave of consolidation that people have been talking about for years. Google certainly has a history of acquiring startups for their technology and talent, and Cisco already demonstrated their willingness to spend some money to get a head start in the market. Both 3M and Thomson made their acquisitions almost two years ago. Microsoft, on the other hand, is more likely to partner with specific regional players than make an acquisition or deploy technology of its own, especially given the uncertainty of the market and its tiny size compared to the other business areas they're involved in.
Still, that leaves a lot of established companies who could be looking for a quick entrance into the retail media space. Who will be the next to take the plunge? Yahoo! has done some work with kiosks in the past, but hasn't been very vocal about out-of-home media yet. IBM makes some great kiosk hardware, but has mainly focused on partnering with software and application providers, or developing one-off programs for large clients. Personally, my money is on the big advertising conglomerates. Publicis Groupe has partnered with Simon Properties to launch a network in shopping malls, and of course they own Saatchi X, the in-store advertising agency that handles Wal-Mart. That puts them in the lead in my mind. Close behind is WPP, who has started to put together a program for addressing the needs of the retail media space through its MediaEdge:CIA division. Still, neither of these organizations has a turnkey product or service to offer its existing clients, and Omnicom and Interpublic have been largely silent on the issue. But with their ample client relationships (especially on the crucial media planning side of things), any one of these groups could claim a significant chunk of the retail media industry over the next few years. Given their current field of expertise, I'd venture to say that these advertising and marketing groups are in a much better position to do so than, say, Cisco, Microsoft or even Google.