In the closing days of 2006, the big news in the digital signage industry is that technology giant Cisco purchased a small digital signage firm, marking its entry into the crowded space of digital signage providers. Right after the acquisition was announced, James Bickers from Self-Service World sent an email soliciting opinions from various folks in the industry, and the responses he collected are pretty interesting. In the course of reading the article, the one comment that struck me the most was from Brad Gleeson, VP of Business Development at Planar Systems, who suggested that the acquisition was a "significant validation of the marketplace." That immediately made me stop and think: is the digital signage industry still looking for validation? And what about the larger retail media industry in general?
After years of watching and participating in the retail media space, I don't see Cisco's purchase of Tivella as validation of the industry. The list of big companies that have put their weight behind digital signage and other forms of retail media grows larger every year, and currently includes Wal-Mart, #2 on the Fortune 500 list and the world's largest retailer. But the list of multi-billion dollar companies certainly doesn't end there, when you consider that Target, Best Buy and CompUSA have all made significant investments on the retail side, and the technology suppliers include companies like 3M, Sony, NEC and Thomson, among many others. The only thing the Cisco acquisition indicates is that they are willing to take a small risk for a potentially big opportunity that plays well to their existing strengths. As Rufus Connell, research director of information technology for Frost & Sullivan notes, "Cisco likes anything that drives bits over networks." Nothing pushes more bits than lots of digital video, so the prospect of wiring up a 1,000 store retail chain or 100 building corporate campus to handle the torrent of data probably seemed like a good idea to the company (and does appear to fit well with their core competency from that respect), and spending a few million dollars to expedite R&D would have been an easy decision.
Moving past that, though, why do many in our industry still feel the need for some source of external validation? I think that part of it comes from the identity crisis that we face. Essentially, what we now call the digital signage industry or the kiosk industry or the retail media industry is in part a re-hashing of products and services that have existed for a long time. For example, the POP display makers have been doing brisk business for the past century or so, as have product packaging designers, fixtures makers, lighting designers, sign makers and any number of other professions whose wares contribute to the in-store experience. Over time, these groups have become more sophisticated, and their offerings more elaborate and varied. New technologies have enabled new forms of retail marketing, giving retailers and CPG manufacturers alike greater control over how their messages are displayed and consumed.
As these companies partnered with each other, formed alliances, trade groups, and independent auditing boards, they re-labeled themselves "retail media" and "marketing at retail" specialists to suggest that these different disciplines should all work together and need to be evaluated together. While we now understand that in-store marketing should be treated as a cohesive strategy (along with things like store experience planning and visual merchandising), this concept really only started getting a lot of attention in the last decade or so. One unfortunate side effect is that by operating under the new retail media moniker, existing in-store marketing efforts suddenly find themselves at odds with traditional advertising that affects people outside of the store. In a competition for a fixed number of ad dollars, everybody in the "at-retail" camp is suddenly contending against television, newspaper, radio, magazine, Internet and outdoor ad folks -- effectively the entire advertising industry -- who up until recently didn't participate in retail marketing efforts (and still don't, in many cases).
In part, then, some people feel that our industry won't be fully "validated" until Madison Avenue signs up for more retail-oriented projects. And while it's true that such a situation could drive a greater percentage of advertising dollars into the store, that's very far from saying that what we have now is somehow invalid. In addition to the projects conducted by the aforementioned Fortune 1000 members, there are literally hundreds of other profitable networks out there testing every business model under the sun. There are two major, independent measurement experiments going on now (continuing the retail media measurement debate that has been making news for months), on top of the dozens of published studies conducted by POPAI on the efficacy of static POP advertising. And a number of large retail projects piloted in the past 12-18 months have gone into full deployment, suggesting that they successfully met their business goals.
There's no question that conventional marketing in the retail environment works extremely well, and it doesn't require a huge leap of faith to extend these results to new forms of in-store promotion like digital signage. In addition, considering that the techniques being tested to measure in-store media effectiveness not only take advantage of the unique aspects of the retail environment but also the past half century of measurement techniques from elsewhere in the ad industry, I wouldn't be surprised to find that we have the most accurate and reliable measurement capabilities of any advertising medium in the next five years or so. With all of that being said, I think it's safe to officially declare the retail media industry valid, and leave it at that. In the coming year, I hope we'll finally see a shift away from this mindset of having to catch up to those other media guys, and the realization that in some ways we're already in the lead.