Measuring ROI
The best way to break through the technology hype and avoid simply throwing money away at new tools for digital signage is to measure the return on investment (ROI). Digital signage has seen a rapid increase in popularity because more organizations have recognized the true value it can add for them. It allows for live audience interaction, compared to previously static ads. It creates a prime opportunity for brand building. And it has been shown to influence consumer behaviour, from reducing perceived wait times to increasing POS sales revenue.
For digital signage to foster a stimulating environment, then, it must engage passersby and have an impact on their short- and/or long-term behaviours. Achieving these goals will depend on the nature of the organization.
ROI is important because of its broad applicability. At its simplest level, it is a matter of dollars earned versus dollars spent, a calculation of the gains from an investment less the cost of that initial investment. Each organization, however, has unique goals and therefore unique requirements for what can be expected in terms of ROI for any new technologies, products or processes.
Hospitals are using digital signage to improve operating room (OR) efficiency, but touch screens are likely to be shunned for the fear of the risk of contamination.
In fact, these objectives can even vary within an organization. Some digital signs might be used to help customers, for example, while others are intended to keep employees informed.
With this in mind, an ROI could indeed involve increased sales, but it could equally entail an increase in efficiency by yielding time savings for staff. It all depends on what the digital signage system will be used for.
Another way to calculate the effectiveness of digital signage, then, is return on objectives (ROO). ROI and ROO are closely intertwined. Digital signage used for wayfinding purposes, for example, may not appear to lead directly to an increase in revenues, but by freeing up time previously spent by employees providing directions to visitors in person, the system makes staff available to perform revenue-generating activities instead. Thus, a wayfinding system leads directly to an ROO and indirectly to an ROI.
It is also important to consider the time frame associated with a digital signage project. One way to judge ROI from a longer-term point of view is through the total cost of ownership (TCO). In the short term, for example, the initial cost of setting up a digital signage network may far outweigh that of printing static posters—but in the long term, with the ability to update on-screen content in real time, whether for a single digital sign in a certain location for a specific purpose or across an entire network simultaneously, the processes for digital signage become a
lot more efficient and the ROI starts to seem much more appealing.
Another, more subjective form of ROI is positive feedback. Indeed, it may be just as important to solicit responses from visitors before and after a digital signage installation, so as to determine the impact of the new technology and whether or not it meets the organization’s objectives. Even simply observing people can measure their response, e.g. how long they spend in front of a screen and then how many of them go on to buy a product advertised on that screen. More detailed ROI measurements can involve conducting surveys or interviews and recording their responses, to check if they not only noticed the digital signs, but actually found them helpful.
Digital signage has been incorporated into the architecture of the Air Canada Centre (ACC) in downtown Toronto.
If these methods are not sufficient, there are also ways to use more advanced technology to measure in greater detail. By integrating sensors, for example, it is possible to measure everything from foot traffic to interactive touch screen responses.
As the old saying goes, “You can’t manage what you don’t measure.” Fortunately, technology is making it ever-easier to measure the impact of digital signage in scientific terms. Businesses can track the medium’s performance over both the short and long terms.
It is particularly useful for companies to measure ROI for digital signage if they plan to start out small with a pilot project before rolling out a larger deployment over a longer period. Calculating ROI for the initial launch can provide a strong influence in finding better ways to manage the network later on.
Driven by digital signage
When considering all of the emerging tools in the visual communications market, then, it is important to remember digital signage should drive the choice of technologies, not the other way around. If an organization can first define what it is trying to achieve, then it can start down its path based on actual requirements, rather than hype. Any technology selected to support a well-thought-out business strategy should help reduce costs, increase revenue and endear digital signage to its viewers.
Doug Bannister is founder, CEO and chief technology officer (CTO) of Omnivex, a digital signage software developer based in Concord, Ont. For more information, visit www.omnivex.com.
