Digital Signage: The outlook for dynamic media

by all | 7 December 2015 2:15 pm

By Lyle Bunn
Digital signage has been around for 25 years or so, having started with videotape loops airing on cathode ray tube (CRT) TVs in retail locations and then evolving into narrowcasting with specially created content. The current era of digital signage, driven by ever more sophisticated content management systems (CMSs), has experienced double-digit growth regularly since 2000, as the pricing and performance of flat-panel displays, media players, connectivity hardware and media management software have steadily improved and organizations of all kinds have revamped their approaches to communications.

By way of example, according to market research firm IHS, the market for digital signage software grew by 13.1 per cent in 2015, while revenue from advertising grew by 11.6 per cent and is expected to increase by 12 per cent in 2016. The installed base of active digital signage displays across North America, based on the addition of two million new screens each year and a mean lifespan of five years, is conservatively estimated at 20 million, including at least one million dedicated to third-party advertising. And annual investments in content, based on assumptions about the scale of various networks and their refresh rates, currently exceed $3.5 million U.S.

Supporting growth
The success of digital signage is founded on the principle that the human brain is hardwired to notice motion. Animated graphics and text are all the more effective in reaching an engaged audience when presented at high-traffic locations with long dwell times and, especially, with messages that are relevant to the targeted viewers, whether they are at work, travelling, browsing or nearing the point of purchase (POP). When done right, the medium can help not only brand a given location, but also improve its ambiance and vitality.

Other factors that have supported the growth of digital signage range from the need to update the public with mass safety alerts to the ability with interactivity to customize content for an audience of one. Digital signage operators’ return on investment (ROI), meanwhile, benefits from network-based integration with point-of-sale (POS) systems and data feeds (e.g. weather forecasts, news, calendars of events), among others. Screens can help activate consumer engagement through other online media, including mobile apps and e-commerce. Indeed, the explosion of mobile and social media has helped vault digital signage forward. Over time, the medium has evolved from a stand-alone platform to part of a greater communications continuum.

Despite the double-digit growth of digital signage in virtually every market, however, other factors have deterred or retarded adoption of the medium. One is the common perception of high expense, particularly with regard to the constant creation of new content. Another is the difficulty many organizations face in identifying where digital signage fits among their marketing and technology budgets, which can result in underfunded and delayed project cycles. And yet another is putting the components of a project together, which can be challenging when clients are working with many suppliers who each only provide one piece of the puzzle.

Fortunately, all of these concerns have been clarified and addressed in recent years, to the betterment of the industry.

Building the supply chain
The digital signage ‘supply chain’ includes content authoring, management, connectivity, presentation and audience analytics, all of which have become efficient and adaptable. Messaging is less expensive today, content development is faster and the presentation of branding across various media is more consistent.

Many vendors today provide displays, mounting hardware, enclosures, CMS software, design templates and other components, with some bundling them to help small, proof-of-concept projects get off the ground with minimal cost, time or complexity, allowing the client to focus on the messaging. Sign shops, audiovisual (AV) integrators and information technology (IT) vendors have all become major suppliers in the market, with new entrants continuing
to emerge.

Nevertheless, the supply chain can be compared to a long, low, flat pyramid. While there are more than 2,000 suppliers of digital signage in North America, fewer than 50 dominate the industry. Most content creators, integrators, AV or IT integrators and sign shops are in the lower-revenue base of the pyramid.

Paid, owned or earned
Digital signage has become well-established as (a) paid, (b) owned and (c) earned media.

In the first example, digital out-of-home (DOOH) advertising has grown into a multi-billion-dollar market, from digital billboards to public transit screens. In the second scenario, dynamic POP displays have become ubiquitous in stores, quick-service restaurants (QSRs), movie theatres and other venues that are merchandising and promoting their own goods and services (see page 66). And finally, in the third context, internal communications networks have used digital signage to display curated social media messages and other repurposed content from other sources.

The more visibly digital signage is used in a wide variety of ways throughout the economy, the more comfortable organizations become with turning to it for their own purposes. Some of them are merely taking an ‘us too’ approach so as not to be outpaced by their competitors, but in many cases there is tangible value in adopting digital signage to achieve specific business results.

Hot markets
While digital signage has been applied to all sorts of locations, its expansio n has been particularly robust in the food-service, retail, financial services and corporate communications markets.

Food-service
Digital signage has increased the revenue generation potential of restaurants through dayparting (whereby different items are promoted at different times), by showcasing supplementary content about events, catering and gift certificates and by accelerating the speed of ordering (e.g. with interactive kiosks).

Retail
With the rise of e-commerce, bricks-and-mortar retailers have become highly motivated to modernize their in-store experience for customers. Digital signage is helping them update promotions based on changing inventory, showcase their customer loyalty programs and exploit opportunities to upsell or cross-sell. The medium’s reach within the sector is also growing, with end-cap merchandising displays now complemented by smaller shelf-mounted video screens.

Financial services
In the past, digital signage was installed in banks to help reduce perceived wait times, but in today’s era of online and mobile banking, it is being better-used to profile investment services for existing customers, generate inquiries about insurance and other supplementary businesses and reach younger demographics.

Corporate communications
The use of digital signage for corporate communications is seeing high growth as employers seek to increase employee productivity, align messaging with corporate culture and reduce turnover. Taking lessons from marketing, they are using their brands and stories to inspire their target audience.

Gathering the industry
The most recent Digital Signage Expo (DSE), which took place in March in Las Vegas, Nev., set a new record with close to 4,100 attendees, 42 per cent of whom where end users. And with approximately 1,940 exhibiting personnel from more than 200 suppliers—65 per cent of which were first-time exhibitors—total attendance topped 6,000 for the first time.

Based on employment estimates in the sector, this means about 10 per cent of the digital place-based media industry’s entire workforce attended DSE. The size of the exhibit hall also set a new record at more than 7,711 m² (83,000 sf).

“When we opened the hall on Wednesday, March 11, attendees streamed in for more than 20 minutes, generating an energy on the trade show floor that lasted late into Thursday afternoon,” says Chris Gibbs, president and chief operating officer (COO) of ExpoNation, which produces DSE each year.

AV industry association InfoComm’s annual trade show, which was held in June in Orlando, Fla., also marked an upward turn for digital signage. Industry representatives declared a ‘tipping point,’ whereby the cost of not using digital signage—i.e. in the face of competitors—now outpace the actual costs of applying and operating the technology. This tipping point has been brought about through reduced prices and improved performance, particularly for media players with embedded software and, in some cases, self-monitoring capabilities, which mean many common problems can now be resolved without needing a site visit.

Interestingly, Networld Media Group’s Digital Screenmedia Association (DSA) repositioned itself in early 2015 as the Interactive Customer Experience Association (ICXA), expanding its scope from traditional digital signage to incorporate self-service kiosks, POS systems, mobile payment technologies and e-commerce. The first annual ICX Summit took place in Chicago, Ill., in late June and reportedly sold out.

Digital signage will continue to grow and evolve alongside other ‘ICX’ technologies to better serve organizations’ communication goals. New approaches to analytics, content playback and network management continue to be developed and, at the same time, new providers and champions of the medium continue to emerge. The future is bright for both the supply and application of digital signage
technology.

Lyle Bunn is an independent digital signage analyst, consultant and educator based in Brighton, Ont. For more information, visit www.lylebunn.com[5].

Source URL: https://www.signmedia.ca/digital-signage-the-outlook-for-dynamic-media/

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