By Jason Bates
In a short period of time, digital signage networks have evolved beyond the phase where they are viewed as simply a new technology that provides an interesting way to relay information in a consumer environment.
Today, digital signage networks are receiving stronger consideration when matched side-by-side with older, more established advertising venues, and network operators are looking to derive even more revenue from these systems by bringing in more advertising and specialized programming.
"Some companies are placing bets on digital signage versus traditional media buys," says Mike Tippets, vice president and chief technology officer of hardware provider Helius Inc.. "Should Dr. Brown buy a slice of time on the local diner ad loop instead of time on the local cable channel or a print ad in the local newspaper? Again, there is a lack of credible information about uplift in traffic from one versus the other. There is a reasonable argument that [digital video recorder] technologies are making local cable ads less appealing."
That opens a door for advertising on digital signage networks, and industry officials see numerous ways to turn the networks into revenue-generating machines, both for the hardware provider and the enterprise customer. "Fundamentally, this has been an emerging area for the last two or three years," says Mike Cook, senior vice president, North American division at Hughes Network Systems. "The technology is there and a bunch of people are saying this is neat, but how can we make that work for us?"
Market Poised To Break Out
To date, companies have used digital signage networks for several reasons, including increasing sales, reducing the perceived wait times of customers and enhancing brand awareness or differentiating themselves from competitors, says Kris Konrath, director of marketing, Convergent Media Systems. "Digital signage can have both direct and indirect effects on revenue. It can directly affect sales lift by promoting and up-selling products sold within the retail environment. This can be relatively easy to measure through past and present same store and/or similar store sales comparisons. Some companies have even been successful in correlating how a reduction in perceived wait time can be translated into increased customer satisfaction and increased revenue. Likewise, digital signage can also indirectly affect revenue by creating efficiencies, ensuring message compliance across all locations and improving employee productivity."
The digital signage industry is among the hot picks in the technology world according to a wide variety of market analysis forecasts. The rosiest predictions call for a market valued at $3.7 billion by 2009, while even the low end of the forecasts see a market of at least $1.3 billion by the end of the decade. While equipment sales account for a fair share of those growth curves, the market for advertising could still be in the billions by the end of the decade, industry officials say.
"Playspace advertising has taken a seat at the table and is coming to the forefront. Traditional media is on the decline and the alternative is booming," says Craig Presser, CEO of OOH Vision Networks LLC, a third-party advertising company.