Measuring Return On Investment
Measurements will be required to determine these winners and losers, but officials disagree on the best way to measure return on investment. In the early stages, system operators may need to look beyond just revenue generated by advertising sales and take into account the impact of such advertising on in-house product sales, along with the impact of product education and branding.
"Right now I don't believe enough companies have implemented digital signage in order to give an industry expectation," says Tippets. "I believe that companies implementing digital signage are simply doing standard 'cost of money' calculations. If I invest $10,000 in digital signage for my location, how fast will I make that money back through increased sales or ad revenues? Is the cost of that money for the expected return period worth the risk or not? There is not enough credible data available to say that by adding digital signage you will see a percentage uplift in sales or ad revenue dollars in the market today.
Microspace has three distinct goals for client networks, says Amor. The impact can be seen in product lift through direct advertising, education and branding. "Show a steaming apple pie when people are standing in line and sell more apple pies," he says. "[It can be as] simple as that."
Consumer education is not as easily measured, "but the main reason we see the consumer education benefit is due to high turnover rates in retail employees," Amor adds. "With a constant turnover, a retailer cannot guarantee the consistency of the in-store experience from location to location. However, if the same information on products or services is available [regardless of the geographic location] they can maintain their ultimate goal, consistency across all locations. Return on investment measurements can be measured but not clearly or as easily as with direct product sales lift."
Branding the customer with the in-store experience also is a measurable impact of a digital signage network, Amor says. "These networks are creating their own unique experience inside their locations that you can't get anywhere else. They do not show prices or specials. In some cases, they may not show their product at all," he adds. "Again, they aren't trying to direct sell a product; they are distinguishing themselves from being 'another vanilla.'"
Others believe a definitive measure, such as simply covering the cost of the money invested in the network, can be set. "You have to be able to generate 60 percent or better gross margins at each location or the economics don't play, which means that a typical site needs to generate $500 to $1,000 per month or it probably isn't going to be worth it in the long run," says Calder. "There is a lot of smoke being generated about 'building the brand' or 'creating ambiance', but I think that ultimately economics will win out."
In other words, Calder says that such a business model means generating significant and easily measurable incremental revenue with gross margins of 60 percent or better on each site. "It is too early to say what is and isn't working, because we are still in the earliest stages of this business," he adds. "You can always get someone to throw money at a hare-brained scheme once, but will they come back the next time? Time will tell."
Strategic Planning Is Key For Digital Signage Success
"A digital signage network can be a powerful tool to tailor specific messages for playback at specific times and places, directly impacting sales at the point of purchase," Konrath says. "However, a blank digital signage display can have a negative influence on customer behavior and could result in decreased revenues. Network monitoring and maintenance are critical factors in implementing a digital signage network and can directly impact network uptime."
But for the digital signage industry to spread the word, they need to make sure potential customers know they are missing out if they do not have a network. "It's about getting content out and into the retail environment, and satellite technology is the perfect way of delivering that," Cook says. "We have to put together a series of platforms on which we can deliver content and manage that in a way which is meaningful to retailers. From putting screens in stores, and providing services and content control mechanism, to providing transport, our goal is to say we're good at driving sales volumes. We're not going to be able to convince a retailer that hasn't even thought about it to implement a network, but frankly, every retailer out there is aware of digital signage, and we're not doing our job if they are not thinking about how they might leverage digital signage."
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