Aug. 15, 2013
By Lyle Bunn
Most of the trends in digital signage are positive, pointing to the ongoing success and value of this dynamic place-based media. Others point to failure and the challenges inherent in the growing industry. Seven trends in particular characterize the sector at this time:
- Growth and installed base;
- Focus on value;
- Failure of networks;
- ROI and ROO;
- Integration into the media model;
- Supply chain; and
- Content and transmedia.
Growth and installed base: With an estimated 20 million displays currently operational in North America and growing at 2 million a year, dynamic messaging is increasing revenues, branding and viewer engagement, and reducing communications costs. The 400-plus ad-based networks, more than 1,000 large brand and corporate networks, and hundreds of thousands of smaller deployments offer an excellent base of example application and expansion potential. A key trend in supply is the focus on existing deployments that could benefit from technology, operational or content upgrades.
Focus on value: The "honeymoon" in digital signage ends about a year after initial deployment or use (sometimes faster). As the expectation of value increases, it is fortunate that improvements in viewer targeting and dayparting are an inherent capability of digital signage. The extent of investment made is causing many end-user organizations to seek higher return on investment through operating cost reduction, improved content strategy and increased third-party payments.
Failure of networks: While decision periods for video walls and installations of 1-5 screens are short, the launch period for new networks and expansion continues to be long. Key contributing factors include poor content, display outage (which may be as symptomatic as causal), revenue under-performance and lack of analytics (i.e. justification). While network dis-continuation is uncommon even when cost/benefit is unsatisfactory, such cases have, and will continue to, shock the sector and reduce the shine that the media enjoys. Underperformance as reflected by lack of expansion investment, suitable ROI, ad rates and uptake, and higher than acceptable operating costs, reflect the malaise of networks.
ROI and ROO: While distinguishing value in terms of return on objectives for less tangible value has been commonly used, this puts network managers and their suppliers on a slippery slope. ROO can be measured as it contributes to return on investment. The trend of using ROO for investment validation makes digital signage vulnerable to greater investment scrutiny while diminishing its capacity of forever improving benefits through optimization. Any deployment that fails to have tangible measures of value ready for presentation is on its way to "walking the plank." Lack of measurable value results inevitably in inadequate funding for content refresh and operations support, which result in the irrelevance of the network and the inclination to "pull the plug."
Integration into the media model: Multichannel and omnichannel communications, which take advantage of the best features of many devices, is the clear direction among marketers and communicators. Some operators of digital signage have embraced this approach and enjoy being part of campaigns and initiatives. By driving viewers to websites and mobile interaction, digital signage is effectively transitioning from an "audience of many" message display to "audience of one" engagement. This trend will continue as new approaches to mobile activation emerge.
Supply chain: The field of suppliers of digital signage continues to grow rapidly, with static sign and digital graphics providers becoming a mega-force in the same way that audiovisual/information technology integrators have mobilized and expanded the sector. Static sign providers inherently understand communications and messaging, have existing customers, are inherently entrepreneurial and competitive, and require little training to learn how to develop digital signage content. At the same time, hardware providers are producing better product bundles, software providers are becoming smarter or are being rapidly marginalized, and the most capable suppliers are transitioning into high value-added areas and areas of broader service. Shakeout will leave the sector stronger as revenues are less dispersed and margins can better support ongoing growth.
Content and transmedia: Once the technology is in place, it is the messaging that delivers the results. Better message strategy and composition equals better results. This hard-fought battle under the banner "content is king" is being won. The key trend is toward getting it right. The Digital Signage Today survey published recently published reflected a significant change in content sourcing. Where 56 percent of respondents previously created all content in-house, the most recent survey reflects that only 21 percent will create content exclusively in-house. Other data points to the trend that content matters and getting it right is a top priority. The transmedia trend of leveraging (re-purposing) media used in other communications formats is strong and will continue.
Lyle Bunn (Ph.D. Hon) is a well-known analyst, advisor and educator in North America's digital signage industry. He can be contacted at Lyle@LyleBunn.com.
Learn more about digital signage trends.