Digital Signage: Is Your Investment at Risk

Feb. 27, 2012 | by Steven Gurley

Interactivity, facial recognition, viewer analytics, proof-of-play reporting, data integration, cloud-based infrastructure, wireless backhaul, on and on it goes. No doubt about it, digital signage is becoming ever more sophisticated. But is this plethora of innovation enough to protect your digital signage investment from the disruptive change that new technologies and processes can bring? Perhaps it is, perhaps it isn’t. This article will offer a perspective.

In the book, “The Innovators Dilemma” the author, Clayton M. Christensen, discusses how new “disruptive technologies” can render established technologies obsolete and relegate state-of-the art innovations to antiquity. Christensen highlights several cases in which leading-edge technologies have been negated by newer, disruptive technologies. In one of his examples, he recounts how the rise of the PC industry devastated the large-format disk drive industry.

According to Christensen, the large-format disk drive industry, which manufactured 14 inch disk drives, was driven to increase disk storage density. For years, everything about the industry was geared towards this goal: Customer expectations, marketing material, product pricing, research and development, vendor analysis, etc. The industry was not, however, prepared for the disruptive implications of the PC.

The advent of the PC created a demand for smaller disks (5.25 inches) in which high storage densities were not a priority – at least initially. This did not fit the success criteria of the large format disk manufacturers’ so they eschewed the PC.

We now know that a different breed of disk-drive manufacturer stepped up to serve the needs of the PC market. We also know that the market for PC’s became the larger market and that the market for large format-disks eventually sank.

The PC was the disruptive technology that facilitated the demise of the large format disk industry. Although this happened nearly 30 years ago, disruptive technologies are still marginalizing established industries today.

In the past 10 years alone, numerous disruptive technologies have arisen to threaten well established industries. The following is an example of just a few:

  • iTunes changed the way in which people purchase and consume music. This has had a devastating effect on the CD industry.
  • The Kindle eReader and associated ebook store redefined how people purchase and consume books. This has led to the closure of numerous book stores and binderies.
  • Craig’s List has almost single-handedly redefined classified ads. This has led to a significant reduction in classified ad revenues received by newspapers, which has led to the closure of many leading papers.
  • The Apple iPad is redefining the mobile devices that people carry. The tablet has significantly impacted Netbook sales. It is also redefining how people consume magazines and newspapers.
  • Facebook, Twitter and other social networking tools are changing from whom, how and when people get information. This is having a negative impact on traditional web portals such as Yahoo.

The question is this: Is there a disruptive technology on the horizon that could threaten digital signage and its many innovations? The answer is an unequivocal yes.

Current trends clearly indicate that mobile technology – specifically the smartphone – will be the disruptive technology that will threaten digital signage. Not just any smartphone, but those that are equipped to support the emerging mobile commerce model that is being developed by some of the world’s largest brands. This new model is envisioned to include the seamless integration of in-venue mobile payments, intelligent couponing, integrated loyalty management, dynamic shopping lists and mobile-guided shopping.

How will this new breed of smartphone and its supporting commerce services threaten digital signage? Simply put, they will create a user dependence on the technology that will be almost insurmountable.

Consumers will become dependent on their phone for their entire commerce experience, which includes pre and post shopping activities. Because of this dependence, consumers will have little inclination to look a digital sign unless it is in a situation in which a phone’s use would be impractical. As it is conceived today, digital signage will not be personal enough, relevant enough or timely enough to compete in instances where mobile use will be practical.

Obviously this mobile commerce model will not come to fruition for some time, but the pieces are already in place and are maturing quickly. Smartphone adoption is outstripping even the most optimistic projections, smartphones are prompting addictive usage behaviors, retailers are increasing budgets to service smartphone-empowered shoppers, mobile payment transactions are growing at triple-digit rates and new technologies such as NFC are being tailored to redefine how consumers will use their smartphones to interact with their world, which includes signage interactions.

In addition to the preceding, consumers are increasingly turning to their smartphones for news and entertainment, health management, learning, insight, directions and wayfinding. All of these will increasingly affect the long-term value of a digital signage investment.

In the end though, whether it is digital signage or mobile, the winning strategy is all about capturing the consumers’ attention. Given that mobile can do this in many more ways than digital signage, it is logical to assume that mobile looks to be the disruptive technology that will threaten – and perhaps even negate -- many digital signage investments.

All is not lost though, digital signage and mobile can co-exist. In fact, digital signage can be fashioned to create a symbiotic relationship with mobile – even with the new mobile commerce model. So, if you are considering an investment in digital signage, then you would be prudent to understand the latest in mobile trends, the new mobile paradigm and how digital signage and mobile can work together to create new synergies.

If you would like to know more about this topic, I will be speaking on it in a half day Symon-sponsored session at Digital Signage Expo on March 6, 2012.  The session is entitled: "Mobile Models You Can Believe"

Topics: Mobile Interactivity , Trends / Statistics

Steven Gurley / Steve Gurley is broadly recognized as an industry expert and thought-leader in mobile and mobile content management solutions. He is a widely published author of numerous papers, articles and blogs on mobility and serves on numerous mobile advisory boards and committees, including serving as the current chairman of the Digital Screenmedia Association's committee on mobile. Steve is currently the President and CEO of Pyrim Technologies, a mobile business and new market development company.
View Steven Gurley's profile on LinkedIn

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