Article
How to measure the breakeven point of digital displays
The case for deploying digital displays is strong, but tracking return on investment can be tough. Here are some ways to measure their effectiveness and make sure you get the most value for your money.
August 21, 2005 by James Bickers — Editor, Networld Alliance
There can be little doubt that, for now, digital displays turn heads. Despite cropping up in more places with each passing day, they are still new enough and different enough from static ads that they can stop passersby in their tracks – or at least make an impression.
But beyond the anecdotal, it remains difficult to determine the extent of a digital display's value to a retailer. What effect do they have on revenue? Are the displays actually helping the bottom line, or are they merely eye candy?
Businesses looking to deploy digital displays need to do some careful research and planning to determine what their criteria for success are, how they will be measured, and what they expect from the displays.
Pre-launch investigations
Advertising mechanisms of any sort never exist in a vacuum – they exist within the framework of the business as a whole. So the first step becomes an overall assessment of the business and the role the displays will take.
"The retailer should do an audit of all of their existing signage applications in the stores," said Hal Newton, product marketing manager, retailing business for Beaverton, Or.-based Planar Systems Inc. "We would encourage retailers to assess whether it is necessary to replace all of their static signage. Despite the advantages of digital POP, we do not think there will or should be a wholesale replacement of traditional POP methods."
Digital displays also come with an increased cost on the back-end which needs to be factored in at the beginning: having stale content on a digital display will be more conspicuous than on a traditional sign, putting the burden on the retailer to generate more content.
"No one will argue the benefit of being able to push the right product at the right time in dynamic images as compared to the traditional method using static displays that cannot be tracked," said Brian Nutt, president of Louisville, Ky.-based Captive Indoor Media. "However, with this increased flexibility comes an increased responsibility to produce more content."
Then, of course, there are the more obvious costs – the displays themselves. Prices continue to fall, but high-quality displays are still in the thousands of dollars. When budgeting and planning a deployment, hardware might be the biggest initial line item, but it will likely be dwarfed over time by content creation and management, maintenance and repair.
Which yardstick to use
A recent story in Inc. magazine dubbed advertising a "black art with a murky ROI," but when viewed from a distance, it is pretty simple: Do something that causes a non-customer to become a customer, or that causes a customer to become a better one.
The murkiness comes from the inherent inscrutability of the consumer's mind – did your advertisement convince them to make a purchase, or was it a word of advice from a friend? Did good customer service factor in, or was it the 2-for-1 offer displayed on an end-cap?
One key method of figuring out the effectiveness of a display system is to compare specific sales periods with comparable periods before the displays were installed.
"A well-designed system will allow the user to get reports containing information about what content played at specific times of the day," said Scott Stanton, digital signage technical services manager for Poulsbo, Wash.-based ActiveLight Inc. "Comparing those reports with sales information should show the influence digital signage has had on the sales of the particular product that was promoted, or show an overall increase in sales."
The old standbys are still effective in the digital world: According to Bill Gerba, president of WireSpring Technologies Inc., trying to identify a cost-per-impression is always worthwhile.
"However, it is still one step removed from generating a true ROI," he added. "For that, you need to rely on controlled experiments, ideally utilizing the sales data from either your host retail location, or your advertising clients, since they will know how much of each type of product gets sold at each location."
Gerba said that companies that have existing co-op marketing or sales affinity programs are good candidates, because they are likely already tracking this data and storing it in a format that lends itself to analysis.
Defining expectations
The excitement that digital displays have generated in recent months might, in one sense, be working to the industry's detriment. Me-too retailers that throw displays on the wall, thinking them to be a magic bullet for flagging revenue, will almost surely be disappointed.
"Digital signs are not magic," Gerba warns. "They're not going to ‘do' anything for your bottom line unless you can execute a plan to make them a profit center."
It is important, therefore, to lay out some clear – but realistic – expectations for the devices. Gerba said that a 10 percent to 15 percent lift in sales for low-cost, impulse purchases is a reasonable goal; Nutt agreed, saying that his company has seen product boosts of 10 percent to 13 percent.
"And like everything else in the world, the more time, effort and resources you put into your network, the more you will get out of it," Gerba added.
About James Bickers
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