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Study: Digital signage gaining traction as focus moves from advertising to proximity-based marketing

Business models that offer branding, entertainment and information, along with advertising, will spur revenues, finds research firm Frost & Sullivan.

June 4, 2015

As brands and advertisers recognize the inherent shortcomings of traditional media, investments in newer marketing vehicles such as digital signage are increasing, according to an announcement from research firm Frost & Sullivan.

Digital signage systems with higher resolution screens (4K), bigger displays (including video walls) and high-definition (HD) content, are becoming popular due to their ability to reach mass audiences and play engaging, targeted messages at the point of sale or a point of transit, the firm said.

New analysis from Frost & Sullivan, "Analysis of the Global Digital Signage Systems Market," finds that the market earned revenues of $1.53 billion in 2014 and estimates this to reach $3.23 billion by 2020.

"Digital signage has generated interest as an effective medium for both advertising, as well as superior shopper engagement," Frost & Sullivan Digital Media Program Manager Aravindh Vanchesan said in the announcement. "Brands, marketers and retailers are actively exploring synergies between digital signage and cross-platform media tools such as mobile phones, tablets, kiosks and touchscreen displays, in order to rebrand stores and influence customer decisions."

Tapping into the potential of omnichannel marketing is crucial given that solely ad-supported networks are unable to sell ad spots and maintain the consistent flow of ad dollars, the company said. While big-box retailers such as Walmart and Target have the financial and technical resources to capitalize on the advertising model, even under recessionary conditions, smaller retailers without similar market reach, operational scale and clearly defined marketing objectives struggle to sustain profits, according to the announcement.

Adopting a hybrid approach is the key to navigating future economic downturns and minimizing risk, the company said. Rather than solely depending on ad revenues for sustainability, vendors must design networks to promote branding, merchandising and information dissemination.

"The digital signage ecosystem is complex, involving display vendors, software companies, media player manufacturers, ad agencies, audio-visual integrators, and tech support services," Vanchesan said. "Hence, the emergence of affordable turnkey bundled solutions, as well as integrators that take charge of the entire deployment from concept to ongoing maintenance, will be vital to usher in the next wave of growth in the global market."