New opportunities in digital signage
Suppliment July August 2008
Despite an ROI model that is yet to be proven advertisers continue to invest in the widespread rollout of digital signage networks, says Adrian Pennington
Digital Signage (DS) networks have evolved from offshoots of business television to corporate marketing mechanisms to dynamic advertising medium. Its potential was initially spotted by large retail chains who believed massive DS networks would produce footfall/viewing figures to make captive audience networks, digital media networks or digital out of home television, rivals to commercial television. Leading international brands are paying serious attention to it as their customers spend more time away from, and indeed avoiding, mainstream media.
The market size is valued in billions of dollars and rising. The global market for DS displays is currently more than $1.5 billion and projected to exceed $3.5bn by end of 2009, according to DisplaySearch. Cisco expects the DS market to top $3.6bn by 2011, of which it hopes to capture about $1bn. If advertising revenues, rather than technology are measured, NSR forecasts out-of-home DS networks will generate $2.7bn by 2013, while Frost and Sullivan puts the worldwide market at over $4bn by 2012.
NSR suggests DS is poised to grow from an estimated installed base of 210,000 sites in 2007 to more than 850,000 by 2013. Though North America and Europe remain leaders in deployments, countries such as China, Australia and India are witnessing tremendous growth.
“Despite an ROI model that is yet to be proven, companies continue to deploy large networks, as advertisers that were once sceptical are now more apt to divert a portion of their ad budgets to the medium,” states Prashant Butani, an analyst at NSR. “This acceptance will drive the industry past billion dollar figures in revenues from advertising, sales of customer premises equipment as well as software over the next five years.”
The real growth in network numbers has come outside the chains. Estate agents, travel and betting shops, mobile phone outlets, pubs and healthcare networks have all quietly embraced the technology. Beyond retail and adjacent markets, there’s been even more activity, with sales of ‘mini-networks’ to corporate users, resort hotels, education and visitor centres rocketing.
Public transit systems are also popular venues, particularly for traditional news broadcasters attempting to follow an audience on the move - BBC News 24 dedicates a feed to urban centres like Liverpool; Sky News to major train stations.
Market fragmentation
DS remains however a rather fragmented market in terms of business model and technology. Potential customers must sort through a number of different vendors contributing hardware options like encoders/decoders, video players, multicast engines, edge content distribution devices and screens/kiosks.
According to Lite Logic Group CEO, James Burrows, “The sector has moved from one concerned with hardware technology (screens) to one concerned with linking hardware with content management solutions to deliver richer information and ad opportunities.”
A typical DS workflow involves content creation; encoding (typically into MPEG2/4); insertion onto an IP network; media management to manage the asset as part of a playlist; then playout to plasma, LCD screen or desktop.
“There will likely be a centralised content schedule and control package that allows the user to drag and drop content - web pages, MPEG files or corporate videos – for playout on a loop or to synchronise every screen with a certain piece of content at a particular time of day,” says Paul Reeves, sales and marketing director at Cabletime. “One challenge is ensuring the best quality resolution from playout to screen since the quality of screens can vary markedly.”
Alex Rassey, VP of marketing of compression technologists Entriq, points out that the success of DS often comes down to the frequency of content updates. “For news broadcasters this is even more imperative,” he says. “If a client has a high volume of content to ingest from many sources and it needs to syndicate that to hundreds of sites it has huge volume issues and the clock is ticking.”
The mix of content is more than likely to include HD video. Although there’s still demand for standard definition, HD puts a premium on efficient compression. Entriq’s solution, in collaboration with Dayport, the workflow management solution it recently acquired, has helped Sky News reduce ingest and transcode time from 30 minutes to 2-3 minutes. “They input 1,500–2,000 videos a day, but there are peak periods where one clip every 12 seconds is processed - freshness matters,” says Rassey.
Delivery options
Aside from the diversity of video formats and file sizes as well as the ability to deliver HD-ready and full-HD content there are few barriers to the technology itself. “The barriers to the delivery of this technology are more significant, especially if the DS network is to be deployed on an international level,” explains Alexandre Ghis, business development manager at GlobeCast. “Varying standards and infrastructures from country to country mean that is it often impossible to use a single method of transport, and even more difficult to find a solution that can adequately combine satellite coverage with terrestrial IP.”
Most used delivery models are a company’s LAN or WAN. Satellite solutions are occasionally deployed, but mainly for global DS networks. “Most DS systems use standard TCP/IP networking to deliver content and monitor the network of players,” explains Hugh Bourne, business development manager at Harris Broadcast EMEA. “Some installations use satellite distribution or even CD/DVD distribution. One emerging technology is the next-generation TCP/IP model called IPv6. This technology holds the promise of faster delivery of content, enabling even more dynamic and visually rich content to be distributed and delivered securely to playback devices on a global scale.”
Cellular delivery is another possibility. Broadcast International for example provides an on-site cellular modem attached to the back of an LCD screen and connected by Ethernet to the playout device at several hotel and resort properties. The cellular modem/router can be used to push the content WiFi to a WiFi-enabled player located on a second or third screen around the property.
Maintaining ROI and DS accountability
According to Burt Jepson, corporate development director at Broadcast International, the whole DS industry is evaluating which type of network (ad-based, brand loyalty, informational etc) and vertical market (retail, financial, transit etc) offers the greatest return on investment.
“We have clients that want to take both approaches of presenting strictly advertising content, and others strictly institutional content for branding purposes, and others who want a mix of the two,” he reports “The jury is still out on what brings the most ROI.”
Creating and channelling the right content to the right audience is a critical first step toward convincing advertisers of DS accountability. “People make the mistake that they can simply reuse their TV ads on a digital signage system,” says Sony’s senior market development manager Nick Deen. “This usually doesn’t work since people have a different mindset in-store and different objectives when shopping compared to watching TV.”
“There’s quite often an expectation that by rolling out an advertising DS system, sales will increase by a large percentage,” adds Harris’s Bourne. “Unfortunately, it doesn’t always work like that. For advertising to be successful in a DS environment, advertisers need to understand the function of the network they place their content on; you wouldn’t want to advertise a washing machine in an airport terminal.”
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“On average, Sony sees an uptake of 20% in sales within advertising-led business models in DS.”
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Considerable research is being conducted to measure the effectiveness of in-store DS. On average, Sony sees an uptake of 20% in sales within advertising-led business models in DS. However, the majority of systems are being sold in merchandising and informational models in Europe, in stores like Benetton, Adidas or in airports.
“Advertisers recognise the decline in effectiveness of TV ads and are looking into ways of reaching their audiences,” says Deen. “DS is the last true mass communication tool, where advertisers reach mass audiences at the point of sale.”
According to Broadcast International’s Jepson, ROI can take the form of direct ad payments from product or service vendors on the network. “Institutional ROI may include sales uplift, cross selling of goods and services, greater brand awareness/loyalty. Measurement can vary from financial only to complex and costly exit surveys to measure DS impacts on the customer or employees.”
Harris and Globecast are among vendors offering measurement tools such as ‘proof of play’ collection and reporting, allowing advertisers to see exactly where and when content was displayed.
One DS vendor, however, argues that retailers are already sold on the benefits of DS.
“They just chose not to publicise it or their figures because it’s in their interests not to boost the price of ad inventory or to alert their competitors to their success,” he reveals. “Large retailers consistently tell me DS is phenomenally effective and that if implemented correctly they see huge volume changes in sales.”
What about the broadcasters?
Aside from content selection, perhaps the major challenge is content creation itself. Do large retailers or resort owners (a Disneyland, golf course or Las Vegas casino) concentrate on their core business or opt to install and manage systems in-house - effectively becoming a broadcaster? The alternative is to outsource the service just as Walmart, Circuit City, Carrefour and dozens of other US chains do with Thomson-owned Premier Retail Networks (PRN).
Broadcasters themselves have a fantastic opportunity to get into DS, suggests Bourne. “Most broadcasters already have content creation services available to them either in-house or as a partnership coupled with existing programme material and advertising content.”
The traditional playout provider of a broadcaster is not, however, best suited to distributing multi-platform content, contends Jon Folland, co-founder of outsourcing specialist Nativ. “Traditional broadcast playout providers are very good at linear playout, compliance and subtitling, but there’s a gap in the market for rapid-reaction IP-led nonlinear playout partners.”
Nativ’s MIO platform is a managed service targeted at just this market, and the company has just signed a deal with CBS Outdoor for it to provide a digital signage content management platform in the UK. “Digital Signage is one of the new breed of distribution models along with IPTV, iPhone or games console which has specific requirements for file type, size and length, compression, metadata, interactivity, geographic restrictions and DRM,” he adds. “Furthermore the content itself may need to be embedded in hard copy or distributed as a single timed broadcast; 'on-demand' stream or download.”
Business model evolution
Initial DS models were based on the broadcast ‘push’ model but future models are likely to involve more pulled content as networks are fine-tuned with content to suit various day-parts or different areas of the same venue.
A prime example, running in New York since last summer, involves over 5,000 yellow cabs fitted since with touchscreen monitors and airing NBC news and entertainment content funded by ads sold by OOH group Clear Channel. GPS helps deliver ads related to specific venues as the taxi passes by. The system includes an integrated payment system for passengers to buy items like show tickets.
Lite Logic is behind the world’s only network of digital screens on buses, a project which is set to significantly expand. The London application gives advertisers like Yell.com the ability to schedule campaigns according to day-part or district. The logical extension of this trend is for DS networks to develop niche content and narrowcasting similarly to how cable industry evolved from broad national channels to specialist interest.
“DS networks work financially for large organisations or retailers but are far less cost effective for smaller businesses,” notes Thomson’s Ray Brooksby. “What may happen is that DS networks like PRN which manage thousands of screens and attract hundreds of advertisers might offer a service to smaller businesses – say a coffee shop with just 15 outlets. A number of advertisers would jump at the chance to reach an audience in that environment supplied with 80% of content from the wider DS network and 20% customised for the client.”
Interactivity by way of Bluetooth, RFID, infra-red, motion-triggers or other wireless technology is also set to grow. By combining mobile media with OOH advertising, print or digital, either the mobile becomes the DS display or the media becomes interactive. “Bluetooth is the leading current means of interactivity, but will be one of many means for advertisers to interact with customers,” says Lite Logic’s Burrows. “It’s up to us to ensure our backend systems cope with any development.”
By SMS, scanning a barcode or taking an image with a phone cam, a user can interact with a print advert or digital signage media. “We’re looking into many proofs of concept to deliver messaging over DS specific to a user’s profile,” says Koen Jacobs, Cisco’s digital media systems manager. Cisco recently entered the market with IP-based solutions and has also created a qualification programme - the Cisco Academy of Digital Signage (ADS) - for media professionals looking be involved with digital signage, focusing on content creation, content management and content distribution.
“We could get to the point where DS networks are so fine-grained that they react to individual demographics,” suggests Thomson’s Brooksby. “The DS network and mobile phone combine to provide updated information on producers pertinent to the individual shopper at point of sale.”
It’s likely the sector will begin to produce more advanced display solutions and innovative installations, including OLEDs (organic light-emitting diodes), which are thought by some to be the next-generation display screen technology consuming less power and less space than current plasmas or LCDS. “As display technology moves forward and with the innovation of flexible display systems, I wouldn’t be surprised to see DS being built into the fabric of a building,” predicts Harris’s Bourne. “Imagine a curved wall that is one giant, super-high-resolution flexible OLED screen.”
