Tuesday, October 31, 2006

Digital Signage: This Smells Big

I'f you've ever walked down the aisle of a grocery store with a specific task in mind only to find yourself enamored by the smell of the pig in a blanket stand 2 rows over, you've experienced the power of the olfactory sense (smell) within a marketing program. Now it seems, some big names are taking the power of smell to the next level and some of them including digital signage.

Advertising Age published an interesting article this morning about the growing number of companies taking an aggressive approach at an age old tactic. One such company, called Smellavision (sorry, I couldn't find the link to this one) says they are going to 8,000 "scent delivery systems" in Kroger stores over the course of 2007. And if that isn't ambitious enough they've also named 2007 "The year of the scent" :).

Whether you take this approach seriously or not, the likes of Mars, P&G, Kraft and Pepsi Co. are giving it a sniff. Those brands do "stink" of enough cash that they would be able to support the introduction of such systems. It will be interesting to see if the scent of this one lingers or fades away like the smell of the last cold pig in a blanket from the sample stand.

The article in Ad Age can be found here

Thursday, October 26, 2006

Digital Signage: Minicom Gets a Mighty Investment

Anyone involved in digital signage knows that the flow of investment capital into the market is growing at a fever pitch. It seems that anyone with a decent bank account, or access to one, is starting up a business and putting their proverbial hat into the digital signage ring. Most of the investment news has centered on new product launches and new start-ups or, more recently, acquisitions. I guess some of these new products must have had some sticking power because some traditional players are raising money and ramping up development and sales efforts. Minicom is the latest.

Minicom is an Israeli company that has been around for many years. Their core product category has been in the Audio/Video space and it sounds like digital signage applications have been good to them so far. The company manufacturers equipment that helps to amplify and distribute video signal over CAT5 which greatly increases the viablity of digital signage applications where distances from the player to the screen(s) are greater than 50 feet.

With that solution in hand, as well as several other strong KVM products, Minicom went to Intel Capital and raised $7 Million in Venture Capital. The article from Globes Online does not specify if the investment will focus on digital signage products or the other areas of it's portfolio but I'm guessing the digital signage industry is playing into this move heavily.

Tuesday, October 24, 2006

Digital Signage: We're Snowballing Now

The digital signage advertising model seems to have no limits. Companies have put them in bars, malls, bathrooms, and everywhere in between. Now comes along a company that has decided to put a bet on installing digital signage in the lift lines at ski resorts across North America and beyond. That company is called Sitour.

When I first saw this article I had no idea who Sitour was. It turns out that they are a multinational company involved in selling advertising at over 1,000 resorts in 14 countries. Wow. Oh yeah, they've been around since the 1960's too.

Now I've seen a lot of advertising models based on digital signage over the last few years (uhh umm, I'm guilty of trying it as well...) and most of them have failed or are floundering. If you've read my blog before, I have repeated the fatal flaw of advertising business models. That flaw in my opinion is lack of scale and reach offered by fragmented network operators. Without the scale of many hundred displays it is not possible to offer the reach required by large advertisers which is where the real money is. From the looks of Sitour, we may have a player beyond Walmart and Captivate Networks that can give some solidity to digital signage as an advertising medium.

For now I'm happy to sit on the sidelines and watch how the advertising model develops. I'm convinced it is here to stay but I do think further maturation is necessary before we see a true convergence. This is certainly a step in the right direction.

The article I came across on this subject was Media Life Magazine and can be found here.

Monday, October 23, 2006

Digital Signage: Statistics for Banks

The most recent publication from the American Banking Association's "Marketing Journal" included an interesting article from the highly regarded Platt Institute about the use of digital signage within a branch.

The article itself lacked in specific measurements but was quite informative about the method which financial institutions should employ as they consider the implementation of a digital signage network. For those (like me) that have experience working with financial institutions the emphasis on method rather than hard numbers will not be a suprise. As the article suggests, each instution needs to develop their own specific agenda and execute their digital signage initiative according to that plan.

With the above said, I hope the next article published by the ABA in conjunction with the Platt Institute will have gone through the motions with several institutions on method and measurement. Although it is certainly a challenge to generate solid numbers from an industry that does it's best to sell "relationship" and not "product" like banks, I hope that as time passes the real numbers will start to graduate into the public forum.

You can find the ABA article here

Friday, October 20, 2006

Digital Signage: As Panel Prices Decline, Signage Shipments Increase

According to a study released today by iSuppli, combined shipments of flat panel displays and digital signage are to increase at a CAGR rate of 3.6% through 2010 and produce revenue of 13 Billion. That number is up from 10.6 Billion in 2005.

The study goes on to project a continued decline in pricing for flat panels but does not make mention of price pressure for digital signage software applications. It does estimate that the market for digital signage applications will grow at a blazing 24.1% CAGR. A Compounded Annual Growth Rate of 24.1% over a 5 year period is phenomenal. I suppose we will need to wait and see what happens.

To find the full article, follow this link to DigiTimes.

Tuesday, October 17, 2006

Digital Signage: Impart "parts" From Advertising Model

Impart Media Group released comments about anticipated 4th Quarter results early yesterday in a press release stating they have changed their business model. Impart had a heavy weight towards advertising revenue and had made a strong push to establish itself as a leading network operator of digital displays over the last 18 months.

If you look at Impart's 2nd Quarter results, it is easy to see why they have had a change of heart. Although revenue increased by $700,000, their net loss went from $161,00 for the first 6 months of 2005 to an incredible $5.9 million loss for the first 6 months of 2006. To be fair, it appears they made a few acquisitions along the way but let's face it, a cashflow negative company balloning their loss to 5.9 million over 6 months is a monster issue to face regardless of future revenue projections.

I believe the lesson to be learned here is that the advertising model demands that the cost of the equipment necessary to operate such a network must be absorbed by the customer who hosts the equipment. In otherwords, convince the venue of the value of the software for their need and then sell advertising as a way to offset the cost of the equipment and software. Unless the location has some "skin in the game" they will be reluctant to help with advertising sales, equipment upkeep and other issues that may arise.

If the value delivered is software first and advertising second, I believe the medium has a chance to proliferate at a much quicker pace.

Monday, October 16, 2006

Digital Signage: Let's Define & Measure not Measure and Compare

If you've visited my blog in the past, you've probably come across an article or two about statistics. Statistical data is the key success factor to any form or media. It is what fuels value in the eye of the media buyer both within Fortune 500's and small Mom & Pop stores. Without a benchmark to reference, the successful sale of an advertising or marketing vehicle will be difficult at best.

Thankfully, the Digital Signage industry is now at the point of transitioning out of early adopter technology and into mainstream. With this progression, there have also been a flurry of statistical studies. Over the last 2 months alone it seems like the study of Digital Signage has really ramped up and it is very encouraging. The problem is, the industry can't seem to decide what is mainstream.

Is Digital Sigange an advertising tool which generates revenue from the sale of time on a network of screens? Is it a corporately controlled medium designed to push product at the right time and in the right location? Is it an interactive technology which executes a transaction itself? Is it a combination of all three? The answer is probably a little of each. But more important than coming up with one complete answer as to the targeted use for Digital Signage, I tend to think we need a set of measurements relative to our medium which will help both vendors and consumers to hash out useful applications.

The above soapbox type rant is a product of an article published this morning by Media Post. The article is a basic overview of the recent survey by BIGresearch entitled "Simultaneous Media Usage Survey". The survey is meant to be a representation of 'In-Store Media" and it's influence capability on consumers within a retail environment.

The study itself is very informative but I would be interested to know the metrics used to compare what they call "In-Store TV" as it compares to the other marketing vehicles included in the study which cover everything from "Product Sampling" to "Parking Lot" and Sidewalk Events". As our industry grows and large deployment implementation decision cycles acclerate, we are doing ourselves a disjustice to allow traditional metrics to control our medium's success.

In the end, we must respect the traditional statistics and work to understand how Digital Signage can best augment the reach of a customer message.

The article from Media Post I've referred to in this posting can be found here

Monday, October 09, 2006

Digital Signage- Statistics That Hit Home

For those of you who have frequented my blog in the past you know that I have commented about digital signage statistics (or better said the lack there of). I am always interested to hear the findings of our fellow industry partners and encourage each to continue gathering data so digital signage can continue to move towards an accepted and measurable medium.

The success of media has always been reliant on measurement. Looking to traditional media, many a company has been formed to generate elaborate measuring schemes designed to determine the success or failure of a particular campaign. And although the viability of these measurements can be debated, each additional study furthers the strength of the measured medium. It appears that digital signage is finally being added to the measurements being made by third-party statistical houses.

In my recent post entitled “Neilsen completes measurement study”, I addressed the need for more third-party studies. I’m happy to post another report which was published by Arbitron and is much wider reaching than the information currently available from Neilsen. For those not familiar with Arbitron, they are a company with equivalent credibility to Neilsen when it comes to media measurements which help advertisers justify their investment in a particular medium.

I’ve listed what Arbitron calls “Significant Highlights” below but you can download the entire report for free here.

For those interested in more statistics, we’ve started another blog focused entirely on reports on the industry. We’ll keep that updated daily and be sure to post the big stories over here or at least reference our other blog articles.

Significant Highlights

One-third of Americans have watched in-store video. Thirty-three percent of consumers recall seeing video screens in a store--not counting sets for sale in the television department.

One in 10 shoppers make a habit out of watching retail video. Ten percent of consumers who have seen video screens in a store say they either always or frequently stop to watch. Another 32% sometimes stop to view video screens they pass in a store.

Most video programming viewed featured products sold in the store. Eighty-one percent of shoppers who have seen retail video say the programming focused on merchandise available in the store. Almost half (47%) recall learning about specials or sales from the video displays.

Over half of retail video viewers think more stores should install displays. Fifty-two percent of the cnsumers who have watched in-store video feel that more stores should run video programming.

More than three-quarters of retail video viewers find the screens helpful. Sixteen percent of the consumers who have seen video in a store feel the displays that feature product or sale information are very helpful, and another 62% find them somewhat helpful.

Close to 30% of retail video viewers have made an unplanned purchase. Twenty-nine percent of the consumers who have seen video in a store say they bought a product they were not planning on buying after seeing the product featured on the in-store video display.

If given a choice, 42% of retail video viewers would prefer to shop in a store that has video displays. Over 40% of consumers who have seen video in a store say that in the future they would choose to shop in a store with video screens versus one without.

Consumers are most insterested in video that focuses on store sales, product information, and special events. Eighty-one percent of all consumers, regardless whether they have already experienced in-store video, are most interested in seeing video programming for the store they are in--including sales and specials (81%), product information (72%) and special events (68%).

Young adults are interested in watching music videos while they shop. Seventy-two percent of consumers age 18-34 are interested in watching music videos on video screens in the stores where they shop.

Almost half of male shoppers are interested in sports news and scores. Forty-six percent of men are interested in getting sports updates from video screens while shopping.

Wednesday, October 04, 2006

More on the Ad Revenue Model

There are many companies today making efforts to create a company based on selling advertising on digital signage networks. We receive frequent calls from prospective customers with high hopes for building signage networks. Unfortunately few of these companies achieve their goal.

In my opinion the model is viable yet premature at this point. It is a capital intensive project to start and has an extended ROI based on the ramp up time for both installing a decent network and getting traction with advertisers. To date most of the major brands have shyed away from digital signage for several obvious reasons. I've listed a few below:

1- Lack of scale- Major brands are not interested in purchasing time on 10 convenient store screens within a market. They want scale. By scale I mean penetration into the majority of MSA's (Metropolitan Statistical Area) in the USA or atleast the top markets. To reach this level is expensive and difficult to achieve unless you can convince a retailer like Kroger or Walmart to get on board. Luckily for the model, those two retailers are already testing the waters.

2- Fragmented ownership- I've seen advertising models where the ad company gives away equipment (PC, Screen, even internet connectivity) to 3rd party locations and then shares a portion of the ad revenue with that location. This is a precarious model depending on what type of location is being added to the network. As time goes by those operators tend to loose interest in protecting the equipment or helping out with a network issue. Possibly more important is they do not have the knowledge nor time to help trouble shoot an issue which can then prompt an expensive truck roll out to the location.

3- Lack of metrics- Although Digital Signage is becoming more popular for out of home advertising, the industry as a whole lacks defined metrics. In my recent post about Neilsen, I referenced a study completed by Neilsen which tracked performace of a network controlled by SignStorey and located in Albertson's. This study was a positive step in the right direction but the industry needs many more examples. Until recently most of the metrics published in the marketplace have been done by digital signage companies themselves and lack the power of 3rd party studies.

In addition to the above reasons, I suggest reading an article from the folks over at Networld Alliance. You can find that article here http://www.selfserviceworld.com/article_16268.php
Hyper Smash