Developing Industry Standards and Measurements for Digital Signage

The booming retail industry is witnessing new positioning strategies among retailers. Realizing the futility of competing on price, retailers are looking at alternate means to differentiate themselves.Consequently, there is a renewed emphasis on providing customers with better in store experience. By delivering relevant messages using compelling content and reducing perceived wait time at checkout counters, digital signage promises to enhance customer experience.New analysis from Frost & Sullivan (www.it.frost.com), North American Digital Signage Markets, reveals that digital signage advertising revenue totaled $102.5 million in 2004."There is a lack of influential media avenues at the point of purchase and a decline of mass media effectiveness, that remains a pressing issue in the digital signage market," notes Frost & Sullivan Industry Analyst Vineeta Kommineni. "Similar to the more than 500 ad forms that are baffled media planners in the early stages of online advertising, the digital signage industry has a glut of ad specifications based on factors such as display size, aspect ratio, and presence of sound."Digital signage is a "marketing by glance" medium and dictates that the messages are brief with minimal audio as to be non-disruptive to both customer and employee.Current television spots are cropped to ensure optimum attention and retention spans. Owing to its primary nature as promotional marketing rather than as a branding medium, sales promotion agencies may be more suited to designing the content when compared to ad agencies.As the medium continues to grow, the future of digital signage hinges on the emergence of a new discipline related to creating content tailored for the medium. Studies analyzing store traffic flow, time spent in the store, time spent in each zone of the store and customer linger points need to be correlated to determine placement of display, length and nature of message.In addition, agencies are cautious in evaluating the role of digital signage in the media mix. Being a fledgling channel, digital signage lacks measurements and buying standards and the medium is considered "unaudited." Hence, media buyers perceive digital signage to be more complicated than the routine of TV, radio or magazine buys to which they are accustomed.In the medium term, an industry association such as the Interactive Advertising Bureau in the context of digital signage may set the stage for developing standards and guidelines. Development of a currency to trade in digital signage will spur media planners to alter their spending and embrace the medium."The entry of media conglomerates such as Clear Channel, Viacom, ABC Networks, Liberty Media and others have justified investments in the industry and have enhanced the perception of digital signage media," adds Kommineni. "Such conglomerates not only have the access to capital resources to fund a large scale network, but also the advantage of selling ads on digital signage networks as part of a bigger package comprising other media slots."There is a grand void in managed service solutions that encompass foot traffic analysis, ergonomic studies, network design, hardware and software selection, installation content creation, liaison with advertising agencies and media planners, and network maintenance into their solution.North American Digital Signage Markets examines key drivers in the digital signage markets, looks at the challenges and provides recommendations to overcome them. The study also sizes, forecasts and scrutinizes pricing trends and identifies market leaders, challengers, contenders and emerging participants in each of the digital signage advertising, display and software markets.If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants an overview of the latest analysis of the North American Digital Signage Markets, then send an e-mail to Mireya Castilla, Corporate Communications at mireya.castilla@frost.com with the following information: your full name, company name, title, telephone number, e-mail address, city, state, and country. We will send you the information via email upon receipt of the above information.Research Overview Eclipse of Mass Media creates demand for Digital SignageThe number of market segments in the U.S. has been multiplying not only due to cultural diversity and changing demographics but also due to sociological trends with customers placing an unprecedented accent on individualism rather than groupism. These trends have contributed strongly to fragmentation of the media industry, whose success depends on delivering relevant programming to its viewers. The average number of TV channels per household, which was 5.5 in 1960 stands at 85 in 2004. Corresponding numbers for magazine titles are 8400 in 1960 and 17,300 in 2004, while for radio stations it is 4400 and 13,500. The proliferation of new media and the ensuing clutter has resulted in shrinking attention spans. Prime-time ratings have fallen by over 40 percent from 1977 to 2003 and readership of daily newspapers dropped from a high of 81 percent of households in 1964 to 55 percent in 2002. However the cost of reaching consumers though these channels, has not decreased. For example, the average cost per thousand viewers in prime time in 2002 climbed to $16.79 from $1.96 in 1972. Simultaneously the Internet has been relentlessly weaning audiences away from traditional media. In addition, devices such as the PVR are allowing viewers to skip advertisements while watching pre-recorded programs. Marketers are therefore increasing their spending on non-media channels such as telemarketing, direct mail, email marketing and digital signage. The popularity of 'Do Not Call' lists and spam filters further abets the cause of digital signage. The ability of digital signage to enhance brand image using targeted full-motion video messages at the "moment of truth" makes it an opportune medium for advertisers. Frost & Sullivan believes advertisers' waning confidence in mass media will continue unabated over the forecast period, further fanning the cause of digital signage.This Frost & Sullivan research examines the drivers and challenges to the North American Digital Signage Markets and provides recommendations to overcome them. The study sizes, forecasts, scrutinizes pricing trends and identifies market leaders, challengers, contenders and emerging players in each each of the Digital Signage Advertising, Display and Software Markets. Content Challenges Confront Market ProspectsThe future of digital signage hinges on the emergence of a new discipline related to creating content tailored for the medium. Studies analyzing store traffic flow, time spent in the store, time spent in each zone of the store, and customer linger points need to be correlated to determine placement of display, length and nature of message. The medium dictates that the messages be brief. Content created for television therefore needs to be repurposed for the digital signage medium. In a retail environment, for example, customers are unlikely to put aside their shopping and watch a lengthy commercial. Sometimes in the process of re-editing, the linear experience of the ad may be lost and it may be more cost-effective to create an ad using original elements. Frost & Sullivan believes that, given the nature of digital signage as a "marketing by glance" medium, it is more efficient to repurpose print ads than video based ads. We expect the impact of this barrier of content creation challenges to crumble towards the end of the medium-term forecast period when best practices for digital signage content will have evolved. Akin to the more than 500 ad forms that confused media planners in the initial days of online advertising, the digital signage industry has a glut of ad specifications based on factors such as display size, aspect ratio and presence of sound. Another factor is the number of content zones into which the screen is divided. For example, in the case of the digital signage network in Pathmark stores, the right one-third of the screens features Pathmark-related content, the left two-thirds of the screen shows advertising and a ticker displays news, weather and sports updates. Frost & Sullivan discourages splitting the screen into more than two zones, a content zone and a ticker zone, since it makes it difficult for the customer to absorb the message amidst the clutter. Frost & Sullivan believes the medium is being experimented with and in the medium term forecast period, media buyers will be offered a limited set of ad specifications. Ads are also required to be effective with minimal audio so as to be non-disruptive to both customer and employee. An additional restraint is advertisers doubting the ability of ad messages as brief as 10 seconds to communicate the personality of a brand. Frost & Sullivan anticipates promotional rather than branding messages to dominate the digital signage medium in the short term. This is not to suggest that branding messages are inappropriate for the medium. The immediate priority of the medium is to prove its effect on sales uplift and this is done more easily when linked to in-store promotion than in-store branding activity. In this context, promotion-oriented marketing agencies such as Valassis Communications, Catalina Marketing and News America Marketing are more appropriately positioned than traditional advertising agencies to design content for digital signage. Frost & Sullivan expects niche content providers for the medium to emerge in the short term. Support For "Event Based Exposure" Stokes AdoptionThe performance-based advertising deals dominating the Internet landscape have triggered a seismic shift in the advertising industry that has traditionally evaded accountability using a viewership-based model. Marketing is increasingly being perceived as an investment rather than a cost or expense and advertisers are pressing other media for such a performance measurement system. According to Vineeta Kommineni, Industry Analyst for Frost & Sullivan, "Digital signage can support "event-based exposure". For example, by tying the display to a price checker, a network owner can sell advertising in the same fashion as Google or Yahoo, which sell search terms. In other words, Frito Lay can buy ads that play whenever a Mission potato chip product is scanned. Since Google and Yahoo have trained media buyers to purchase search words, Frost & Sullivan expects they will be ready to buy scan based ads." Currently, revisions to item pricing laws exempt retailers who install at least one electronic scanner for every 5,000 square feet of store selling space, from requiring most items sold in a retail store to have a price label attached in addition to price labels on shelves. Nine states in the US -- California, Connecticut, Illinois, Massachusetts, Michigan, New Hampshire, New York, North Dakota and Rhode Island -- currently have these item pricing laws. Frost & Sullivan believes the opportunity for digital signage to veer away from the traditional business model based on number of viewers will be enhanced by the implementation of these item pricing laws. Another example of "event based message display" is in the context of RFID tags. Over the long-term forecast period, Frost & Sullivan expects that the RFID tags of products chosen by customers and placed in shopping carts will prompt suitable messages on displays. For example if the customer has purchased a pack of baby wipes, an advertisement for a baby product can be delivered on a nearby display. Also, the digital signage system connected to the POS and inventory databases can be programmed to offer automated price markdowns based on inventory level. Such flexibility can be used to meet in-store challenges such as managing the perishables program, which is estimated to account for more than 50% of supermarket sales. Similarly, by integrating weather information with the digital signage content management software, messages can be served based on a variety of parameters such as weather, demographics of store customers by time etc. Says Ms. Kommineni, "We believe the incidence and extent of integration of digital signage software with in-store databases will be pronounced in the medium term forecast period. The ability of digital signage to correlate the delivery of messages with the products that consumers are interested in will boost demand for the medium in the medium to long-term forecast period."

P2PI MEMBERS

JOIN P2PI

You May Also Like

Asda Grows Retailer Media Network With New Partner

Keys to Winning With In-Store Retail Media