POV: Digital Signage Return on Investment

In a down economy, digital signage is a welcome growth technology in the AV market. Northern Sky Research has estimated that out-of-home digital display networks will generate $2.7 billion in advertising revenue by 2013
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POV: Digital Signage Return on Investment

May 6, 2009 12:00 PM, Provided by InfoComm International

In a down economy, digital signage is a welcome growth technology in the AV market. Northern Sky Research has estimated that out-of-home digital display networks will generate $2.7 billion in advertising revenue by 2013. Impressive numbers and good news for anyone who has invested in or spent money on advertising-centric digital signage, but the majority of digital-signage systems are installed in nonretail environments such as corporations, educational facilities, government offices, hospitals, hotels, or convention centers. These facilities have less of a focus on moving merchandise and more of a focus on providing information.

However, the long-running discussion of digital-signage networks and return on investment (ROI) has become even more important as clients across all verticals are reviewing capital expenditures with a closer eye. The true sticking point is calculating ROI for nonretail clients.

"If there is a direct trade-off, then ROI is quite simple to compute. In reality, one-to-one comparisons are not always possible," says Bill Gerba, CEO and cofounder of digital-signage software provider WireSpring Technologies. "There isn't necessarily a link between ROI and digital signage. A lot of the reason people think that there is always a link is the industry's own doing. We are so focused on ROI for advertising and merchandising networks that everyone auto¬matically assumes an equally straightforward ROI for every system. It has become an expectation."

What's more, there is no industry standard measurement to calculate ROI or standard value to serve as a benchmark. "In regards to ROI in a nonretail environment, there is no simple answer," says Sean Matthews, president of software developer Visix. "There's long been a perception that digital signage is glitzy and appealing because the endpoints [i.e., plasma or LCD displays] were so expensive five years ago. Now, the prices have dropped dramatically and, therefore, the investment risk is much lower."

Matthews says that digital signage is still on the growth side of the adoption curve. Almost half of Visix customers are in higher education, with the business and corporate market occupying nearly 30 percent of its customer base. In contrast, retail is less than 1 percent of its business.

Gerba, whose company was founded in 2000, says that digital-signage networks were originally skewed toward large retailers or large corporations. "Over the past couple of years, there's been more growth with smaller networks; these tend to be driven by the AV installers. The sweet spot right now is smaller customers who need 20 screens in five venues," he says. "In reality, large retail networks are just the tip of the iceberg."

LCD manufacturer Westinghouse Digital Electronics recently unveiled an ROI calculator for small-to-medium businesses. Its calculator addresses ROI via cost avoidance for expenses such as printing menus, fliers, or brochures. A small business can enter in its average monthly profit, monthly cost avoidance, and projected percentage increase to get the ROI for its Westinghouse digital-signage software. "We understand that many small businesses have some kind of entertainment-based displays," says Rey Roque, vice president of marketing for Westinghouse Digital Electronics. "We help them take the next step by making their displays more functional as digital signage too."

In another nod to smaller networks, WireSpring recently launched its FireCast Digital Signage EasyStart, a software program specifically designed for small projects or standalone displays. The goal is for a client to create digital signage in five steps. "In contrast, our enterprise product assumes a worst-case scenario for every network permutation, the need to aggregate from various content sources, and so on," Gerba says. "The FireCast EasyStart is easier to use by making as many guesses on the back end as possible. An AV integrator can use it if he or she has less IT experience with networking and data transfer."

This is an excerpt from InfoComm International's InfoComm Special Report: Digital Signage ROI. Visit www.infocomm.org to view the full document.

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