VIEWPOINT: Overcoming Short-Term Thinking in the New Age of Digital Signage

published: 02/10/2011 The overall long-term health of the digital signage industry within retail depends upon successful pilots turning into successful deployments. By Michael Hiatt Back in August of 2010, a headline in DigitalSignageToday.com read, “Intel sees huge growth potential in digital signage.” This theme has been repeated over the past 10 years. Digital signage has been poised for huge growth. Still, it has yet to materialize. Will reality ever match the hype? At Dynamic Retailing, we analyzed media coverage of digital network announcements over the past seven years to see how many of these networks actually became capitalized, viable signage networks. Our less-than-scientific findings: For every actual network that is fully deployed in a retail environment, 12 networks are announced. Many of these are at least piloted in a few stores. But the fall-away between research pilot and successful launch is staggering. The headlines of these announcements are quite bullish. “[Retailer] rolls out new digital TV network” or “[Network Provider] Announces Nationwide Rollout.” To be sure, most headlines and articles are positive. Why shouldn’t they be? Research from Frost & Sullivan, InfoTrends and others has consistently projected a positive growth rate for the digital signage media space. There has been a fairly reliable enthusiasm surrounding this marketplace, as if it has been destined to replace the World Wide Web as the high-growth medium of choice for investors and advertisers in the 21st century. The good news is that this coming decade will be much more impactful and profound than the previous one. However, as the advertising-supported digital signage market matures, there seems to be two distinct sub-markets being created — both using much of the same technology, software and infrastructure but with different approaches and appetites. The digital out-of-home (DOOH) marketplace is largely following a well-worn path. Moving from static, printed signage to dynamic, digital signage is largely a continuous innovation. The business models and approaches are largely similar. Intelligent software, smart phone integration and vivid displays bring excitement to this old, established medium. At the same time, the advertising business model is primarily the same — the DOOH will be quite analogous to the OOH. Much of the advertising in this sub-market will come from beyond the venue. In other words, building brands will be the catalyst for this ad spending. An example would be Cadillac promoting its new car on a digital screen at a basketball arena. On the other hand, digital signage deployments in greenfield locations, namely retail, demand new, radical thinking to be palatable to the venue owner. An advertising revenue stream is not enough for these entities. In most cases, they are looking for customer engagement, shopping optimization and in-store inspiration. Advertized products are found within the store. Of course, this must be combined with some version of a sustainable, nearly risk-free business model for the retailer. It all adds up to rocket science and is clearly discontinuous innovation. While continuous innovation creates a positive upside and its progress is easier to chart, a discontinuous innovation is a game changer and can create a white-hot marketplace of significant industry growth. The challenge: Finding that game changer is never easy. Of course, once it is revealed to the marketplace, it quickly becomes a “no-brainer” that everyone believes they should have personally discovered… think DVRs, MP3 Players, Amazon.com, Facebook or even the Snuggie. Does a customer-facing solution within retail have a shot at this type of glory? The jury is still out and there are several candidates looking for their fortunes to turn. Over the past several years, there has been considerable short-term thinking as it relates to creating long-term success in this field. For network providers and retail marketing technology firms, successfully navigating these larger and often fickle organizations has proven difficult. An interesting result of this core challenge has been a cottage industry of companies that have learned to be satisfied and even moderately profitable at providing research pilots. In many cases, these research pilots are not the means to an end, but an end unto itself. And if the goal is not to fully deploy a solution throughout a retail chain, then the concern of creating a false negative with a research pilot is not the issue it should be. We have witnessed too many false negatives in this industry. The overall long-term health of the digital signage industry within retail depends upon successful pilots turning into successful deployments. We must move beyond being satisfied that a retailer is willing to pay for and test our solution in 20 of their stores. The focus for both the solution provider and the retailer must return to the idea of building successful and economically sustainable deployments. As these successful deployments yield best practices, then this industry can begin to truly see sustainable growth over the long term as retail competitors look to match one another as they move from the current retail experience to new, innovative retail models for the 21st century.