Digital signage starts to come of age

There is no question as to whether or not digital signage will pick up momentum – it’s already happening, according to the presenters sharing their experiences with the medium at the Strategy Institute’s recent Digital Signage Summit, held in Toronto February 7 and 8. However, there is still a struggle to get advertisers and their agencies to buy into the emerging technology. The components of a digital signage network are fairly straightforward: content, distribution, and display devices. However, that doesn’t mean firms are guaranteed to make a profit. "Distribution is the easy part of this business," said Mike DiFranza, president and general manager of Westford MA’s Captivate Network. "Getting the advertising community to embrace new media is a challenge." Increasingly, communications gurus are positing that the media industry is entering a new age, where end users and consumers set the rules for how they view content, not broadcasters or advertisers. As a result, advertisers need to start thinking of their target demographics in smaller niche audiences and targeting them with the right message, at the right time, on the right platform. And, digital signage networks would be well-advised to be selective about who their target audience is, and install their displays accordingly. "In our case, we recognized that we needed to own a niche, that we would never be able to build out a network to take on the mass media," DiFranza said. In 2001, Captivate merged with a Toronto-based firm, Elevator News Network (ENN), which operated a private video network found in office building elevators in Vancouver, Calgary, Toronto and several US cities. Now, said DiFranza, the firm reaches more high-level business professionals than the Wall Street Journal does. In fact, Captivate "can deliver the Wall Street Journal’s or the Globe and Mail’s audience at a fraction of the price," he said. And, DiFranza said, the Canadian advertising market seems much more receptive to the message – and the media. "Canada has been much more aggressive in embracing these new media concepts than the US," he said. "Canadian ad agencies are driving it here, they get it." Peter Irwin, ENN’s founder and first CEO, said digital signage makes sense in environments such as elevators, banks, and grocery store checkout lines where there’s a captive audience. "One of the things we used to say with ENN was that people were locked in the box for 60 seconds," he said. Founded in 1997, ENN had a hard time selling investors on the concept, but found willing partners in many of the office buildings it targeted for installation. "The real estate companies loved it," Irwin claimed. "Who wouldn’t? We were going to put $8 million worth of equipment into their locations." After ENN’s merger with Captivate, Irwin launched a new business, Outdoor Broadcast Network (OBN). As president of the firm, he is responsible for large-format digital sign installations at some of Toronto’s busiest intersections. The Captivate-ENN merger wasn’t the end of the M&A activity around the firm: in 2004, Captivate was bought by McLean VA’s Gannett Co. Inc., best known as the publisher of USA Today. Medical Media Television Inc. (MMT), another provider of advertising-driven content for place-based networks, has also drawn some attention from big media. "People like News Corp. are suddenly saying, ‘Let’s have lunch,’" said Philip Cohen, MMT’s chief executive. His firm provides health-related content – funded by both subscriptions and advertising – in medical and veterinary offices across the United States. In such environments, Cohen said, providers need to be wary of confusing their own agenda – recouping costs and making a profit – with the agenda of the location owner, something he says is more likely to happen to bigger media firms than small, focused and nimble players such as MMT. "They are going to confuse their agenda with the viewer’s agenda," he said, by trying shortcuts like repurposing content created in other parts of their operations for place-based networks. Peter VanSickle, director of merchandising at BMO Financial Group, recounted his organization’s experience with digital signage in some of its BMO Harris Bank locations in the Chicago area. He noted that digital signage will usually not work as a stand-alone method of selling additional goods or services to customers, "but it has the potential to create an incredible number of quality customer-initiated contacts." However, becoming either a provider or a user of digital signage also calls for caution and good judgement. For instance, digital signage should be used sparingly and strategically, to preserve its novelty and ensure it doesn’t fade into the out-of-home media milieu. "Just because I can watch TV on the side of a truck driving down 401 does not make it a good idea," said Boardwalk Media president Terry Debono. With a history stretching back to 1979 and the federal government’s experiment with Telidon, an early "videotext" service that turned television sets into interactive content-on-demand platforms, Debono speaks with some authority on matters of digital media – and he’s had his share of missteps. In 1985, he said, "I personally brought the first video walls to Canada. By 1986, I had personally lost $2 million." Over-saturation of digital signage can dilute its impact as well. "The Bloomberg/CP24 model can also irritate people," noted Debono. "If you put too much information up there you risk turning it into dirt." Captivate’s DiFranza agrees. "One thing that really concerns me with digital signage is the Times Square effect, where digital signs pop up all the time," he said. While traditional media have been able to create a price book for advertisers using agreed-upon metrics such as cost per thousand viewers (CPM), digital signage has no such pricing model. "Here’s the reality for digital signage: there is no currency today," said Elizabeth Corbett, VP of new media services at Dunedin FL’s Nielsen Media Research, adding "A media without measurement is an undervalued media." Digital signage providers can help rectify that by providing figures for compliance rates (to prove to advertisers that their creative ran at the times and locations it was supposed to), gross potential impressions (the number of possible times an ad can be seen in a given location per hour), and so on. OBN’s Irwin said owners of digital signage networks might be tempted to lower prices – at least at the outset – to woo paying advertisers. "We have to learn from the mistakes of radio," he said, referring to the advertising price wars that have wracked that medium in the past. Consequently, OBN has maintained a consistent price for spots on its networks, refusing to offer a discount at times of the year that are traditionally slower for advertising purchasing. And while digital signage can run an ad at a lower cost, that savings is offset by the fact that digital signage network operators – unlike their broadcast media counterparts – must also supply the hardware for viewing. If you’re a television network, for instance, "someone’s paying to build the television set, and it’s not you," DiFranza said. Finally, digital signs in locations open to the public face competition from other forms of technology-enabled advertising, including portable media players, mobile phones and satellite radio receivers. "Customers are walking through the door with their own digital signage network," Debono noted.

Digital signage starts to come of age

Broadcast | February 17, 2006

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