IT Players Bullish on Digital Signage Despite Bleak Advertising Spending

By Chris Connery - Vice President, PC and Large Format Commercial Displays, DisplaySearch

Does the future of digital signage hinge on the digital out-of-home advertising market alone? Newcomers to digital signage might look at articles such as the recent one in Advertising Age reporting that the sizable drop in ad revenues in 2009 was the main reason that the digital signage market hasn’t had the explosive growth that many expected. With traditional advertising at the lowest levels in history, no wonder digital out-of-home advertising hasn’t taken the world by storm yet, right?

In actuality, in spite of all the roadblocks in front of it, sales of displays for digital signage show the market holding its own, with growth (yes, growth) actually being seen sequentially (quarterly) as well as annually.

Players in the digital signage industry-ranging from the biggest of IT companies to small to mid-sized software and integration companies-presented their ideas and visions of the market at the DisplaySearch Digital Signage Conference held last week in San Jose. From this conference some key findings were revealed:

• While many equate digital signage with digital advertising, the concept extends way beyond the trend of DOOH (digital out-of-home) advertising, encompassing a wide variety of dynamic digital content.
• Several markets are embracing digital signage for communications other than advertising :
  • Education, prompted by “safe campus initiatives”
  • Corporate communications of key (and rapidly changing initiatives) to all employees in all remote offices or branches
  • Healthcare
  • Quick-service restaurants (for electronic menu board systems)
• Until a few years ago, the market consisted of smaller, vertically-oriented players. Now some of the world’s largest IT companies, including Cisco, HP and Intel have dedicated resources to this market, with subsidized digital-advertising models not even on their radar.
• Panelists from large and small players alike agreed that DOOH will be a key component of digital signage in the future, but key ROI metrics for audience measurement are currently missing. No company will risk the investment required to install a digital signage network without being able to demonstrate ROI to advertisers. The key is to show that DOOH enables advertisers to target messages (and dynamically change them), helping with audience reach, with audience recall, or with any of the other standard, audited advertising medium. It was noted that while the installed base of digital signage is growing, it is hard for advertising agencies to suggest a media plan to their clients, as DOOH installations tend to be independent with no centralized mechanism of control.
• Players in the space are looking for other digital signage opportunities, with the US stimulus package dollars a potential opportunity. As with all government programs, however, these are slow to emerge and there are no specific digital signage projects. With as much as 10% of the stimulus associated with IT, there is the potential for trickle-down, but any impact to digital signage is expected to be slow.

While individual initiatives have often failed, it is too early to count out digital signage, given that it is now backed by the $80 billion display industry and some of the top IT companies.