As a barometer of a technology’s likely future, a good place to look is the Hollywood blockbuster. From the ultra-skinny mobile phone to the sexy flat-screen TVs that are becoming ubiquitous on lounge walls, there is a good chance it first entered the public’s consciousness via a favourite big screen outing starring Hollywood’s elite.
Take digital signage (DS), for example. No sooner had that enormous Coca Cola advertising screen appeared in Bladerunner’s dystopian vision of LA, than similarly grand DS installations started appearing on every street corner.
Except they didn’t. Bladerunner was released in 1982, which is 25 years ago and yet there is still not a DS installation on every street corner.
Suffice to say that DS has not been an overnight success. Price, substrate limitations, lack of infrastructure and bandwidth constraints have all stood in DS’s way at one time or another.
Now though, things might just be on the move. Pete Gamby, research director at specialist display market analyst Meko, claims that DS is growing, albeit slowly.
However, while the market is currently seeing only moderate year-on-year growth – perhaps eight or nine per cent over the next 24 to 36 months, according to Meko – things may be ready to move up a gear.
For instance, Gamby says that on a quarter-on-quarter basis there have been a number of sharp increases in demand over the past couple of years. This appears to be thanks largely to a number of large-scale individual roll-outs, and while these have so far been isolated and sporadic, such installations are beginning to increase in number, size and frequency.
Iain Campbell, sales director at True Colours Distribution, has been in the DS business for about five years.
“It used to be just small projects with companies putting up a screen in their reception area to welcome guests,” he says. “Now though our run-rate business has grown and the bigger projects have really taken off. The fog has been lifted from the sector and it is no longer seen as a golden art. Firms have realised that they need to get their message across and this is a platform for doing that.”
For example, the first quarter last year saw several big DS installations ahead of the World Cup. That uplift was obviously short-term – not least because of yet another ignominious England exit. But there are more similarly large pieces of business to be had for providers that can put themselves in the right place at the right time.
Brett Rowe, sales and marketing director at virtual network operator, TFM Networks, says: “The DS market has been slow until late 2006. But firms such as [lottery organisation] Camelot are entering the market. Digital screens are becoming more standardised and are being recognised as a good medium for getting content to end-users. At the same time, those customers are starting to recognise this form of advertising as something worth taking note of.”
Rowe also claims that the cost of entry – the price of screens, for example – is coming down to a level where the risk/reward ratio starts to become more attractive.
“In 2005, the cost of the average screen was £2,500,” he says. “Now they’re closer to £1,000.”
So with pricing at least beginning to move into more reasonable levels and plenty of products out there, is there now an opportunity for VARs to get into the DS sector?
There is according to Alan Hemson, sales manager for corporate business at Samsung. He says that vertical markets are a key area of opportunity.
“It all starts with a need to communicate,” he says. “VARs with networking expertise need to have a simple solution and build the opportunities from there. In the next few years this technology will be everywhere.”
Darren Lewitt is audiovisual (AV) divisional director at distributor Midwich, which executed a ‘planned push’ into the DS sector last year – in part with the acquisition of True Colours Distribution. It is currently on a major DS VAR recruitment drive.
“The market is very healthy and we expect it to take off over the next two years,” he says. “DS take-up now is especially popular among corporate AV integrators and in the SME Leisure space.” As proof, he cites “some significant signage projects in pubs and hotels”, as well as a number of outdoor projects Midwich is undertaking that incorporate weatherproof LCD displays from Sanyo.
However, some verticals have seen faster uptake than others. The education market is accelerating, especially in higher education and universities, as is the entertainment market, particularly in venues such as pubs and clubs. Other areas predicted to take off include Petrol Pump TV (once screens are bright enough), hospitals, hotels, museums and sports venues.
Campbell says: “The market for education has seen good growth, as has the corporate market. The big banks especially have been adopting DS technology.”
He adds that True Colours is also seeing take-up in the public sector.
“Many organisations have had to have a means to inform the public of any security alerts, especially since 11 September 2001. Using DS technology is one way they can do this,” he says.
For now though, retail remains comfortably the single biggest DS adopter to date – it makes up more than half of the DS market – with the most common deployments in areas such as point of selection and sale.
Rachel Harker, co-founder of Hypertag, a marketing specialist that has so far worked with companies including Ford, O2, Nike and Coca Cola, says: “Go into any reasonably up-to-date supermarket and there are screens showing targeted advertising in the aisles and at the tills. This is something that is only going to grow.”
Roger Saunt, head of sales at venue management company Venue Solutions, claims it is all down to the quality and neatness of the fit between retail and DS. He believes that DS offers the retailer an extra dimension and level of immediacy.
“Research from PoPAI [Point of Purchase and Advertising International, an industry body for retailers that specialises digital signage], revealed that 74 per cent of buying decisions are made in-store,” he says. “But with the right DS it can influence the consumer to buy brand A or brand B. This also makes DS interesting for shopping centre owners because they can sell premium messaging for a particular desired effect.”
However, according to Saunt, it is no longer just the early adopters such as supermarkets that are driving DS in the retail environment – specialist retailers such as trade suppliers and merchants are also stimulating growth.
Saunt says that DS is likely to become so powerful and ubiquitous that the businesses that don’t adopt some kind of DS-based marketing and advertising strategy may find themselves marginalised in the longer term.
Harker also says that 2007 could be a particularly big year for the interactive digital outdoor market.
“We recently hosted a roundtable in conjunction with CBS Outdoor, Vauxhall and the Beattie McGuinness Bungay agency looking at the future of the outdoor DS sector,” she says. “All of the major outdoor advertising networks have bought into DS in a big way: from CBS Outdoor, which is putting digital poster boards throughout the tube network; through to Heathrow’s Terminal 5.”
Gerry McKenna, chief executive of MDM.TV, says the entry of some major media players, such as Viacom, JCDecaux and Clear Channel is also helping push the market into a new level of development and maturity. CBS Viacom Outdoor has invested more than £30m in the London Underground project, while JCDecaux has earmarked £25m for the digitalisation of Heathrow’s Terminal 5.
“This highlights that the market is about to explode,” McKenna says. “Major operators don’t want to take risks and usually come into new markets when the risks have gone. The investments of Viacom and JCDecaux show that the market is advancing and that the ‘big boys’ clearly feel that the time is right.”
Not that this makes entering the DS fray any easier for the average VAR, warns Nick Deen, senior market development manager at Sony Professional Solutions Europe.
“Setting up and selling a DS solution can be a challenging job, especially when the network stretches out across several countries or even worldwide,” Deen says. “The opportunity for resellers can be selling DS networks to local companies that don’t require very complicated solutions.”
This is where VARs need to be more ‘application aware’, he adds.
“The technology is not the problem anymore, it’s more about what the customer wants from the DS application,” Deen says.
First of all – and everyone in the industry agrees that this point is crucial – content is king.
Deen says: “Content is everything. DS is a marketing tool for many companies and organisations and it should be sold as such.”
“Content is the most important aspect of DS,” Campbell claims.
He adds that end-users must know exactly what they want the DS technology for. For example, to sell a particular product, or advertise a message, rather than simply just wanted to put a screen up in their building.
“We have content providers we work with that can help the reseller discuss this with the end-users and then work out what content they want between them,” he says.
Rowe adds that VARs should find the right content partner and leverage them.
“DS firms have expertise in their own field, but usually they don’t know much about content, advert selling or network issues,” he says. “So joint ventures to create end-to-end solutions are the best way to make money.
“Being able to centrally manage a playlist of content and distribute this to the entire DS estate with the touch of a button is very, very powerful. The ability to react to market trends in an instant has to be worth a small marketing fortune. Partnering with players already active is the best way to find some credibility in the sector.”
Harker agrees. “The key is to recognise that it’s about more than signs,” he says. “As well as showing consumers moving images, VARs need to think about how they can help customers use content to drive engagement through other channels.”
However, Lewitt is not so sure that the existing content management specialists are going to have things all their own way for too much longer.
“Content management companies seem to have a fair part of this business at the moment, but there is an opportunity for resellers to offer it and for it to be taken in house at head office,” he says. “In fact, depending on the system, it can be straightforward.”
Lewitt concedes that the content delivery itself remains “a bit of a mixed bag. There are dedicated content providers out there, but there are also a number of companies who wish to control all the screens from one central location at head office.”
Just as important as the content itself, McKenna says, is the context in which it is broadcast. Because of this, he adds, many companies, including Microsoft, Sony and Samsung have started looking at captive networks and digital out-of-home DS networks.
McKenna’s MDM.TV network is a propriety media management and delivery system that delivers both advertising and editorial content to major football stadia and the Manchester Evening News Music Arena. Consumers influence the play-out structure of the content via text messaging, multi-media messaging, Bluetooth and also by client web sites.
“Captive audience networks allow the showcasing of brand-funded content and user-generated content from the internet,” McKenna says. “The environment is also a key content factor. Football stadiums targeting the 16- to 44-year-old ABC1 males demographic, for example, or music arenas targeting a particular demographic of music fans.”
The principle advantage, McKenna says, is that users get a captive audience in their chosen environment.
Having knowledge and expertise beyond the technology is clearly essential. This is an issue that traditional AV and IT resellers need to consider carefully, according to Simon Birkenhead, sales and marketing manager at 3M Digital Signage.
“The DS market is still embryonic,” he says. “All kinds of people and businesses are trying to figure out how to sell DS, but few appreciate just what is involved and casualties are almost inevitable. DS companies are going out of business all the time.”
To get their heads around it, according to Birkenhead, resellers need to think about DS not in technological terms, but in marketing ones.
“There is a temptation to see DS as an IT project, but IT and facilities are really only secondary stakeholders,” he says. “First and foremost, DS is there to deliver on a marketing objective, so it needs to be approached from a marketing perspective. VARs therefore need a degree of marketing knowledge and expertise if they are going to close the deal.
“First, VARs need to understand the market and have the vision to exploit it. They need to be able to see and to explain what’s in it for the customer. Then, resellers need the right portfolio of DS components and solutions – the screens, the software, the content, the context, the cabling – or at least access to it. Next – and the importance of this cannot be overestimated – VARs need the marketing talent so that they can speak the same language as their audience and talk about DS strategically.”
Then, he adds, it is a matter of how pro-active VARs are willing to be.
“Resellers can sit back and wait for projects to come to them, which does happen from time to time, but to be truly successful in this sector VARs need to stimulate, create and cultivate new projects and demand,” he says. “That means giving prospects and existing customers a strategic reason to adopt DS. This is not TV. It’s an interactive marketing channel and there’s a big difference.”
Alun Williams, marketing manager at NEC Display Solutions, also warns against thinking about DS as in-store TV.
While Williams understands resellers’ temptation to see the display itself as a big ticket, high-value hardware cash-cow, he says that they will miss out on opportunities for extra revenue and margin if they maintain such a blinkered outlook.
“The display typically accounts for 25 to 30 per cent of the cost of a DS solution,” he says. “So if VARs ignore everything that has to sit around the display to turn it into true DS – the cabling, the networking, the PCs to deliver the content, the content itself – they are ignoring decent margin.”
However, most resellers will have neither the fully loaded portfolio nor the resources to acquire one. This is a problem, Gamby says, but one that the vendors are now recognising and working to resolve by putting partnering programmes and affiliations in place that give VARs easier access to the various DS components they need.
NEC’s SolutionsPlus scheme, for example, includes a stable of partner offerings that complement its DS displays. This, according to Williams, helps the channel in two ways.
“First, it allows NEC resellers to source the entire DS solution from one place, which in turn cuts project times,” he says. “Additionally, because these partners are assured of getting a certain amount of run-rate business, that’s reflected in their prices for resellers – so there’s margin here too.”
Campbell says that choosing the right partner is essential.
“Once a partner is chosen, resellers then need to get a knowledge of the infrastructure and products,” he says. “Selling DS is also about helping end-users to define what they want to achieve, as well as the implementation and installation. Finally, resellers must make sure that support services are in place because this can lead to further projects being ordered.”
Harker agrees that the additional products and services offer the real margin opportunities.
“The winners are going to be those that can identify the whole opportunity, offer an integrated package and add real depth to what’s a relatively straightforward technology,” he says.
Saunt claims that ‘expectation fatigue’ is another area in which resellers may be able to find a foothold.
“Many media and marketing agencies have quickly realised the potential of DS, but in their haste they have vastly underestimated the practicalities of delivering cost effective, reliable solutions,” he says. “A true DS system encompasses many disciplines, but there are very few businesses able to deliver it all. The most successful examples to date have been where an equipment manufacturer works with a client and a specialist system integrator to make the system work. Arsenal’s Emirates Stadium and Mercedes World are good UK examples of where this occurred.”
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