• Expenditure increases are planned. In 2009, 79% said they planned to spend up to $100K compared with 84% in 2011. 16% of survey respondents in 2011 said they would spend more than $1 million, versus just 6% in 2009.
• 73% expect budget increases over the next year versus the 53% who expected it in 2009.
• 57% of displays are now networked versus just 35% in 2009.
• In 2009, 60% of displays had no third party advertising. In 2011, only 37% have no third party advertising.
• 24% of 2009 survey respondents expected to deploy new or additional screens in the 0-3 month period, whereas 49% of 2011 respondents expect to deploy or add displays.
• Respondents expecting to use digital signage primarily for internal communications doubled in the period 2009 to 2011.

The “train” that is digital signage left the station in the post 9/11 economy when advertisers and marketers sought more productive ways of communicating. Since then it has been picking up speed at a double digit compound annual rate of growth and acceleration, and now has a full head of steam and is thundering down the tracks in just about every market and application area.

Digital signage continues to be installed at points of purchase, transit, waiting and gathering, at and near where people shop, work and study to inform, influence and increase safety.

Arbitron has reported that Out-of-Home video as a medium reaches 67 percent of Americans 18 years and older each month, and delivers a fairly representative cross-section of consumers. 76 percent of those seeing digital signage noticed displays in multiple venues.

A “critical mass” of displays has been deployed, which allows advertisers to reach targeted audiences based on demographic profile, Designated Market Area (DMA), geography and even the activity in which they are involved (shopping, transit, café, workout, attending a game, etc.).
 
More than 180 ad-based networks exist with 47 of these (as Out-of-Home Video Advertising Bureau — OVAB — members) accounting for almost 400,000 displays. DisplaySearch reflects that almost one million displays have been deployed in North America for dynamic media presentation to shoppers, patrons, staff and students. A Compound Annual Growth Rate (CAGR) in display deployment of more than 23 percent is forecast. This growing critical mass substantiates the value for marketers and other communicators to consider, plan and use digital signage/DOOH.
 
Twenty percent of the 1,200 firms that responded to the fall 2009 industry survey conducted by the Digital Signage Association indicate they will spend between $200,000 and $1 million per year on digital signage/DOOH. This represents 240 firms of the survey respondents themselves expecting to spend a total of $48 to $240 million. Forecasts by industry analysts place industry projections in excess of $1.2 billion annually.
 
To be or not to be…

So the question is not whether or not an end-user or supplier organization will engage with digital signage during 2010, but “how.” End-users, suppliers and integrators all have the choice to be part of digital signage or not, with consequences to those that do not, and benefits for those organizations that do.

End-users, such as retailers, service providers and others, will lose revenue and patrons to competitors that use the medium, or will enjoy the benefits of more effective communications spending, meeting the information needs of target audiences. We are increasingly a “visual” society and the effectiveness of digital signage as a communications device is being proven across a wide spectrum of projects.

A/V and IT integrators are ideally suited to provide the technology integration needed. Some have lost market positioning by not offering digital signage earlier, while other have seized on new clients, revenues and margins, while other parts of their business have declined.

Some are generating new, ongoing revenues from services such as network planning and design, network operations and content production. End-users are going to buy from someone, and the ability to respond to needs is the basis of ongoing supply relationships.  

The field of the suppliers of technologies that comprise the technology “ecosystem” continues to grow. While some bring more cost-effective elements for media authoring, management, connectivity and presentation, many are enhancing their offering by bundling technology elements. 

Once the choice of whether to engage with or not is made, the important question of “how” needs to be addressed.

The following chart illustrates the framework for digital signage planning, supply and operations. It provides the context of the choices that end-users and suppliers must make as they decide how they will engage with digital signage.

No single organization can supply all elements of a digital signage network, and there are a wide range of more or less encompassing approaches used in both the sourcing and supply of the required elements. This presents opportunities while also making decisions about sourcing and supply both important and complex.

Digital signage projects start in the same way as the typical audio/visual project, however are typically much more complex in the definition of intended use, outcomes, Return on Investment (ROI) and Return on Objectives (ROO). A challenge of this phase is that the lack of understanding of what the digital signage technology can do often constrains the process.

A/V integrators, which typically focus on technology provisioning based on a defined specification, can often play a key role in defining the overall operational model and technology configuration which it might then supply.

Opportunities also exist for A/V integrators to provide services such as network operations, help desk, playlist administration and content development, as illustrated in the chart.
During this planning and assessment, the approach to technology sourcing/supply will be determined.

This feeds into the business model of “who supplies what” and “how.”

And in this process, some areas of ongoing operation emerge as key sourcing/supply issues. These include network operations, help desk, playlist administration, and content creation and sourcing in particular.

Some A/V providers are having success at providing these planning and operational services from within their organization, while others are sub-contracting or gaining a referral commission on these needed services, from which margins of 30-60 percent are typical. 
So consideration for the enabling technology in terms of functionality/benefits/costs relative to ROI and ROO is needed. The iteration and refinement of communications goals and the technology will result in a balance of outcome versus investment.

Throughout the process, end-users as well the integrator and suppliers must each decide on the nature and degree of their involvement in each phase of the system deployment life cycle and the sourcing of required technologies and services.

New digital signage projects will be advancing in 2010 across the economy. And, as the communications objectives become broader in scope and the technology infrastructure of existing networks is refreshed, new sourcing requirements and supply opportunities exist.

So, 2010 is a year of choices. Correct decisions by end-users will result in successful projects with ROI/ROO from the sourcing and use of digital signage. Correct decisions by integrators and suppliers will result in new revenues and profits, the retention of existing customers and expansion through new ones.

Digital signage and digital out-of-home is not in itself a technological breakthrough, but rather the ongoing incremental improvement of technology integration that exploits "digital" in a supply chain that includes digital content creation, management, connectivity, playout, display and measurement.

This incrementalism, which continues its rapid acceleration, means that neither ad revenue achievement or "infrastructure" come first, but are concomitant — both effected by, and effecting each other simultaneously. The presence of either of these elements supports and triggers the other.

It was never an option for a single DOOH firm to "cross the chasm" with others rapidly following as is characteristic in technology breakthroughs. Instead, a critical mass and momentum by a larger number of firms has had to be achieved almost simultaneously over the past several years, which in itself has fueled growth.
Digital signage is a vortex, accelerated by the internal forces of enabling technologies, better technology integration and scalable operations along with the external forces of the increasing pressure for communications and marketing cost effectiveness.
 
The growing numbers of networks and displays reflect the broadening at the top of the vortex, while the vortex seeks to gather up and integrate technology elements and processes with integration into other systems for better message targeting, impact measurement and other points of operational optimization and cost savings.

The growth in the number and locations of displays motivates increased advertising which enables greater infrastructure investment, resulting in an upward spiral, rather than a "chasm crossing."

The great benefit is that all end users, location providers, technology providers, system integrators and operators, and content providers "win" through participating in this upward spiral.

The genesis of DOOH has not triggered an exodus from TV or other advertising devices, but enabled the revelation that media more optimally applied means more effective communications spending. Digital signage has found its place, incrementally, into the communications continuum and is on its path in wealth creation, in the same way that every other high-value application of managing light has found its economic success since the beginning of time. DOOH allows demographic targeting at points of purchase, long dwell times and high traffic.

The expanding infrastructure of digital displays proliferates message presentation in the "digisphere," the global environment of digital addressability and connectivity where media and messaging serve people, organizations and society.

People live on the lithosphere of earth, as part of its biosphere in its atmosphere while looking up into its troposphere, stratosphere and mesosphere. The digisphere enables human success through connectivity in all these areas.

Within the digisphere, communications can be increasingly granular — in the case of digital signage and digital out-of-home, improving the message targeting to audiences and individuals by location, interest, demographic and intended action to improve the level of relevance and engagement leading to the outcome intended by the communicator.

Lyle Bunn is a highly regarded independent advisor and educator in North America’s digital signage/digital out-of-home sector.

If you can imagine 140 football fields, you have an idea why digital out-of-home network advertising is becoming hotter every day.

That’s how much area it would take to lay out all 900,000 of the digital signs expected in the market by the end of 2009 if each were a 40-inch display.

“That’s 6.3 million square feet of dynamic digital display area,” marveled Dale Smith, senior director of business development at Peerless Industries Inc.

Size isn’t the only thing that matters, however, among a number of factors fueling the growth of the networks. Proof-of-performance has improved dramatically, more ad space is available to sell, planning and placing the ad content has never been easier, and an increasing number and diversity of media-buying divisions are writing checks, taking money from pockets typically emptied into TV and Internet buys.

Proof of the boom: the Out-of-home Video Advertising Bureau, whose members include many of the largest DOOH networks, reports that video advertising networks are a $1.01 billion industry now and growing at 25.4 percent annually. The Bureau predicts the industry will be at $3.2 billion before 2012.

Buyers, sellers tuning in

NBC, ABC and CBS have been promoting DOOH ad placement to their advertising clients, often bundled with TV network proposals. Cable system and billboard ad sales organizations have been ramping up their efforts, and print media is expected to engage DOOH ad sales as a way of leveraging their sales organizations.

But some media buyers and planners are looking for a different way. Brand managers, agencies, creative houses and others have become frustrated with the high amount of effort it takes to place ad campaigns that take fullest advantage of the medium. Here, network operators have an opportunity to capitalize on the sharpening of their own marketing kits, proposals and analytics.

“A fact of modern life and commerce is that better approaches will be used,” said Shelley Palmer, media guru and author of the best-seller “Television Disrupted,” when addressing a packed house at the NEC Digital Solutions Summit in late August. “Digital out-of-home is powerful because of its placement at point-of-event such as purchase, decision or attention. As an addressable media, it exploits the digital communications supply chain to provide better message targeting capability – the holy grail of the advertising.”

DOOH network account execs easily could fill a media buyer’s calendar, and ad placement is becoming increasingly easy. Industry associations such as OVAB and www.OOHDigital.ca offer direction to many networks.

And DOOH ad sales agencies such as Adcentricity, SeeSaw Networks, Charter Media and MediaPlace offer convenience to media planners and buyers. New entrants to this service area such as rVue, UnSoldSpace.com and AdSemble suggest that the administration in using DOOH for advertising will become more streamlined.

Not only are placement options becoming more sophisticated, so is the understanding of the medium’s potential. Rocky Gunderson, vice president of SeeSaw Networks, said he is seeing companies using DOOH in ways more sophisticated than ever before, and believes the model is moving beyond place-based advertising into more strategic communications.

“That’s really exciting, particularly when from a creative perspective you see how effectively digital-signage can deliver a relevant, timely message,” he said. “When you add to that the explosive growth in digital-signage companies, increasing the venue choices brands have to advertise in, this media now has the reach of TV with the target-ability of the Internet. Planning teams are beginning to stand up and take notice.”

Rob Gorrie, president of Adcentricity, agrees.

“Today there’s a better understanding of the digital OOH medium, and folks are more comfortable with how to use it,” said. “This is what’s driving demand for digital OOH. And it’s about time.”

Lyle Bunn is a commentator, contributor and consultant to North America’s DOOH industry.