What has happened to ad-funded digital signage (aka Digital Out Of Home)? Just five years ago industry analysts were forecasting a nearly $2 billion market by 2010. Back in ’05, the future of this sector seemed so bright that tradeshows, press reports, articles, blogs, etc. were brimming with optimism. Today, the reality is much more sobering. Ad-funded digital signage has fallen significantly short of expectations, and according to some estimates, 2010 revenues will likely be less than a quarter of 2005's forecast. This failure to perform to expectations has been creating a sense of concern among many within the industry that DOOH’s money making potential is just not there.

Recent blog traffic has been questioning whether the growing ranks of ad-funded digital provider/operator bankruptcies would suggest that the industry has too many players and whether the industry would be better served by consolidating. While this speculation does suggest that a smaller number of players would benefit from splitting a smaller pie, it does not address the fundamental issue: Why is the revenue pie so much smaller than originally forecast? An examination of a recent report by a leading digital signage network aggregator gives some insight into the problem.

In a report by Adcentricity, the authors painted a rosy picture for the industry by expounding on the unprecedented and continued growth of their digital signage network. While their report provided an impressive set of growth statistics -- none of which were revenue-oriented -- it did however slip in one caveat that could lead one to believe that the core revenue fundamentals may not be so good. The report said: “…digital agencies haven’t yet adopted or fully understood its [digital signage’s] capabilities. There is a digital divide when there should be a natural fit.”

For an industry that depends on ad revenue, it would seem that the failure of digital agencies to embrace the technology would be a serious problem. There are however theories as to why this may be happening:

1) The inability to correlate DOOH metrics with traditional ad metrics,
2) The inability of agencies to afford the cost of DOOH campaigns,
3) The fiscal and operational instability of DOOH networks/operators,
4) The impact of a poor economy on the availability of ad dollars.

Perhaps the real reason is this: The fundamentals (e.g. ROI, value proposition, etc.) of ad-funded signage are simply poor.

While this statement may not sit well with many in the DOOH industry, company devaluations and sector bankruptcies are tending to reinforce the point. So is this statement suggesting that there is no role for ad-funded digital signage? No, but it is suggesting that social and technological change will further reduce agency participation; therefore the industry must learn to adapt or face extinction.

The remainder of this paper will examine the trends that are imposing change and then outline what DOOH providers can do to adapt.

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In my last post, I provided insight into the fourth, and most controversial, form of digital signage and mobile convergence: 2D Bar Codes.  2D Bar Codes are controversial in the sense that some believe that 2D Bar Codes will become ubiquitous while others, including myself, think that 2D Bar Codes will be no more than a curiosity.  In this post, I’ll examine the fifth and, what many would believe to be, the most obscure form of signage / mobile convergence: Graphic Recognition.

This particular embodiment of convergence is similar to dynamic 2D Bar Codes expect that rather than photographing a bar code, the viewer photographs an entire object.  Once the viewer photographs an object, an application on the cell phone wirelessly communicates the photographed image to a remote server where the server searches a database for a similar image.  Once the image is found, the remote server then retrieves information that is linked to that image.  The retrieved information is communicated back to the phone and where it is displayed.   These interactions are then statistically analyzed to extrapolate usage and viewership.

Nokia’s Point & Find application is an excellent example of this form of convergence.  The Nokia Point & Find application allows users of certain Nokia smartphones to point their camera phone at an object and receive content/information tied to that object. Nokia uses the example of a movie poster that when viewed through the phone’s camera would prompt the phone to access information stored in Nokia’s managed library of objects.  Once accessed, information linked to that poster (e.g. trailers, theaters, show times, directions to the theaters, etc) could then be displayed on the phone. Nokia makes a portal available to those who want to create a library of “tagged” objects along with their associated calls to action.

For those of you who view this technology as obscure, one need only consider that Google and several other companies are actively pursuing a similar offering as a means to facilitate the shopping experience.  Just last month, Google announced Google Shopper.  Google Shopper allows users of Android-based mobile phones to photograph the cover art of CD’s, DVD’s, books, video games, etc as a means to access information about product pricing, product reviews and product details.  Similar services are offered by companies like Amazon, SnapTell, etc. 

A key difference however between Google Shopper application and Nokia’s Point & Find application is that Nokia provides a mechanism for third parties to create and manage their own object libraries.  Only authorized parties are able to manage the object libraries of shopping sites like Google’s.

So where is the convergence with digital signage? In the case of the Nokia Point & Find application, digital signage could be extended by adding signage content and their associated calls-to-action to Nokia’s object library.  In the case of Point & Find, only certain Nokia phones would be able to use the service so its value would be extremely limited.  If however all phones could access a network operator-maintained library of tagged objects, then digital signage content could be easily extended.  But since no such application exists, the value of this form of convergence is also limited.  

Several weeks ago I wrote a blog post outlining the seven ways that mobile technologies and digital signage were converging.  In my last three posts, I explained in greater detail the three most common forms of convergence: DTMF (Dial Tone Mult-Frequency), SMS (Short Messaging Services) and Bluetooth.  In this article, I'll provide more explanation on the fourth form of convergence: 2D Barcodes. 

2D barcode uses graphical patterns to convey information as compared with 1D barcodes that use vertical bars.  The purpose of 2D barcodes is to deliver more information than can be conveyed in a 1D barcode.  But just as a 1D barcode must be read by scanner technology, a 2D barcode must be read via a pattern recognition technology.

The process for reading a 2D barcode via a cell phone is as follows:

A 2D barcode is affixed to an object or shown on a digital sign.  The viewer launches a reader application on their cell phone.  (Note: These applications can typically be downloaded for free.)  The viewer uses the application to capture (flash) a picture of the barcode via their phone’s camera.  The reader application then interprets the barcode.  Depending on the sophistication of the reader application and the contents of the barcode, the application will perform a specific function: e.g. present the information, transfer the information into another application, access a web page, dial a number, show a map, etc. 

The Japanese have been using cell phones to read QR Codes since the late 90's and European adoption has been increasing in recent years. In the U.S. however, neither companies nor consumers have readily embraced 2D Codes in any meaningful way, but many believe that the day is coming.

A recent discussion with several technology experts produced a consensus that 2D barcodes will become ubiquitous in the U.S.  A strategist for a major handset manufacturer, who by way of example had a QR Code on his business card, felt that the future was very bright for this type of technology.  He said that he saw a day when every product and location would have a barcode attached.  This sentiment was echoed by the CEO of a company that develops location-identification products for mobile phones. A technologist with a leading digital signage company suggested that 2D barcodes would become a common fixture in digital signage content.  It was even suggested that 2D’s future was secure because of Google’s interest in the technology.  One person said: "You can't argue against something that Google gets behind."

Although I personally like the concept of 2D barcodes -- especially when the reading process works smoothly, I do not share the same enthusiasm for the commercial prospects of 2D barcodes as my peers. My reasons are as follows:  

• First, 2D barcodes will be supplanted by easier to use technology, e.g. Common Short Codes. I have found it vastly easier to text a keyword to a short code than “flash” a picture of a barcode. If you've ever tried photographing a barcode, you've likely found that it does not work well in low light conditions or in places where you are walking or moving. In addition, it is a relatively cumbersome process to execute.
  
  
• Second, there are no standards for 2D barcodes. Although the QR Code is the most common barcode for mobile applications, there are presently 12 other encoding schemes being used for mobile devices -- and this does not include the many proprietary schemes that exist. This means that a phone's reader software may not support a given 2D barcode that is being displayed. There are standards setting bodies working on this problem, but one has to wonder whether the standards will be set before other technology makes 2D barcodes irrelevant. Remember, it took almost 30 years following the invention of the 1D barcode for Uniform Product Codes (UPC) to be broadly adopted.
  
  
• Third, 2D barcodes are generally static (See the note herein). Once you print the information, it's there for the duration. The trend is to move away from static information. The real trend is to deliver information wirelessly and passively, based upon your location, time of day and, ultimately, the direction you are facing. NOTE: There are dynamic 2D barcodes on the market (e.g. Scanbuy's Scanlife via EZCodes and Microsoft's Tag codes) where a flash of the barcode prompts the reader software to use an index stored in the barcode to access a remote server to retrieve information from a database.  Server-based 2D solutions require that a third party registrar manage the assignment of the barcode/index and host the information.  Dynamic barcodes are superior to static barcodes because the information can change without having to change the barcode.  In addition, the backend server of a dynamic solution can provide analytics on barcode usage.  It remains to be seen however if the market will unanimously  endorse a registry-based solution as the most well known are currently proprietary.
  
  
• Fourth, there is no way to get critical mass in a timely manner. Although it is easy to run some 2D trials, it is another thing to begin deploying a specific coding scheme on a universal basis. Very few companies will be willing to invest in a technology that has no standards and can be easily supplanted by new technologies that are on the horizon, e.g. RFID and other near field communications (NFC) technologies. Very few consumers will be interested in embracing a technology that they don't understand and requires a change in their existing habits. NOTE: There are quite a few 2D barcode trials currently in process.  It should be noted however that some of these trials are using QR Codes, some Scanbuy codes, some Microsoft's Tag and others are using a mix of various encoding schemes.  It will be tough to build critical mass in this type of environment.
  
  
• Fifth, it is a difficult model to monetize. Although it took UPC's many years to catch on, at least there was a very clear value proposition connected with them: A company could increase sales and reduce labor costs at the checkout line. UPC codes introduced tremendous efficiencies into the retail industry. Fewer checkout personnel could process more customers in less time. This provided clear financial benefit to those who adopted the technology. In terms of 2D, the application must be identified that will make the value proposition for 2D clear and compelling otherwise who will want to hassle with it.

In summary, some believe that 2D barcodes will be widely used in digital signage.  It is true that it is a workable technology for delivering information to a mobile phone, but it has limitation -- primarily the lack of standards and the lack of measurable value.  The question is therefore this: Will we see it used in digital signage?  The answer is yes, but I predict on a limited basis.  Most signage operators will find it onerous to manage the extension of content that comes via 2D barcodes and without a clear value proposition, few will want to expend the effort.

In my last post, I provided an overview of the second, and most common, convergent implementation of digital signage and mobile technologies: SMS.  In this post, I’ll discuss the third, and what I believe to be the second most common, convergent implementation: Bluetooth.

First of all, for those of you not familiar with Bluetooth, it is a short range wireless technology that in its current implementation supports data transfer speeds between 2 – 3 megabits.  Bluetooth was originally conceived as a replacement for data cables (RS232) and now forms the basis for what is known as a Personal Area Network or PAN.  PAN’s are used for wireless communications within 10 meters and can be found in everything from PC mice and keyboards to cordless telephones.  (Note: Depending on the power of the transceiver, Bluetooth can communicate from 1 up to 100 meters.)

There are a number of companies that are using Bluetooth as a wireless airlink to communicate digital signage-related content to Bluetooth-enable mobile devices (e.g. cell phones).  Most are using Bluetooth as a way to augment content shown on a digital sign with something that is designed to enhance the viewing experience.  That “something” may be additional visual content (graphics, pictures, videoes, text, etc.), a game, a ringtone, etc.

The typical Bluetooth-enabled convergent implementation involves a centrally administered system that communicates content via the Internet to “edge servers” located near the digital sign.  These edge servers generally host the programming logic for receiving content from the centrally administered system and then subsequently managing the delivery of the content to the mobile device.  The edge servers also house the content and Bluetooth transceiver.

The process for communicating content to the mobile device is fairly straight forward.  The Bluetooth transceiver on the edge server is constantly polling (i.e. sending out a signal) looking for other Bluetooth devices (e.g. Bluetooth-enable cell phones) with which it can connect.  When it senses one, it immediate establishes a connection to that device.  The programming logic in the server then says to the phone “I want to communicate with you.”  The security feature of the cell phone's Bluetooth receiver prompts the cell phone user to either accept or reject the communication.  If the communications is accepted, then a session is established and content is transmitted from the edge server to the mobile device and then made available to the cell phone user.

All in all, Bluetooth is a fantastic technology and very good for facilitating communications between a mobile content server and a mobile device.  So one has to ask the question: “Why is Bluetooth-enabled convergent signage not deployed everywhere?”  The answer is multifaceted. 

First, one must have a Bluetooth-enabled phone.  Since nearly every cell phone sold today is Bluetooth-enabled, this is not the problem it was several years ago.  However, there are still phones in use that are not Bluetooth enabled, which limits the community of potential viewers.

Second, the cell-phone must be “discoverable.”  This means that the Bluetooth transceiver in the cell phone must be configured to allow a connection with another Bluetooth device, e.g. the edge server.  This is a bit of a problem as most cell phones, for security reasons, are shipped as “non-discoverable."   In order to make the device “discoverable,” the cell phone user must activate this setting within their phone's configuration menu.  Since most cell phone users do not understand what being “discoverable” means, they typically leave it turned off.  If the phone is non-discoverable, then the Bluetooth-enabled edge server cannot communicate with the phone. 

Third, the cell phone's operating system in conjunction with the Bluetooth API must be configured to allow file transfers.  Since many wireless carriers have required the cell phone manufacturers to disable the file transfer feature, Bluetooth file transfers have not been a viable option for many cell phones.  One may ask: “Why would a carrier intentionally block Bluetooth file transfers?”  Simply stated: Economics.  The carriers want their subscribers to send files over their networks so they can charge the subscriber for the privilege.  This however is becoming less of an issue as the carriers are moving to flat-rate data plans (one fee for all the data you can transmit).  As they move to flat-rate plans, they’re opening up Bluetooth file transfers.  The carriers are now wanting their subscribers to get as much stuff off their networks as possible.

Fourth, Security.  Many users have chosen not to accept Bluetooth file transfers for fear of receiving a virus.  In fact, Bluetooth transported viruses are said to be excessive in countries outside the US where Bluetooth is more commonly used.

Fifth, Costs.  Although the great majority of cell phones now have Bluetooth, the form factors (i.e. shapes, sizes, functions, screen resolutions, etc.) of those Bluetooth-enabled cell phones vary tremendously.  Content must therefore be “repurposed” to accommodate the various form factors.  This means that content designed to fit the screen attributes of the iPhone (assuming that the iPhone supported Bluetooth file transfers) would not look good on the screen of the Motorola Razor.  In essence, content needs to be modified to fit, run and look good on each phone.  This is a time consuming and expensive endeavor and not within the budget of many companies that would desire a signage/mobile convergent solution.  For this reason, most Bluetooth-enabled convergent solutions have been relegated to specific projects funded by big brands that can afford a large media budget.

So in summary, Bluetooth-enabled convergent signage is here, is working and is able to fit a particular purpose.  It does however have its limitations.   I believe future implementations of convergent signage, like the one we did at Symon, represents the future of convergent signage.