Digital Signage Promises Simple Second Revenue Stream
magine a video medium with no channel changes or skipped commercials, one that requires minimal bandwidth and equipment, and generates revenue. That’s the reality of digital signage--on video monitors in the local Wal-Mart, the doctor’s waiting room, or even on the nearest gas pump.
“There is a huge trend of media companies
converting static posters to digital signage because the medium is much more effective and therefore commands higher rates for the same advertising real estate,” said Michael Terni, executive vice president of iGotcha Media in Montreal. “Frost & Sullivan predicts that 90 percent of retailers will have implemented digital signage networks by 2011.”
|A captive veiwer takes in CBS Mobile News on a Gas Station TV monitor.|
Digital signage “is projected to be a $1.7 billion dollar business in ’08, growing at 27 percent and second only to online search marketing,” said David Leider, CEO of Gas Station TV in Oak Park, Mich. (GSTV is currently seen on over 5,000 monitors in 365 U.S. cities.)
Michael Tippets, president of Helius/HughesNet in Lindon, Utah, offers yet more numbers.
“By 2015, the out-of-home market could be worth more than $10 billion,” he said. “The potential of this market is enormous.”
CAPTIVE AUDIENCE On Gas Station TV, “We feature CBS News and Entertainment, ESPN sports and market-by-market weather, as well as advertising from national marketers like General Motors, Kraft, Kellogg’s, Ford, Progressive, Goodyear, Mobil, and NestlÃ©,” Leider said. “Individual advertisers may target individual markets, geographical areas, or even target individual locations for their campaigns.”
“The GSTV model is a good example of how digital signage works, and why this medium is so exciting for broadcasters” said Jimmy Schaeffler, chairman and chief service officer of The Carmel Group in Carmel-by-the-Sea, Calif. “Digital signage providers need content to interest captive audiences at gas pumps, checkout lines, and anywhere else people may be waiting. Who better to produce such content than broadcasters? They already have the studio facilities, the talent, and the name brands and talent.”
Major U.S. broadcasters have grasped the potential of digital signage, and are chasing its possibilities avidly. CBS Outernet was created after the network paid $71.5 million to buy digital signage company SignStorey late last year. Today, CBS Outernet provides customized digital media in “grocery stores, pharmacies, medical and dental waiting rooms, restaurants and malls and other retail locations,” said Tom Green, senior vice president of ad sales for CBS Outernet in Fairfield, Conn.
“Our grocery network, encompassing network services, programming and advertising sales, is currently installed in over 1,400 stores nationwide, reaching approximately 80 million shoppers each month.”
TV EVERYWHERE CBS is not alone in its out-of-homeâ€”OHH--advertising endeavors. NBC Universal’s NBC Everywhere division is targeting content to roughly 300,000 screens in supermarkets, gas stations, fitness centers, colleges and even maternity wards, with the network expecting 3 billion impressions in 2008 alone.
“Two years ago, we asked our advertisers if they would like their messages delivered into these targeted unique venues along with our other carriage, and their answer was overwhelmingly, â€˜Yes!’” said Mark French, general manager and senior vice president of NBC Everywhere NBC Universal. “It’s no wonder that we are seeing such growth in this play space, with predictions that digital signage will be worth $2 billion annually in the U.S. in just a few years’ time.”
Over at ABC, the network has developed a new sales division for out-of-home markets called the ABC InStore Network, said Greg Weaver, manager of digital signage networks for Microspace Communications Corp. in Raleigh, N.C.
“They all understand just how big it could be for them,” he said.
There are two ways that broadcasters can do digital signage--establish and operate an OOH network, or create content for third-party distribution and delivery. Gannett Captivate Networks is taking the first approach, said Doug Collins, strategic marketing manager for Harris Digital Signage Solutions in Cincinnati. It operates an out-of-home network that delivers content to digital signage in elevators in commercial office buildings, Collins said.
“By comparison, KNBC in Los Angeles licenses its content to Transit TV, an out-of-home network provider that equips Los Angeles metro buses with digital signage,” he said. “Other local broadcast stations have signed similar content licensing deals with outof- homes such as Transit TV within their markets.”
|A "permiter" screen, located at the edge of a store, usually in the produce, meat or deli departments, considered high-traffic areas.|
Ken Goldberg, CEO of Real Digital Media in Sarasota, Fla., said that standard encoding equipment was sufficient for managing digital signage content.
“Most digital signage solutions will play MPEG-1, -2 and -4 files,” he said. “As digital signage is most commonly an IP-based technology, transmission from broadcasters to network operators is generally accomplished via FTP. Transmission from a central server to the media players and displays is generally accomplished via broadband connection.”
Collins from Harris said providers typically aggregate source content at a central facility, produce it for the various venues then deliver it to a server at the venue. Content is often store-and-forward transmitted to reduce bandwidth costs. “...with some screen elements updated continuously via RSS feedsâ€”e.g., weather and a news highlightsâ€”and other elements updated as infrequently as once every couple weeksâ€”e.g., national ads,” he said. “In this case, a typical bit rate falls within the range found through a commercial broadband Internet service.”
People in checkout lines and waiting rooms may not have access to a remote control, but bore them, and the retailers paying for the service won’t be happy, said Peter Cullen, executive vice president of business development for Thomson Out-of-Home in Paris.
“In the early days, broadcasters would simply show promos for their on-air programs, until retailers put their collective feet down,” he said. “Retailers know their markets. Hence they demand digital signage content that appeals to their customers, and fits the products their stores are selling.”
CBS Outernet’s Green said some broadcasters re-edit existing TV shows into shorter segments for digital networks.
“Others are creating custom content that is relevant to the venue, and some are doing a combination of the two,” he said. “Our goal at CBS is to give the consumer a compelling reason to look at the screen...you have to serve content that is relevant to that consumer at that point in time. Otherwise they’ll just tune out.”
STAR POWER NBC Everywhere recruited primetime stars to do spots for specific stores, Thomson’s Cullen said.
“It is very powerful when you have Kelsey Grammar speaking directly to you, in context of the store you’re shopping in,” he said. “In the same vein, having people from The Biggest Loser talking to customers in Wal-Mart can really work; especially if there’s a DVD set of the show’s last season on sale, and the on-screen star can alert you to it.”
Broadcasters, service providers, and retailers alike are bullish about digital signage. Green from CBS said the medium was creatively friendly.
“We can turn around an ad in a second,” he said, “whereas with print and other forms of outdoor, you have to pull the creative together way far in advance. Each TV screen has its own IP address so the flexibility and ability to target your audience and tailor your message is extraordinary. As advertisers continue to embrace the medium, the returns will continue to grow.”