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Digital signage emerges as new advertising venue

Dynamic digital signage has emerged as the next killer application in the advertising industry. National retailers such as Macy’s, The Gap, and Foot Locker see the potential of leveraging digital signage technology to increase sales and promote their own brands nationwide. Now third party advertisements are being displayed in targeted locations to increase revenue.

As an example, McDonalds is placing ads in Foot Locker’s in-store video network. Wal-Mart is upgrading its vast in-store television network at 2600 locations to promote products sold within the stores. According to Wal-Mart, the retailer’s TV operation captures some 130 million viewers every four weeks, making it in effect the fifth largest television network in the United States after NBC, CBS, ABC and FOX. Advertisers are willing to pay $137,000 to $292,000 to show a single commercial for a four-week period, depending on the length of the ad and the number of stores where it is shown.

However, digital signage is no longer the exclusive domain of national retailers. Independent storeowners also can sell ad space to both local and national advertisers to increase revenues. Value Added Resellers (VARs) such as sign shops and hardware providers can offer services to businesses wanting a hands-free operation. Services including hardware installation, content creation and content management provide more ways to bring in businesses for VARs. Cross advertising helps in the promotion of local businesses whose ads are viewed by local customers that shop or seek services in the same area.

The Application Service Provider (ASP) model for digital signage is one approach to building an advertising revenue stream with reduced capital outlay for digital signage. As an Internet subscription service, the ASP model allows small and midsize business to access full-featured software, with installation, maintenance, and upgrades handled by the ASP provider. Businesses pay a low monthly fee rather than build their own systems. The system uses simple hardware and the application can be accessed from any PC on the Internet making ad-posting and content management for multiple stores feasible.

This article is the first in a two-part DSU series on digital signage and advertising by Yvonne Li and Greg Gilbert of Adurance.

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