Can Digital Signage Truly Compete with Internet Advertising?

One of the greatest boons the internet has given to small business in recent decades is the unique ability to reach a scaled audience on a budget that makes sense. This is one of the reasons the massive investments in the internet have helped to be a tide that floats all boats. Internet advertising has leveled the playing field for many would-be entrepreneurs. Unfortunately, the same DOES NOT also hold true for digital signage and out-of-home advertising for a number of key reasons.

Lack of Scale

Apart from some large format digital displays in football stadiums and perhaps on the interstate, there are few–if any–small form-factor digital signs that actual make an impact individually on any meaningful scale. The cost to install and maintain a digital signage system on an individual level cannot be scaled to a mass audience. The costs may be fixed, but the scalability is extremely limited.

High Cost

Not only is scaling a campaign extremely difficult, the costs associated with doing so on per customer-basis ¬†are in general higher than a traditional internet banner ad or click campaign. With a naturally lower ROI, selling digital signs as an effective advertising solution to any venue that already uses other mediums is a difficult close. When budgets are measured on returns (and we all know everyone is actively seeking those these days–just look at the bond market), then the internet beats signage hands down.

Metrics

That brings me to my next point–metrics. Despite all the attempts to develop integrated and effective audience counting tools, digital signage advertisers still have difficulty in providing the same type of keen and honed metrics the internet can bring. Unlike web-based advertising even the best facial tracking software doesn’t quite perform as well as a pay-per-click pipeline. Which is more, most sign operators are in the SMB, which means paying for more expensive audience tracking tools can take the cost above the desired initial project scope (see high cost above).

In short, the inability scale at a low cost with meaningful metrics means digital signage can’t even compete on an apples-to-apples basis with the likes of the web.

Many have evangelized digital signage as the next wave in digital advertising, but I greatly disagree. Unlike the internet, it represents a more costly approach on a per-viewer basis. Moreover, the ability to track campaign effectiveness without the help of click-throughs true CPM rates and and other metrics makes calculating a digital signage ROI that much more ethereal.

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