Digital Signage Business Models

Posted by on Jul 1, 2011 in DOOH

Digital signage may have “turned the corner”, but immense work remains. With the current economic crisis, choosing and maintaining your business model may be a trait necessary to avoid extinction in the current fray. There are many companies who, without understanding the competition, will enter the digital signage market intent on a profit, but who lack understanding of a very broad industry. Although this is not uncommon, it is rather disturbing to see the same business models practiced repeatedly with the same effect: network death. Education is important, but not the end of what is necessarily a difficult decision.

Numerous issues abound in the models had by many digital signage companies. First, and like I mentioned previously, there is a lack of understanding of the overall market. Entrants often jump in, some intent on making revenues from advertising networks. Others suppose piggybacking with a software company and running a SaaS model (software as a service) will give them the revenue they desire. This may be true, but unless due diligence is made in the discovery phase, the greatest plans of mice and men will surely go awry.

Yet another indication of a problem with specific digital signage business models is often found in the company’s offering. How many times have I seen a company who tries to be everything to everyone? Mucho. Geoffrey Moore said it best: “Make a total commitment to the niche, and then do your best to meet everyone else’s needs with whatever resources you have left over.” Sometimes this is difficult for small to medium sized companies. They see opportunity and end up trying to become everything to everyone. This is dangerous for a couple of reasons. Firstly, hedging your bets by over designing or overstepping a niche for a “broad” market without a target, waters down your product pitch. Secondly, valuable resources, including human and financial capital, are wasted in attempts to bring revenue from wherever possible. The irony is that when companies attempt to reduce risk in the marketplace by hedging their bets, they’re inadvertently increasing it.There are exceptions to the rule. For instance, when markets go mass (much like recent reports of digital signage indicate), broad platforms always beat niche applications. In most cases, platform companies will weed out application companies all together by creating similar apps themselves. Does WordPerfect vs. Microsoft Word ring any bells here?

Another tell-tale indication of that your business model will not survive is that your leadership lacks the fortitude and guts to see it through. One of my favorite books is “Think and Grow Rich” by Napoleon Hill. In it he indicates that is often is not the plans that fail, but the people that fail:

“First comes thought; then organization of that thought, into ideas and plans; then transformation of those business plans into reality. The beginning, as you will observe, is in your imagination…Reduce your plan to writing. The moment you complete this, you will have definitely given concrete form to the intangible desire...When defeat comes, accept it as a signal that your plans are not sound, rebuild those plans, and set sail once more toward your coveted goal…The majority of men meet with failure because of their lack of persistence in creating new plans to take the place of those which fail.

The applicable takeaway here is that business does not fail when the plan fails. Continuous tweaks, changes, and improvements will be absolutely necessary in every situation. Such tweaks will ensure your reach your targeted digital signage roi. In the next couple of months, I will be putting together a piece on the blog wherein I will showcase a couple of successful digital signage advertising networks. How they were successful, how they funded their project and what we can learn from them. Those of you who have information on specific digital signage business models you have worked that were successful or that you have seen work, please post your comments below. I Will be putting together a summary later about possible digital signage business models and, with your permission will quote you in doing so.

What is the best digital signage business model you have seen? How was it implemented? What worked and what didn’t?

Until we hear from you, please see my related posts on digital signage business models:

Advertising Network Business Model

Private Network Business Model

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