Digital Signage ROI: Past, Present & Future

Posted by on Jun 30, 2011 in DOOH, Industry

Let’s face it, when the economy tanks, so does advertising–most often branding focused advertising. I’m a numbers person anyway, but the reason I love the Internet is because it’s measurable. You can predict, focus, and hone your ROI to a scientific level. Of course, other methods such as direct mail can be just as measurable, but you get my drift: the Internet makes for an easy and fast ROI yard stick. Plus, major media pushes are gearing toward newer forms of media. In fact, recent reports have shown how advertising dollars are quickly shifting to new mediums. Television branding on the other hand is often not nearly as “return” focused (unless you’re doing QVC or some type of infomercial where they throw in a free comb for “acting now”).
Hence the difficulty in selling the “sizzle” of digital ooh to media buyers. Lack of a streamlined measurement process has, until most recently, created industry fragmentation–fragmentation which will need to be eliminated before the major media outlets will consider digital signage as a viable media spend.

Past

The Ghost of signage metrics past may still be haunting us. Until recently (and even still), the world of digital signage metrics was a bit of a wild, wild west environment. Outlaws and bandits claiming specific performance in cases where measurement was not even implemented. I’ve spent time on the phones (which occupies 90% of my time) speaking with persons either operating or intending to operate networks on both small and large scales. During such conversations I have heard just about as many different descriptions of ROI and CPM as people I’ve talked to. Cost per impression numbers have ranged from nickels to several dollars in some cases. It all just depends on the network, the advertisers, and venue.

Fragmentation is to be expected. But some networks have not educated themselves enough to know what is industry standard for what they are doing. Networks operating 15 to 80 screens seem so suffer greatest in regards to fragmentation. Some, in a seemingly careless shotgun approach, assume that ad revenues are based on venue traffic and not measurable “impressions.”

Contrastingly, there are those anal retentive personalities (and, oh how we love them) who run their network on a tight ship, requiring host venues to keep and report back with monthly affidavits regarding daily, weekly, and monthly traffic averages and actualities. And, in cases where the venue does not meet the required guidelines, the revenue sharing is substantially limited. Although it is anal, it gives great motivation for improvement and that’s why we love ’em.

Present

Enter the Sheriff. October of 2008, marked the beginning of metrics standardization for digital signage with the release of the Out-of-Home Video Advertising Bureau’s Metrics Guidelines. It’s a somewhat technical report, but it outlines specifics for calculating digital signage ROI. And, thanks to the piece Dave Haynes so succinctly put together entitled “OVAB Guidelines for Dummies”, we can now at least pretend to understand in generalized terms what the report intended us to know. In narrowing down audience measurement, Dave’s five guidelines below may be of assistance:

  1. Total venue audience
  2. Possible viewing audience (those who have a chance to see the screens)
  3. Actual audience (those viewing the screens)
  4. Average viewing audience dwell time
  5. Content loop length

Determining Vehicle Audience

Let’s do a simplified example of a signage metrics calculation for a pet store. Let’s say the store receives an average of 500 persons/day (total venue audience). Of those 500, only 300 get within viewing distance of an LCD advertising screen (possible viewing audience or “vehicle traffic”). Your metrics device(s) and/or audience surveys indicate that only 100 patrons (20%) actually viewed the screen (these are your actual viewers or “vehicle audience”).

Average Unit Gross Impressions: Matching Dwell and Loop Times

Once you’ve determined vehicle audience, it’s time to do an “average unit gross impressions” calculation. This is determined by comparing the loop time with the average vehicle audience dwell time. For instance if your loop time is 5 minutes, but you’re average dwell time is only 1 minute, you have an average impression rate of 20% of vehicle audience. Now you can effectively calculate an average unit gross impressions of 20 persons. Of the 500 people who entered the store, 20 is your average unit gross impression calculation. In the rare case that your loop time matches consumer dwell time, your calculation is at 100%, or in our case, 100 average unit gross impressions: not too shabby.

As metrics standardization goes into “trickle-down” mode, reaching even the small and local networks, more development of devices and platforms will take place. Most recently, France-based Quividi released a great whitepaper outlining their findings from measurements done in a pharmacy. The whitepaper utilizes the prescribed outlines the OVAB intended. It sounds like the metrics standards are begining to take hold, at least somewhat.

There are, of course, limitations. Without audience measurement devices, much of this data is left to speculation or oompa loompa drone workers, counting bystanders, onlookers, and general traffickers–inefficient and expensive. At least it was the last time I priced out hiring orange-faced dwarfs.

Future

What does the future hold for digital signage audience measurement? I personally feel metrics will be greatly enhanced as dynamic signage continues to be integrated with other technologies. SMS (and perhaps eventually some form of mobile instant messaging), RFID tags, social media, and other interactive devices will only aid in making metrics measurement a more simple task. They will at least take away the ethereal guesswork that, up until recently, has been somewhat universal, at least in the retail environment. Interactivity gives you a way to specifically measure, thereby hone, messages for a particular audience–a priceless tool, I’d say.

Technological integration will eventually go far beyond audience measurement devices and “average” numbers. Digital signage ROI must become as honed as internet searches for it to be even considered part of a new media triad replacing television, print, and radio. It will happen. Time will vindicate metrics efforts and everyone on both sides of the fence will be happy…eventually.

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