Digital Signage: Luxury or Necessity?

Posted by on Jul 1, 2011 in DOOH

Often individuals and companies rush headlong into decisions with a mind void of logical thought processes. Finding necessity above luxury is no exception. And, determining between wants and needs is often an extremely difficult task. Seldom is the conclusion decisively clear at the outset. If it were, there would be a literal overflow of demand. And supply–even in its current glut–may have difficulty filling the gaps. As such, there must be a convincing blow to settle the question once and for all: does digital signage produce a viable return on investment? As a caveat, determining a viable digital signage ROI does not answer the former question of whether digital signage is a luxury or necessity. That question is settled on a case-by-case basis.

Frankly, proving a bonafide ROI can be difficult, which is why hesitancy still clouds the minds of media planners and advertising agencies. When solid ROI stats cannot be determined digital signage becomes a nice luxury piece, a bling factor that is worth its weight solely on “coolness” alone, a fact recently frowned upon by Paco Underhill. Stating that something should be implemented simply because of “cool” is synonymous with saying digital signage is a luxury item. However, numerous examples abound giving credence to digital out-of-home’s ability to drive sales. Even more importantly, using digital signage as a corporate communications tool has, in many instances, proven a cost-cutter. If savings are realized on one end of the spectrum and sales are increased on the other than digital signage is most certainly a necessity.

Establishing a Need

When attempting to sell a product, first you need to establish a need. Sounds straight-forward enough, but many companies are attempting to sell a “techie” product based on the technology alone. Practical buyers not only spurn the “latest and greatest gizmos,” but look around them at the solid numbers. Without these, your sales may be as effective as selling a ketchup-covered digital signage media player to an 80 year-old woman in white gloves. It is simply not feasible.

What is doable is showing various signage industry case studies, proving increases in ROI. They are as numerous as you might imagine. Practically every company seeking for traction in this space has a similar digital signage case study about increasing ROI. Keep ’em coming folks, but remember unless the practical buyer can really feel the ROI is meeting the road. He/she will walk. Especially in this economy. Additionally, although prices are still falling companies are often placing digital signage in areas where no signage–especially measurable signage–existed previously. That throws another variable into an already-complex equation.

Selling the Sizzle, Not the Steak

Now here is where I contradict myself. The “sizzle” or “bling” factor is often the bait, but numbers are the real hook. Draw them in with the technology, close them with solid salesmanship and reporting. Simple as that. If you keep trying to woo them with “sizzle” alone, you’re just teasing them with cotton-candy tactics. It’s a taste-good sales maneuver that leaves prospects hungry and salespeople empty handed. Contrastingly, if you are able to talk about the “bling” benefits while knitting in actual numeros, you most certainly will see not only an increase in interest, but you will be able to show real benefit to digital signage.

Luxury or Necessity?

We have still not answered the question, “are digital signage displays a luxury or necessity?” I hate to say it, but it depends on a number of variables, including projected ROI (often a shaky variable itself), Return on Message (a term emphasized by MediaTile), and overall network purpose. There is an answer, but for me to go through and play out every possible scenario would be extremely nit-picky. It would also take an exorbitant amount of time. So, the brief answer is that it all depends. If you want to set up a luxury-type venue where digital signage adds to the ambiance of the locale, then ROI may not be as fundamentally important as Return on “Coolness.” Such a retail installation is a rare species indeed.  In many instances, determining whether digital signage is necessary depends on what you want the signage to do. The term “digital signage” encompasses such a wide array of applications it is a dangerous proposition to use blanket statements. However, it is important to note that if you currently utilize static signage, looking into replacing it with digital should be a high priority, given that ROI can be measured by decreased costs and not P.O.S. increases alone.

Recent reports still admonish vendors to be looking for growth. In fact, Monday’s digital signage news brought in two articles touting industry growth. One stated that digital signage was to grow by 1/3 this year. The other touted the signage market at a 100% growth over the next three years. Effectively, they are not only giving numbers for good growth this year, but also steady growth for the following two. Interestingly, the articles had a hardware and software sales-lead focus. With the continuous growth promise, digital signage vendors are currently scraping the cream from the top of the market in many instances–effectively making a luxury item out of what could be an effective medium. And when, in cases where digital signage qualifies as a luxury item, cost is often everything.

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