Private-Label Digital Sign Networks

Posted by on Jun 30, 2011 in DOOH, Industry

Sometimes indecision is far more crippling than making the wrong decision. Choosing your digital signage business model is no exception. As a result, it is vital that due diligence is done in the “discovery” of your project to ensure you’ve settled upon the right modus operandi for deployment. However, this also must be done efficiently so as not to be crippled by the indecision that can often come from information overload that surrounds us today.

To further aid in determining what type of network you feel would be helpful, this article will discuss the functions, purposes and opportunities housed in creating a private digital sign network. In addition, we’ll also discuss some of the costs, benefits and issues that may arise in deploying your own private network.

The four functions of a private label digital signage network:

1. Corporate Communications

Businesses worldwide spend billions of dollars every year on training expenses. Included in such expenses are costs for travel, accommodations, meals, entertainment, etc. Digital signage, as a corporate communications vehicle, can help such costs. By utilizing a multicasting system integrated with a corporate digital signage network, corporations can significantly alleviate the costs associated with training and communications within large, national, and international organizations. When viewed in this vein digital signage becomes more of a significant cost reduction, rather than a leaky boat whose survival depends on outside advertisements.

In a more specific case, the massive retailer JC Penny utilizes digital signage at its 1,100 locations in the U.S. and Puerto Rico as a means of providing communications, interactive distance learning, and training for its 150,000 employees. JC Penny found digital signage as a means of streamlining both time and cost variables by utilizing scheduled prerecorded content placed on Helius digital signage media players throughout their 1,100 locales. Helius allowed for on-demand content to be deployed for training purposes. The system also allowed for tracking of trainees’ progress, score reporting, and completion progress. The JC Penny digital signage initiative helped to eliminate costs associated with training a massive audience on a large scale.

2. Branding

In store branding is not new. Static signage has performed this function for centuries. Dynamic digital signage captures audiences, especially with creative and compelling content. Effective branding in such an environment is easily accomplished. I think if I talk too much about branding I’m going to make myself queasy. It is sufficient to note that because digital signage creates in the mind of the consumer a cognitive recognition of a previously viewed advertisement, it’s an effective method to be utilized for product branding purposes.

3. Point-of-Sale Spikes

Numerous reports abound giving credence to claim that digital signage produces a measureable sales-lift when effectively utilized. I’ve personally read instances ranging anywhere between a 1% and 20% sales-lift on a digital signage network. One percent may seem miniscule, and perhaps it is. This all depends on the economies of scale that could be had for a particular network. Think for instance what 1% of 1,000,000,000,000 might be. It’s obviously quite a large sum (if you can’t figure it out, don’t read on–the math gets even more complex). It is plainly obvious that such a small percentage increase, although seemingly insignificant, may prove immensely important when large numbers are involved. With large scalability involved it may be weeks vs. months to see a breakeven.

Not only can digital out-of-home be used to influence purchases at the point-of-sale, but it also becomes a method whereby network operators can more effectively manage the in-store movements and activities of consumers. For instance, a sign might read, “Please visit aisle five to see what’s new in our baby diapers exhibit…” This call-to-action/branding combo can be very effective. In some instances, it can be used as a means of crowd control.

4. Information

In some instances, profit or cost savings may not be the summum bonum of a network’s existence. Communicating a message of information to an audience may be the sole reasoning behind a deployment. For instance, churches and other houses of worship benefit by utilizing digital signage as a communications tool. Live or prerecorded sermon broadcasts can be displayed locally or nationally through a multicasting digital signage hardware and software installation. In the case of a church, ROI is not priority one, but content quality and reliability becomes paramount.

Airport digital signage is yet another excellent example of an information-only privately operated digital signage network could run. Anyone who has been to the airport has most likely viewed the digital signage that displays departure times, gate numbers, and maps. Such dynamic methods of disseminating information save time and frustration for airline passengers. And, as we all know time=money in the business world. Of course, not all airport digital signage is devoid of advertisements, but much of the display of information in airport digital signage venues is informational only.

Benefits

Demographic targeting comes to mind. We all know at different times of the day, different groups are drawn into particular venues. For instance, the lunch crowd at Starbucks will appear much differently than the crowd that came earlier that morning. For that reason alone, digital signage is worth its weight in gold. With increased knowledge of specific demographics during specific times of day, private labeled network operators can more specifically hone a marketing campaign to a particular group. Similarly, advertisers can produce a needed sale lift with a solicited “call-to-action.” Driving audience behavior is a key component of digital signage.

Revenue, if measured at all, is much more difficult to determine on a private network. Although most understand what the term “sales-lift” could possibly mean, many struggle getting the specific numbers. Understandably so. While measurement is only one issue, benefit can truly be seen through use of a private internal network.

One such benefit is 100% pure unadulterated control. This includes control over all the hardware, software, content, and maintenance. Whereas, ad-supported networks are much more accountable to the hand that feeds.

Costs

Costs associated with hardware, software, and installation open up a can of worms for another time. A much better, and perhaps more elusive cost associated with private networks involves ongoing content creation. Refreshing, new content is the lifeblood of any network and a necessary part for both regular customer and employee sanity. I know of several networks who had problems with both employees and consumers turning off digital signage because the rotating ad loops were either too short, or the content was so poor, it was simply too annoying to tolerate for a long period of time. Good content takes effort. Effort means time. Time means money. Some smaller networks, in an effort to scrimp; have cut content creation budgets to a sub-par level. This is a problem. Sales-lifts, branding, and calls-to-perform are often rendered null when long dwelling captive audiences have to repeatedly watch the same crappy rotation over and over again. If you want it to draw, it needs a compelling reason.

Apart from the content costs, don’t forget you’re fronting the cash. That’s right. The owner is the owner, which means they’re the purchaser, buyer, Daddy Warbucks… You get the idea. Simply stated, the money fronted for such a network is not supported by externalities. It’s all supported internally. This is why a cost/benefit analysis for deployment is crucial.

Issues

As the sole manager of the network, private label network operators can often have a daunting task. If your software platform is not “fool proof” then you may run into issues with maintenance. Or, in a worst case scenario you may have to hand deliver your content to multiple displays via DVD. Believe me, it’s something that is still done. Not to name any names, but I know of a very profitable digital signage network in Texas that was regularly swapping advertisements with DVDs delivered to each display. I’m not going to mock them, at least they’re out of the red, but it’s called “dynamic” digital signage for a reason. Get my drift.

Another issue, of necessity, had with ad networks that can be alleviated in privately held networks is the need for constant monitoring, proof of play reports, and advertising sales. Perhaps proof of play may be necessary, but ad sales are a headache currently had in this industry that is still looking for a savior. If you’re a company, looking for an opportunity and have ad sales experience, feel free to jump on board and hang on for the ride. There is a real need out there for networks that need ad space filled. But, why am I talking about this? This has nothing to do with private networks…

Conclusion

What is your desire? To sell more crap to people that don’t necessarily need it? To inform and enlighten? To brand? There are multiple ways a private network can benefit the operator. And, I guess as an overall network of screens, private labeled providers are not pigeonholed, but there is usually a vast distinction between a retail private labeled network and a network created solely for sales lift purposes. So, when creating your private network be sure and understand where you sit on the internally-driven network spectrum. If you don’t know where you are, you’ll have no idea where to go. However, if you’re well aware of your model, have a clear understanding of your cost, and realize where and how you can receive a healthy ROI from your

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