Why Advertising Hasn’t Lived Up to the Hype

Posted by on Nov 5, 2013 in Uncategorized

When we first dove into this industry, we–along with everyone else–saw the dollar signs touted by some of the largest industry studies on where digital signage would be and how the growth would be sweeping. Most of the touted growth was outside the realms of hardware and software (the boring area where we do most of our work) and in the realm of advertising. Unfortunately, for those who went headlong after an advertising market

Greater Advertiser Diversity and Competition 

Do you realize that true touchscreen smartphones as we know them today have only been around about 7 or 8 years? The iPhone truly revolutionized the way people interact, shop and game–all activities which at least in part compete with a digital out-of-home audience. The growth of the smartphone market has been heaps and bounds larger than the smaller corporate share of connected out-of-home displays screens, making the focus of advertisers that much less enticing. When going after growth, it’s opportunity cost baby. Unfortunately, the next best alternative for many–especially the digital advertisers–was mobile. Mobile trounced signage into oblivion.

And I haven’t even discussed tablets–the other elephant in the room.

Good Metrics

Sure, the industry has metrics tools to gauge audience participation, interaction and overall ROI, but they’re sub-par in comparison to clicks and conversions on other screens. Even when the metrics are good, the return on investment in retail settings varies widely, making it difficult to replicate or predict any steady return from a specific amount spent–something that all marketers crave.

The metrics are certainly improving, but finding the pot of gold at the end of the industry rainbow has been a bit illusive, especially when it comes to creating content that will drive sales. The missing linchpin is the content and there’s only so much you can do to improve it after a given quality threshold. Trying to up that anti can even be more expensive than the hardware and software combined.

A Worldwide Recession

Recessions are certainly never good for advertising. And, I don’t like to use a recession as an excuse for not getting any growth, but with the worst recession since the Great Depression a behind us (knock on wood), hindsight is truly 20/20. Advertising budgets were massively slashed during the last couple of years. They’re certainly coming back, but when it comes to ad dollar spend, it’s a zero sum game. That is, digital out-of-home will only win if they can steal market share from some other medium (see comments on mobile/tablet above). If the industry would like to steal further market share, they need to prove their worth from a metrics perspective (see metrics comments above). It’s a vicious cycle of ill-performance which can only partly be blamed on recessionary forces.

The recession certainly dampened the growth for a time, but the industry hasn’t fully found the model or stepped-up its game to compete directly with other markets.

Cost Prohibition 

A small digital menu board in a local restaurant or local small town advertisers looking to set up their own network faced obstacles for growing their respective businesses with their respective business models with the costs of some per-player hosting through the roof. Luckily, cost-effective players are now providing solutions that meet the needs of a growing number of small business owners who use digital signage.

The industry is not–and will not be–the new media darling of the 21st century until some of the aforementioned issues are fully resolved. When they are, there will be larger forces at play which could potentially take the advertising digital signage business model to what many resellers think it could be. Until then, we’ll have to muscle through the fray and make small margins where we can get them.

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