Digital signage should be thought of as one component of the overall sign industry. The issue the industry faces, however, is how digital signage may appear at first to be confusing, complex and even intimidating to traditional sign shops. To quell such apprehension, it is important to understand there are many similarities between all segments of the sign industry and, as such, there are very real opportunities for sign shops to expand their business and increase their profits by entering the digital signage arena. To find a clear-cut path to do so, signmakers need to start by considering a number of core elements of digital signage as alternative medium.
Defining the opportunity
At their core, all businesses will seek new opportunities to grow, but the traditional sign industry has been relatively slow to add digital signage to its activities, for a number of reasons. Over the past few years, the opportunity to enter this niche has become more attractive, addressable and attainable than many signmakers might have assumed.
Digital signage is an exciting, fast-growing market segment where the traditional sign, information technology (IT) and audiovisual (AV) industries intersect. It has far-reaching implications in terms of opening markets for signmakers, system designers, AV integrators and content creators, among other professionals.
Digital signage has found success where it can provide relevant, targeted messaging to the right viewers at the most appropriate time. As conditions change, whether environmental or informational, digital signs can be designed to respond to those changes. Content management and updates can be performed in real time from a central or remote location.
Further, digital signage has been shown to influence its viewers’ behaviour, both short- and long-term, by helping to create a more visually stimulating environment. The value of this influence has been substantiated by increases in return on investment (ROI) for the medium’s users.
The New York Times recently reported 68 per cent of people see digital signage every day. And research shows the inherently dynamic nature of digital signs captures up to 10 times more eye contact than traditional static signs.
The most obvious ‘explosion’ of digital signage has been in retail environments, but there have also been many applications for corporate communications, wayfinding, education and public transportation venues. This is why industry pundits predict a double-digit compound annual growth rate (CAGR) through to at least 2020.
A sign shop should not feel intimidated by the billions of dollars in digital signage sales forecasts or reports of many thousands of screens being rolled out for major networks. While the largest projects tend to get all of the mainstream attention, the average digital signage system sale actually involves five or fewer screens. This type of project, which represents the vast majority of those billions of dollars, is right in the ‘sweet spot’ for most traditional sign shops to handle.
Addressing barriers
There are, however, several barriers that can impede progress in the field. Many potential customers for digital signage lack an understanding of the technology’s capabilities, particularly with regard to the design, creation and refreshment of content. Additionally, financing and funding may remain challenges for their organizations, especially those concerned about a ‘soft’ ROI on ‘hard’ dollars spent.
Another barrier is the period required for a company-wide rollout in multiple locations, which can be dauntingly long. This means not only a large undertaking for the client, but also a longer sales cycle for the sign shop providing the network.
One way to prove ROI is through viewer analytics, which can gauge the effectiveness of digital signage and will continue to become more mainstream in the future. And from the perspective of sign shops, it is important to understand digital signage can supplement—not replace—what they have already been doing for many years. It is not an either/or situation, but rather a blending of sign types and strategies to best serve customers by remaining current and relevant to their needs.
A natural fit
To determine if digital signage is a natural fit for their customers, signmakers must ask where it would make good business sense to add dynamic content to an existing static signage environment. It is up to sign shops—not the customers themselves—to make the case for the ROI of digital signage.
Ultimately, digital signage does a lot of the same things static signage does, just with dynamic movement. Its features and benefits are complementary to a sign shop’s existing business.
There is a significant overlap in the sense that most shops are currently selling static signs to the same retailers, quick-service restaurants (QSRs), corporations, health-care organizations and entertainment venues—among other customers—that have, in many cases, already been shown to benefit from digital signage. A customer segment analysis is recommended, assigning a percentage of a sign shop’s current business to each type of client, to help provide guidance as to which niches to concentrate on when adding digital signage to the shop’s portfolio.
Research shows sign customers are looking for ways to attract, entertain, educate and motivate viewers—and they are willing to pay for new services to do so. It should go without question that shops would prefer for these customers to buy any and all signs directly from them. Existing clients must be thought of as theirs, not anyone else’s, for both static and digital signage.
It is important to keep in mind their customers will not abandon static signs, but rather add digital signage to their communications mix. Supplying that digital signage is a good way for sign shops to retain those customers and expand their business.
Navigating a tangled web
While digital signage should not intimidate signmakers, it does represent a somewhat tangled web of interconnected technologies that must work together. Many companies understand some of these parts—such as displays, networking or content—but only a few grasp the whole picture.
To truly succeed in digital signage, a company must understand the various elements and be able to convey their value to customers who will pay for it. Most digital signage failures are situations involving poor due diligence and business planning.
Each project must begin with a plan and a clear articulation of the client’s objective or purpose. Examples include:
Building a brand.
Increasing sales of goods/services.
Disseminating information.
Wayfinding.
Improving the customer experience.
Content must then be planned to suit the objective. The creation of digital signage content is an art form specific to the medium, generally involving more than simply reformatting graphics produced for broadcast or printing. There may be a mix of advertising and information.
The design of the system must also meet the project’s purpose, linking hardware and software in an integrated package that will be both manageable and successful. The scale and scope of the deployment must be factored into its design. Other issues to consider include indoor or outdoor installation locations, heat, humidity, ambient light, security and the potential for vandalism.
Another important choice is which software to use.There are subscription-based software-as-a-service (SaaS) options, as well as packaged software for on-premise use, which is either purchased outright or included with a system package. Software provides the ‘brain’ of a digital signage system, including the management, scheduling and distribution of content.
Hardware is a more obvious, visible and easily understood element of digital signage, including displays, mounts, stands, media players, cables, connectors and distribution amplifiers. All of the major suppliers produce good to excellent equipment and most are on par with each other.
If software is the brain, then connectivity to the Internet is the nervous system of digital signage. Wired systems are the most reliable, but depending on installation issues at a given location, they may be the most expensive or even impractical. Wireless and cellular connectivity has improved significantly over the past few years, though it can still encounter problems with reception and bandwidth.
Once the network is completed, it will need to be managed on a daily basis. Support, service and maintenance are ultimately the processes that will make a project continue to work within definable costs. Not accounting for these processes will necessitate additional outlays of money when (not if) something goes wrong.
What to sell
The display is the most visible part of any digital signage system. There are all types and sizes of screens available today, but the most common are flat-panel liquid crystal displays (LCDs). They tend to range from 152-mm (6-in.) kiosk screens to 2.4-m (95-in.) large-format displays. Digital projectors are also common, making up 20 per cent of the overall market. And light-emitting diode (LED) arrays are becoming increasingly popular as video walls.
Displays have become commodities today, with low profit margins for those selling them, but these can be made up for through the sale of peripherals and add-ons. There are many products, for example, designed for mounting screens and projectors to walls, from ceilings or in stand-alone kiosks. The addition of mounts, along with enclosures (for outdoor applications), power conditioning and extended warranties can turn a low-margin flat-panel display into a profitable system.
Media players are devices dedicated to storing content and bringing it to the screens. They may be stand-alone personal computers (PCs) or boxes that attach to the back of a display. In some cases, they are built into the displays; these are often referred to as system-on-a-chip (SoC) players.
Software also resides on a PC server for the management and distribution of content. Cables and connectors, which allow displays, media players and servers to communicate with each other, are another category of profitable peripherals.
Beyond these items, however, the real profits in digital signage are in the design, integration and recurring revenues from content creation, software updates, service and maintenance. The time invested in the client’s needs analysis to discover the objectives of the project is a tangible value and a price must be charged.
Content is the driving force of digital signage, just as with static signage. The production and refreshing of animated graphics—supplemented by data feeds, such as weather forecasts, news headlines or sports scores—is the most profitable part of the business.
The necessity of regular service and maintenance cannot be overstated. A digital signage network needs to be checked regularly to provide maximum uptime. Displays need to be calibrated to ensure colours and contrast levels match the source content. A service contract with the client will help reduce risks before they become problems.
Partnerships and risk abatement
Most dedicated digital signage companies, let alone most traditional sign shops, do not have mastery over all of the elements of the medium. Instead, they need to look to partners—not just vendors—who can supply the knowledge and experience they lack.
Digital signage system design and content development are two of the most commonly outsourced tasks. While many sign shops handle content creation as one of their core activities, there are instances where outsourcing it makes more sense. Some third-party companies focus only on developing video content, for example, on a project-by-project basis.
Logistics and installation are also often outsourced on a regional basis. If a shop lands a digital signage deployment project outside its usual coverage area, it can be highly beneficial to have someone else get the components on-site, install them and manage logistics. There are specialized service providers of this type that do not compete with sign shops.
Most hardware manufacturers and software developers sell their products for digital signage through distributors. It is worthwhile to work with a distributor that provides value-added support, rather than simply reselling products.
Content management system (CMS) software is key to any digital signage network and one size does not fit all. The nature of the application will determine what level of CMS is needed, whether simple or complex.
As for the digital displays themselves, all distributors of major brands should provide strong warranties and after-sale service.
Positioning and promoting services
The addition of digital signage can make a sign shop more profitable and help it retain existing customers. As with static signage, there are many vertical markets to choose from and each has its own unique applications and challenges.
After looking at opportunities from the perspectives of these customers and developing a better understanding of their overall signage needs, it is important to actively invest in positioning and promoting the shop to the selected vertical markets. Digital signage providers need to differentiate themselves by offering full turnkey systems, rather than just stand-alone products. Success in this context involves not only forming new, meaningful partnerships with outside specialists, but also helping customers better understand the value of digital signage with measurable ROI. If done properly, all of this will add to the bottom line of nearly any sign shop. |
