Issue Summer 2008

Lack Of Audience Metrics Won’t Hold Back The Growth Of Digital Signage

Article Provided by AKA.TV

The growth forecasts for digital continue to defy the general downward trend in the media industry - the latest figures put media spend for US digital signage at $2.25 billion by 2011. According to the opinion makers, this growth is being driven by the emergence of a medium that finally gives advertisers the kind of direct and measurable ROI that has the power to draw-in media spend from many other less accountable mediums.

The industry has been selling itself well. ROI remains the chief calling card of the digital signage industry - the transparency and accountability of a media that can target particular groups of people; that can change its messages in real time; that can elicit direct response; and that can drive real consumer behavior all the way to the point of sale, has become the established 'market wisdom'.

However this position is not unchallenged - there is also an entrenched alternative view. In a recent article in MediaPost, one media executive was quoted as saying that the landscape of the industry still resembles the 'wild west' and that with no accepted metrics, the sales process is still completely 'up in the air' and the whole industry is being held back.

The reality is that despite these seemingly logical perspectives, neither measurable ROI nor accepted metrics are absolutely critical to the next stage of the industry's growth.

Tough Beginnings...

To understand why, one needs to consider how the medium has developed. The small start-ups who pioneered the industry entered a market where the traditional 'hot' outdoor locations were already taken. With an established (and conservative) big media owner lurking at every key site, all that was left was to search out the new and unusual.

The fact that the industry now boasts an installed base that ranges from elevators, gas stations and gyms; to coffee shops, bookstores and nightclubs - is testament to these beginnings. It is also the main reason why media buyers have been left scratching their heads as to the relative value of it all. It is not that these networks don't all offer excellent opportunities, it is that any pitch is quickly lost in the unfamiliarity of the different environments, and the seemingly bizarre range of viewing experiences.

Equally it was not a medium that could immediately hide behind massive audiences. Unlike TV, Radio and the Internet - digital signage requires the media companies to invest in all the infrastructure (instead of sharing the burden with the public). Audiences could only be increased slowly - and in the pressure to build advertising revenues, many networks were left over-selling the ideals of accountability, on often sub-scale and marginally located media.

The result was a slower than expected pick up from our traditionally risk-averse media industry. It wasn't that they didn't get the potential, they just didn't feel comfortable enough to engage.

Enter The Big Guns...

In a tougher media environment, companies always look to the potential to find their growth stories - and suddenly in the downtown, digital signage has found its spotlight.

Much of this is because the conglomerates that own the traditional outdoor media companies, buoyed by their growing revenues, finally figured that it was time to start investing in digital.

Suddenly some of the hottest outdoor properties around the world are being given the digital make-over, and finally the media industry is being given the opportunity to actually consider a mainstream digital proposition. The investments being made by the likes of CBS Outdoor and Clear Channel are suddenly enabling advertisers to successfully try a new form of 'risk-free' digital.

The market has turned - and the truth is that much of the predicted media growth in the digital signage industry is likely to come directly from the traditional out-of-home companies simply converting their existing poster base.

Now For The Metrics...

The hope for those pioneers is that a trickledown effect will soon be felt. To try and ensure this, the industry is looking to shed that 'wild west' image and finally prove its accountability claims and assume the advertising moral high ground.

This last year has seen the emergence of a raft of new initiatives that are attempting to define a universal currency for the medium. Even traditional ratings agencies (like Nielsen & Ipsos) have begun to look at how common metrics for audience measurement, opportunity to see and media compliance can be delivered.

The chances are that they may never actually be able to agree on something that will work equally well between a gas station and a nightclub. However the initiatives are having at least one very important effect. The message has got through to the technology providers - and all the worthwhile systems now being released have integrated compliance tools and field reporting modules as standard.

As this technology flows into the field, the whole industry is suddenly benefiting from a much more reliable and a much improved media proposition.

Aggregation & Consolidation...

Meantime the network operators have begun to figure it out for themselves. Networks are realizing that though they may be fundamentally different, they do have slices of audiences that they can share, and that by combining and scaling their media they can better attract a wider advertising base.

The good networks are picking off the bad ones, and the ones who have quietly built their businesses on the back of local ad sales are finally reaching a scale where they can begin to command the respect of the 'big' media market.

As in any market, success breeds success. As the momentum builds so all sides of an industry respond. It has been shown that advertisers will use digital when it starts to resemble something that they can recognize, and when they see their peers taking the plunge.

With the big outdoor companies now promoting the medium, the format will quickly become better understood and more recognizable. Advertisers will start to engage, and then eventually begin to look for better value and for differentiation opportunities within the medium.

The lack of decent metrics didn't hold back the development of older traditional forms of media, and it won't be the arrival of bullet-proof digital signage metrics that will really drive the industry forward. The avalanche has begun.