Market Survey: Digital signage - Signage takes off

It's all about the verticals. After years of chasing the retail market, digital signage vendors have now realised their revenues are actually more likely to be coming from areas such as corporate communications, education, leisure and healthcare.

This is partly because the technology has become more accessible. Even low-cost systems designed to be easy to install and manage now offer most of the features that, only a few years ago, very expensive and complicated-networked systems were able to handle.

Orders increase

'We have seen a significant lift in the market,' says Scala's Damon Crowhurst, director of business development and services for EMEA. 'The number of request for proposals that have come back onto the market, as well as the actual purchase orders, indicate that things are heading in the right direction. We have seen large orders from the retail finance, public transport and telecoms sectors.'

However, he adds: 'It's the clients who have a tangible return on investment that are in a position to place the orders. Networks based on third-party revenues dependent are not demonstrating the same growth.'

Saturn Visual's managing director Chris Welsh is even blunter, saying: 'Anyone who is using the advertising payback pitch is having problems justifying their sales' argument.' Saturn is also enjoying a rise in the number of orders, but these are 'not so much new projects coming on line, but projects that were talked about in 2008 which had been put on pause. Now firms have hit the play button'.

'It was hard for people to justify major investments in internal communications when they were making people redundant, so digital signage - which had moved from being nice to have to being an important business tool and had drifted back down the priority order during the global recession - has returned,' says Welsh.

Other vendors are coming to the same conclusion. For example, Onelan managing director David Dalzell highlights the growth in corporate foyers, medical, banking and manufacturing - all classic av communications markets.

Schools broaden horizons

The education sector has made significant purchases. 'There are lots of projects out there, and some big numbers, although it has tended to be low-margin business,' says Dalzell.

'The education market is slowing down, and the sales cycle is getting longer, because schools and colleges are not quite sure whether they should spend their budget or not,' says David Oades, managing director of Sedao.

'Also their use of the technology is changing,' he adds. 'It has stopped being a pretty reception screen. People have woken up to the idea that if you put PCs around the screens you have a communications tool, which is more powerful than a simple RSS feed. The schools are being pickier about what they are buying and they want the equipment to do much more.'

Steljes' category business manager Alun Williams says that features required now include interacting with the local community, as well as with pupils or students. Williams, who is leading the distributor's move into the market with MediaTile, which works over 3G mobile comms, rather than over a wired network, says: 'During the past 18 months we have seen a lot of digital signage going into schools, but equipment mostly consisted of just one or two screens in reception. But the situation is changing as a result of programmes such as Building Schools for the Future (BSF). All of a sudden schools have to communicate with 1,200 pupils, and they must have a more coherent way of doing that than just using a notice board. Education organisations also have many more resources that can be used by the community - so they need to advertise the facilities both in the school and in places outside the school, such as libraries.'

Retail starts to rebuild

Some of the factors that have encouraged the corporate and educational take-up of signage are also making their presence felt in a renewed, but subtly different, retail market. Instead of the accent being on delivering moving graphics and streamed ads to remote locations, retailers who want easy-to-manage signage without massive creative and management running costs are opting to buy into the kinds of system that corporate firms and the educational sector have been buying.

'Many retailers just want to deliver the same information to 400 screens,' says Oades. 'They want digital signage, but have got limited budgets.'

Crowhurst adds: 'Retailers are actively seeking new ways to differentiate themselves from their competitors and signage is definitely one of the elements they are taking more seriously as part of their marketing mix.'

'Both retail and corporate firms are looking for ways in which signage can be used beyond the obvious to justify their investment,' says Remote Media managing director Jason Cremins.

Changing technology

Much of the increase in market activity has its roots in the fact that digital signage technology is maturing and users can start to do more for less.

However not everyone would agree with Oades, who says 'the technology is finished, because now you can play out unlimited zones of anything from an inexpensive PC'. But there is little doubt that systems have become easier to install and offer far more sophistication for the same price than previously. The MediaTile offering, which needs no cables or network connections, is a case in point, although users might flinch at the 3G costs of up to £50 a month per screen.

'3G mobile is becoming a practical reality because easily understood pricing packages are becoming available,' says Dalzell. But, he adds, they are only one of several technologies threatening the 'old' VGA over Cat-5 way of distributing signage. Others include 'cheap and reliable land-line internet connectivity, which has made a big difference'; ever-more sophisticated media players; IP streaming of content to multiple displays and 'the prospect of web-enabled TVs'.

The latter option may be closer than some people think, with Remote Media about to release a digital signage media player based on the SMIL standard, which will allow content to be delivered to the player via an internet stream rather than an edge server.

As the technology becomes less complicated (or at least better understood), digital signage sales patterns are changing. For example, Remote Media has moved mainly to a distribution-based channel model for its SignageLive SaaS (software as a service) product range, and Cremins can see the day when networks are licensed on the basis of usage, the bits in the channel and the amount of data served, rather than on a per-machine basis.

Right now, though, most digital signage vendors are focusing on a full-service offering, providing a mix of consultancy, network management and creative services as well as hardware and installation.

But there is no consensus on how to go about it, apart from the general conclusion that resellers who know their vertical markets are key to the sales process.

'High-end customers expect to deal with the organ grinder,' says Welsh. 'We do have some av partners, but dealing direct for the majority of our business plays to our strengths. There are bespoke elements in many systems, which are harder to do using a reseller.

'We have to rely on key resellers who are good in their market sectors and support them,' says Oades. To do that, he adds, manufacturers need to make their products specific to the market.

'The technology is totally developed, so rather than walking through the door and saying, "Here's a box of tricks that will do everything", which may confuse the user, we should say, "You run a doctor's surgery, so here's a box with five buttons on it, and you can call it Dr Surgery TV",' says Oades.

Routes to market occasions

Either way, it is obvious that all resellers are going to have to become more market-savvy and IT-aware.

'The IT integrators are moving further into the realm of the av vendors, and it is important that the traditional av suppliers understand the IT needs of deploying signage,' says Crowhurst.

'Digital signage deployment needs are still more demanding than the skills within an av distribution firm, but there is a market opportunity there. But I am not sure many distributors have cracked this nut yet, if you see how often they change signage products.'

As the market develops and grows, the channel dilemma is one that will have to be resolved. Now, however, digital signage is developing as a medium for serious organisational usage, rather than as an adjunct to advertising or a competitor to television channels.

'People don't want to use signage as a creative tool,' says Welsh. 'They want to use signage to allow them to use their assets. They don't want to create their own TV ads, they need a vehicle to display the data they already have. Communication departments, for example, are sitting on rafts of information that they need to present.'

It is the job of digital signage to help them put it out there.

LOOK TO NEW HORIZONS

Digital spending 2004-2009

The digital signage outlook is still buoyant, according to a recent report released in the US. The world digital-out-of-home (DOOH) market grew 4.7 per cent last year (2009) to EUR4.6bn, says PQ Media, and it is on course to grow at a compound rate of 10 per cent worldwide between now and 2014. PQ's report says that video advertising networks and digital billboard revenues are growing far faster than other outdoor advertising media. The bad news is that DOOH markets in EMEA are growing much more slowly than American or Asia/Pacific markets. However, says PQ Media, they are still going to grow at a CAGR of 14.5 per cent over the next five years with the region spending a healthy EUR1.3m in 2009.

Source: PQ Media Global Digital Out of Home Media Forecast 2009-2014.