Lack Of Audience Metrics Won't Hold Back The Growth Of Digital Signage
Market Insight September 6th, 2008
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
resonse; and that can drive real consumer behaviour all the way to the point of
sale, has become the established 'market wisdom'.
However this position
is not unchallenged. 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 bottom
line is that whether the metrics are there not, the next stage of the industry's
growth won't be affected.
Tough Beginnings...
To understand why,
one needs to consider how the medium has developed. The small start-ups who
pioneered the industy 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 succesfully try a new form of
'risk-free' digital.
The market has turned - and the reality is that
much of the predicted media growth in the digital signage industry is likely to
come 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 trickle down 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 Neilsen & 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 noe 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
realising 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 recognise, 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 recognisable. Advertisers
will start to engage, and then eventually begin to look for better value and for
differentiation opportunites 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.