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Digital Signage - Big Challenges, Bigger Opportunities

We spent today at The Digital Signage Content Strategies Summit at the Mandalay Bay hotel in Las Vegas.  We’re interested in the digital signage market first because we are covering it in detail as part of our 2010 Retail Automation Planning Service, and second because we think digital signage represents an enormous opportunity for established and emerging technology suppliers.  Below are some highlights – with our commentary – of the days most interesting insights for those participating in the digital signage value chain.

The Island That Is – And Should Not Be - Digital Signage – As digital signage begins to capture the imagination of brands and retailers, an expanding list of companies stands ready to offer the software and hardware necessary to deploy digital signage networks.  What many seem to be missing – with the notable exception of a company called LocaModa – is that digital signage is only one of several bricks in a retailer or brand’s digital out-of-home (DOOH) marketing strategy, all of which must be mutually reinforcing and fully integrated.  The fact that most digital signage networks are isolated from each other, as well as from the other networks through which marketing messages are being delivered, creates enormous inefficiencies for brand managers and retailers trying to efficiently reach large audiences with multi-channel marketing campaigns.  We are impressed with LocaModa’s effort to address this problem through a combination of technology and business processes.  The challenge they face in creating a unified platform for purchasing and managing out-of-home advertising (and as importantly, for delivering reporting on its performance) across disparate networks are great, but we believe the benefits and potential rewards are too.

We Need Great Content - Now! - Digital signage technology suppliers have done a better-than-necessary job in creating hardware and software that can deliver content and manage networks.  But advertisers and their agencies continue to assert that the challenges associated with developing great content remain.  And we agree with Verne Freedlander ofX20 Media that the standard for digital signage content is rising, and is being set by the HD broadcast TV industry (i.e. digital signage content must look as good as what consumers see at home on their HD TVs, or the brand is damaged). But we believe creative, technology-based solutions to addressing the cost and complexity associated with content development will emerge.  We believe that the next area of intense competition among digital signage technology companies will be around content aggregation and simplified content re-purposing / authoring.  The combination of an explosion in the amount of content needed to support growing signage networks and the increasingly high bar for the quality of the content creates a business opportunity that is simply too large for the industry to ignore.

The Future – Many More Signs, Much Better Content, And A Lot More Of It – Several years ago, Starbuck’s promoted a corporate strategy they called “Third Place”, drawing upon the work of sociologist Ray Oldenburg.  At its core was the premise that in addition to your home and your office (or school), Starbucks would be the “third place” you would choose to spend leisure time.  While he mentioned it only in passing, we agree with Bob Martin of RMG Networks that the idea of a third-place is going to extend beyond Starbuck to other restaurants and retailers, that stores are very likely to become a preferred place for individuals to spend considerable leisure time even when they not at any stage of what is currently viewed as the buying process, and that digital content will play a critical role in defining the retail environment. As an example, the car dealership of the future could very well be a place where car enthusiasts elect to relax on a Saturday afternoon, all the while being exposed to (and interacting with) digital signage content that builds that dealer’s brand.  (Indeed, one of the highlights of the conference today was a presentation on a revolutionary Danish bank calledJyske Bank which has been designed to be an engaging, enjoyable place for consumers to shop and relax.  The design includes strategic use of digital signage to enhance the consumer experience).  The investment of time and money to build the required networks and create the necessary content that results in an engaging third-space will not be small, but we believe that the ROI for retailers and their brands will be real, and that the opportunity for digital signage technology suppliers to support these efforts will be significant.

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