Opportunity or Competition?
An ISA White Paper by Rich Gottwald
The on-premise sign industry has seen many developments and changes over the years. From hand-carved signs to electric neon signs; from fluorescent box signs to LED technologies; and from painted and screen printed signs to the advent of digital printed signs, each change has required sign manufacturers and installers to adapt to the latest technology, and they have done so with remarkable dexterity.
Now along comes another new technology and the on-premise sign industry must adapt again. This time, however, these new products might require skill sets not readily apparent in our industry. Does this mean sign companies should take a pass on dynamic digital signage? Absolutely not! Learn how today's sign companies can incorporate dynamic digital signs into their offerings.
Getting on the Same Page
Any time there is a new technology, it takes a while for the terminology to catch up, and this is no different. Many outside of the traditional sign industry refer to it simply as "digital signage" or "digital out of home" (DOOH). Some in the audio-visual industry may refer to "electric display networks." Still others may call it "digital electric signage." Our industry typically terms it "dynamic digital signage" to differentiate from digital printing, a term which has become more entrenched in the on-premise sign industry.
No matter what the name, though, this type of signage has several key components: a screen, a player which provides content for the screen, and cables to connect those two. This might be as simple as a small video screen connected to a DVD player, or as complex as a national network of screens connected via wireless internet to a hub which controls the screens.
Somewhere between these two extremes is where the most opportunity for our industry lies. The first is too simplistic and likely could be installed by a business on its own, without need for expertise from a sign company. For an end user who simply wants to enter dynamic digital without investing heavily in content, it may choose to rotate static images or prepackaged material purchased from a third-party vendor. The other extreme may run as the equivalent to a broadcast TV station, including weather reports and advertisements. This type of network likely will be too complex for all but the largest of sign companies to manage.
The greatest potential for the majority of sign companies is found in providing solutions for companies that want to connect several screens to a single content player. This might mean a small chain of grocery stores sharing recipes and information about specials. It could be a convenience store/gas station advertising in-store deals to customers while they pump gas. It could be a restaurant that wants to provide information about daily specials or new items at multiple locations.
Technology advances have made the opportunity ripe for traditional sign companies to operate in these ways. Screens are becoming more durable, while the prices have dropped. A dynamic digital signage player may include templates for content and may be able to power eight or 10 screens. Content management systems allow a sign company to remotely provide material for these types of systems.
A Growing Industry, With No Signs of Slowing
The dynamic digital signage marketplace is expanding at a tremendous rate, with compound annual growth (CAG) in excess of 20 percent. By 2015, it's expected that the market will stand in excess of $15 billion. For comparison, an ISA-sponsored study in 2008 pegged the total on-premise sign market at $49 billion.
While dynamic digital signage is dwarfed by the overall signage industry, it clearly is growing. And it's doing so partly at the expense of the traditional sign industry, and partly at the expense of the traditional paid advertising market.
Dynamic Digital Versus the Traditional Sign Industry
In certain settings, dynamic digital signage offers many benefits over traditional sign products. While the initial set up may be more expensive, it is easier to control messaging from one location. A small retail chain might need to ship new signs to each location, and hope that employees will put them up—and take them down—on the prescribed date. By comparison, a small digital network can be managed, monitored, and updated from one location.
Of the various segments of the sign industry, it is expected that traditional print will pay the highest price as dynamic digital grows. However, recent experience is showing that dynamic digital does not eliminate the need for print, and often the two mediums are used hand in hand to reinforce messaging. Electronic messaging centers – a close cousin to dynamic digital signage—also could be impacted by the growth of dynamic digital, though at this point, comparable dynamic digital signage for exterior applications is somewhat cost prohibitive.
To be sure, the traditional on-premise sign industry has many complementary skills and products. We'll explore those later.
Dynamic Digital Versus Traditional "Paid" Media
Dynamic digital signage is outpacing paid media, like advertising on broadcast, radio, and TV. Paid advertising has grown at about 16 percent annually, while digital out-of-home advertising is growing at 23 percent a year.
In an article for the Association of National Advertisers, Lyle Bunn, industry expert and frequent ISA International Sign Expo educational instructor, wrote:
"Digital displays ‘owned' by retailers are used on premise to achieve branding, merchandising, upsell, and cross-sell, while improving the customer experience and motivating ‘earned' media. Messaging is being tested and refined on ‘paid' out-of-home media and in-store ‘owned' media before being committed to ‘paid' media buys, like television.
Dynamic digital is becoming increasingly important to business-to-consumer interests, but that is far from the only use for these displays.
Benefits of Dynamic Digital
Dynamic digital might seem like the latest trend, one that reaches a population ready to adopt the hottest gadget. But to dismiss it merely as a passing fad is to miss the clear and obvious benefits that it brings to overall messaging and branding.
"Dayparting," or changing messages based on time of day or the demographic in the store at set times of day, allows a restaurant to promote its breakfast items until a set time, then switch over to lunch promotions. It also could enable a mall to target seniors in the middle of the day, and teens in the evening. There's consistency—and ease of use—in changing out promotional signage when the event is over.
While much of the discussion of dynamic digital focuses on the broad perspective—to the point where 1,000-screen networks can seem overwhelming—consider the uses in niche markets:
- Restaurant menu boards: Especially in restaurants that change the menu or specials on a frequent basis, these types of screens can be pre-programmed to provide the right information on the right day, or the right time of day.
- Internal company communications: A call center can keep track of calls waiting, sharing information in an instant with managers and call operators. An office can install screens at—or on—the elevators, telling employees of important information while they wait.
- Wayfinding: An airport may offer information in a variety of languages to international travelers who can select the information they need by touching a screen. A hospital may help patients and visitors navigate the labyrinth of hallways and offices. Corporate office suites can easily direct visitors to the right location.
Traditional sign companies that explore adding dynamic digital may choose to do so by becoming proficient in one of these area, serving a core niche business. By fulfilling the requirements of niche markets with the latest technology, the sign company can focus its expertise and can retain its customer, without handing the project off to another vendor.
The Sign Company's Role
While there are many aspects of dynamic digital that may be foreign, some of the core skills of an on premise sign company are imminently translatable.
Alan Brawn of Brawn Consulting and another frequent ISA Expo educator, has developed seven key elements of digital signage:
At first glance, the list may cause traditional sign companies to believe that dynamic digital is not an avenue of business to enter. But step back and consider the majority: content, operations, design, and business. All of these share similar traits to the static sign industry.
Let's take them one by one:
Much of the material included in dynamic digital signage—especially in small locations—is static, similar to brochures, marketing materials, and static signs already in place throughout the stores. In many cases, there is no need for a designer to learn new skills. In fact, many dynamic digital signs in use today simply rotate static images as opposed to creating and running more expensive and complex video content.
Many content management systems offer easy-to-use templates that will help a designer create content for the signs. However, designers on staff already may have familiarity with programs that can provide simple animation. It may not be a steep learning curve.
Obviously, if a customer wants to include original video creations or complicated animation, sign companies could consider developing a stable of competent freelancers who can help on an as-needed basis until the staff gets up to speed.
Every day, sign companies ensure that their customers' signs are operating in proper order, ranging from managing the installation to continuing maintenance of the sign. This is the same whether that sign is a 40-foot pole sign or a digital system in-store. In short, sign companies excel at project management. Granted, some of the techniques may differ, but the underlying skill sets remain the same. Traditional static sign companies have a distinct advantage here over audio-visual installers, especially when it comes to working through any codes and permitting issues.
In Brawn's definition, this encompasses putting the right system in place in the right location, including needs analysis and finding the right equipment for the job. Again, this will include a bit of a learning curve for the static sign company in finding the right screen(s) and player(s) for the right location. However, many of the issues are the same: handling heat and humidity, ambient light, and security. Sign installers are skilled in creating custom cabinets and unusual ways to hang signs that easily will translate to installation of dynamic digital.
This is by far the biggest advantage that traditional sign companies have: they already have long standing relationships with their customers, the end users. Dynamic digital is the next logical step in this relationship. When a small or medium-sized business starts thinking about using dynamic digital signs, it will often turn to its on-premise sign partner. This is an opportunity not to be missed! Those sign companies that understand dynamic digital signs will see their businesses grow when they can respond to these customer needs. Other business skills—such as understanding the return on investment and return on objectives—while familiar to sign companies – may need to be enhanced so they can effectively communicate the benefits of these new signage offerings to their customers.
With such strong skills in a majority of the seven aspects, sign companies must determine whether they want to acquire the other skills, either through training staff or hiring new personnel, or develop relationships with others who have the expertise.
The Potential for Repeat Business
Dynamic digital signage hungers for content and a savvy sign company can find itself building its business through serving these needs. However, sign companies must make sure they have the skill set to work with the content management system and keep the content up to date. Larger companies—regional chains to national ones—are likely to use a marketing or advertising agency to provide content for digital networks. But certainly, opportunities exist for serving the content needs of small and medium-sized businesses.
Develop, Partner, or Ignore?
By this point, there is no doubt that the dynamic digital signage industry will only continue to grow. And in some regards, it likely will do so at the expense of traditional signage, particularly printed materials.
So what is a sign company to do? There are three options: develop the ability to deliver these products in-house; partner with someone who can handle those elements of dynamic digital signage outside the sign company's reach; or ignore this rapidly growing market.
In a few cases, the last may be the wisest course of action. But for most sign companies—especially those who want to thrive years from now—ignoring dynamic digital isn't an option.
Traditional static sign companies may not be able to coherently talk about pixels and resolution and HDMI cables, but they should not underestimate the value of what they bring to the table: relationships with small and medium-sized businesses.
National retailers and restaurant chains have chosen to deploy dynamic digital signage by working with companies that exclusively offer that service. But there are many small and medium businesses that would benefit from the many aspects of dynamic digital signage and that are within the reach of traditional sign companies. Audio-visual companies don't know how to reach those businesses, but sign companies are interacting with them every day.
What a Sign Company Should Take On
As with any new business, a sign company should take on tasks that fit well within its skill sets, or those that it is willing to invest in. Installation of the simplest networks might be a learned skill while content management might require finding the right software before deciding. Content development and project management are both well within the sign company's wheelhouse.
What a Sign Company Should Leave to Others
When a national brand installs dynamic digital signage, it makes news. But few, if any, traditional sign companies will benefit from attempting to build massive networks that control 1,000 venues.
There also has been discussion of creating a national network of dynamic digital screens, connecting large retail and restaurant outlets with smaller ones. The belief is that this network might be more attractive to advertisers. This has, at this point, been largely unsuccessful. One of the perceived drawbacks of dynamic digital is that most systems do not incorporate sound; that has made it a tough sell for outside advertisers.
While these grand scales might seem attractive, a typical sign company would do well to become proficient at managing networks of a few screens, and to identify a niche market on which to focus. Don't despise small beginnings; instead see the opportunities there. Understand that the majority of companies that are installing digital signage are installing just a handful of screens in, at most, a few locations. Yes, the big flashy projects draw attention in trade publications and general media; but that's not what the majority of your customers are seeking.
What ISA is Doing
The sign industry is evolving to embrace this new aspect of signage, and the International Sign Association is leading the way.
During ISA International Sign Expo 2013, an entire day will be devoted to a Dynamic Digital Workshop, April 3. The track of courses will focus on all aspects of this rapidly expanding signage.
Online courses also will be available through ISA Education, with five slated for the first quarter of 2013. With online learning, companies can schedule employees for the classes at a time that fits into their workflow.
ISA understands the impact that this signage will have on traditional sign companies and sees the potential for growth. We work to educate our members about dynamic digital, with the hope that sign industry companies will have the information to make the best decisions for their businesses.