Develop Your Digital Signage Pilot Now

More than any other IT system, digital signs – plasma or flat-screen display panels showing preconfigured video or a series of still images – are a function of the marketing department. Initiatives to deploy digital signs will come from marketing, and they’ll decide how the screens will be used and what the screens will display. However, the burden of carrying out marketing’s directives will fall on IT’s shoulders. If you haven’t done some of the digital signage groundwork prior to receiving a directive, you’ll court the frustrations of all of the people behind the initiative. Here’s what you can do to avoid that.

Your marketing department – and management – will be drawn in by the lucrative claims of digital signage vendors, such as the ability to dynamically influence customer decisions, the ability to drive sales of promoted items, and the potential to increase revenues by accessing new advertising dollars. “Retailers have taken advantage of just about every revenue maximizing opportunity available, all of which have become mainstream in the industry,” says Nate Hatch, senior VP of corporate development at digital signage provider Helius, Inc. “Digital signage is the next generation of retail-to-consumer communication.”

A digital sign is more than a screen attached to a DVD player running a loop of video. Marketing might put together such a setup in a store, and might even see a sales lift and get excited. Then, pressure will build for IT to expand digital signage, which is a recipe for disaster if IT isn’t ready with a viable solution, according to Stan Woodward, CEO of digital signage vendor Reflect Systems, Inc. “When marketing decides to expand digital signage, IT needs to step in with a networked solution,” he says. “If not, it will be nine months before the solution rolls out, which means a loss of momentum and excitement, and possibly a loss of budget.”

You don’t want to work on developing a digital signage solution with such expectations and a cut budget hanging over your head, so begin working on a solution early. “That way, when the case is made for digital signage – and the funding, support, and excitement is on your side – you can deliver a workable pilot solution,” says Woodward.

In-Store Networking Key To Digital Signage Solution
To prepare a digital signage pilot project, you’ll need to do some groundwork. Consider the network connections in your stores: are they broadband, frame relay, or dial-up? The latter won’t work very well for digital signage content. Also take into account the so-called last mile: how the signs will be placed, wired, and powered in the store. You can’t have cords running all over the place, so you’ll need to think about whether establishing a wireless network is feasible, or whether you’ll use mini-COAX or CAT 5 cabling, etc. “Retailers should make sure a digital signage solution enables centralized content scheduling [if they will own the network] and the ability to display unique content on multiple displays,” says Hatch.

Determine Who Will Manage Signage Content
Many retailers use a third party to manage their digital sign content, which takes some of the cost off a retailer’s shoulders. In this situation, the third party would own the digital sign network and sell advertising on the network for the retailer. The third party reaches out to retailers’ CPG (consumer packaged goods) partners, local television stations, and national advertisers to sell space on the network. For example, the third party might sell ad space to Honda to promote its Pilot vehicle on digital signs at a retailer like the GAP, with its established demographic. This relationship usually involves some profit sharing for the retailer as well. “One reason for this relationship is that it is still early,” says Ken Goldberg, CEO of digital signage technology provider Real Digital Media. “The benefits and revenues from digital signage solutions are largely unproven, and the capital cost of implementing a large-scale network can be substantial. It makes sense to offload the investment to a third party.”

A third party relationship can help avoid awkward – and potentially damaging – situations with CPG vendors, where one says the retailer is favoring its competitor with in-store advertising. Think about it. Say you have several CPG vendors in a single category. You make a deal with one to set up a digital sign at a display of that vendor’s product and run advertising video. The vendor would agree to pay for the setup, or establish some equivalent cost-sharing trade. That vendor’s competitors will want a similar deal. Your stores can’t accommodate four different displays of the same type of product, not to mention the four 42-inch plasma screens that would be involved. If you’re looking to take the cost off your shoulders, a third party, rather than your CPG partners, is the better way to go.

As digital signage technology costs come down, and results from early adopters become known, shouldering the capital expense will become more feasible. “Retailers will start to wonder, ‘Why am I giving the lion’s share of the profits to a third party?’” says Goldberg. “Retailers will want to be on the right side of an 80/20 profit split.”

Interactivity Can Add To Digital Signage ROI
The success of most digital signage solutions can be tracked by examining the promoted items and the corresponding sales. These reports are vital to showing the benefit of the solution to those companies advertising on the signs. While the increased sales are adding to your bottom line, you can increase your digital signage return with interactivity. In this situation, the display piece of the digital signage solution is a touch screen, or the system is set up like a kiosk with a keyboard. “It is one thing to pique a consumer’s interest with digital signs, but the consumer might not take action right then,” says Jennifer Davis, director of retail business for digital signage provider Planar Systems. “With interactive digital signs, retailers can collect information from the consumer: an e-mail address for follow-up, or information on what attracted the consumer to the product.” With an interactive solution, you will have more raw data on the success of the system. You can track whether the consumer touched the screen, how long he or she interacted with it, and what specific products or features the consumer looked at.

No matter what features you choose for a digital signage system, you should begin making those considerations now. “2006 and 2007 will be huge digital signage growth years for big and medium retailers,” says Woodward of Reflect Systems. “If CIOs don’t have digital signage on their list of the top five technology areas to address, they should.”