Broad Thinking. Narrowcasting.

We're Moving...

2010-04-28T15:40:00.003-05:00

Well it seems that Jason, our Marketing guy, got inspired and told me it was time to move our little blog onto the RDM corporate website. When we started the blog, we didn't know whether people would find it, and if they did, whether they actually would read it. Over time, people have found us, for which we are very grateful... we don't get quite as much attention as Ellie Mae at the swimmin' hole, but enough for the Marketing dude to reel it back in. So we're relocating effective immediately.

While we were at it, we migrated from the Blogger platform to WordPress, which I am told will be really cool and make my jokes funnier. As long as it has a spell checker, I'm in. We've migrated the archives to WordPress, and we'll leave this site live (but no longer updated) for a while so that the search engine results don't dead end. Marketing guys hate when that happens.

If you actually subscribe to the blog, you'll want to go to here and re-subscribe using the handy dandy icon on the right hand side.

So come on in, set a spell, and Granny will get you a plate of possum vittles. Mr. Drysdale just gave us the keys, so we've already added a new post on the new site.

By the way, did you notice the product placement in the picture above? Not bad for the 1960's!!

Convergence, or Convenience?

2010-04-14T10:28:00.001-05:00

Let’s start yet another industry association-related commentary with full disclosure. My company is a member of the Digital Signage Association (DSA), and the DSA kindly allows me to post blog entries on their web site. I am also an interim Board member of the Digital Signage Federation (DSF), which was formed in February to offer an independent alternative to DSA. I am on record in previous posts as supporting a shelving of egos and a meeting of the minds to advance a true digital signage industry agenda. Sadly, very few people have responded to that thought, and while I still hold out hope, the latest development in the soap opera leaves me wondering if there will be common ground.

Yesterday, the DSA and the Self Service Kiosk Association (SSKA) announced plans to merge and become… the DSA. Only now, DSA stands for Digital Screenmedia Association, following the trend set by DPAA, nee OVAB, to choose politically expedient and tortuously insipid names to try to please too many people. We’ll get back to that one. I will award style points for the new logo, however.

In a press release replete with two or three more gratuitous sound bites than experts might recommend, there was one particularly curious statement:

“What’s interesting is that board members from the two associations, independent of each another, made the suggestion that we consider a merger,” said David Drain, who serves as executive director for both associations.

Let’s mull that over for a second. The two associations, led by the same man, funded by the same company, with several duplicative Board members, had this miraculous and simultaneous epiphany to join forces “independent of each other”. Yup, and I have a bridge in Brooklyn you may be interested in owning. Can we get this Screenmedia gig off the ground with a little straight talk? Why wasn’t this a brilliant idea eight months ago? Could it be that as two organizations financed by one media company and sharing resources and infrastructure enjoyed double dipping on dues from several members of both associations? Here is a more likely scenario, although I am privy to absolutely no insider information: DSA was under tremendous pressure to become independent of NetWorld Alliance, given the launch of the DSF. While DSA had been talking the talk, they had not been walking the walk, re-electing a Board without a member vote, and leaving NetWorld executives on the Board. Is it possible that they learned that the roots of the Association as a child of NetWorld might imperil their application for 501(c) (6) non-profit status? How might one get around that? Hmmm... maybe form a new association with a new name and a new Board and finally remove NetWorld from the picture, at least financially. That’s the ticket. Hello DSA, part 2!

On the positive side, this adds about 200 new members to DSA, and fuel for their media battle to emerge as victorious against the DSF. Concurrent with the annexation of SSKA, we will hear lots of talk about how this was both brilliant and inevitable, as the convergence of interactive media and digital signage is all but complete. That’s one spin I don’t quite buy into. Interactive media and kiosks are very different disciplines from digital signage. The level of convergence of these disciplines now and in the future is tenuous at best. Their educational, technological and legislative agendas are different. That truth will play out in some really fun Board meetings, I am sure. For a detailed discussion of why convergence is over-hyped, read more here. I think you would be hard pressed to find pure digital signage industry players (networks and solution providers) who truly believe that this merger advances their industry.

As for the Screenmedia part of DSA, for me it is tantamount to going incognito. I know of no digital signage company and no kiosk company that identifies themselves as vital players in the screenmedia industry. Like OVAB, DSA was faced with trying to find a name that would please powerful constituents, but ended up with a name by committee that evokes no image of what any of the members actually do. “Screenmedia” evokes movies, not kiosks or digital signage networks. The word (actually two words) appears to be used in Europe in the intended context, so perhaps that is the origin of its use. I am sure that the spin will be that it can encompass kiosk, digital signage and mobile screens with one word. Perhaps, but even if the three make for interesting exhibit hall mates at a trade show, they aren’t a cohesive industry. Just my opinion, but I think it is a gamble to insist that they are.

Is the merger a bad thing? No, I do not think so, even if I am skeptical of the motivation behind it. The crossover between the three disciplines that DSA wants to advocate for are primarily on the vendor side. There are many hardware companies, integrators and a few software providers that serve both the kiosk and digital signage channels. Mobile integration is the wild card at the table, so it will be good to have all players involved in certain discussions, providing perspective and leverage to each. My issue is that this does little to resolve an industry leadership challenge; it only escalates a slap fight that is becoming tiresome.

I still hold out hope that the DSA and DSF can come together as one. It looks from here that the merger with SSKA is a digital (as in middle digit) signal from DSA that such an approach is not forthcoming. If that were the case, it would seem to me that DSF would be left representing an industry, while DSA attempts to create one. DSA has more numbers, while DSF now has more focus. Neither has an easy road to travel, and no one is benefiting from the power struggle. Our company remains affiliated with both organizations, and hope that egos can be managed and the greater good can be addressed. Frankly, that prospect looks grim at the moment, but it is always darkest before the Solar Place-Based Ascendancy.

Credentials, Relevance, and the Digital Signage Industry

2010-04-01T08:25:00.008-05:00

In a comment on last week’s post, an anonymous reader named Chuck (Can you be anonymous and sign your name?) provided some interesting fodder for discussion. Chuck made two interesting points. The first was this:

“Instead of focusing on name changes DPAA nee OVAB should focus on credentialization. And not just a methodology, but a gold seal.”

This is a good point, although maybe not on DPAA’s radar. Last October, I took a shot at suggesting that such a trend was forthcoming in this post. So far, it hasn’t occurred, but Chuck’s comment would seem to indicate that others have thought about what is needed and what would be helpful to all entities in this business. It may make the most sense for an entity such as Nielsen or Arbitron to take on the task of certifying networks, report formats and software platforms, since the people most interested in such a certification will be the advertisers. They would almost certainly charge for the effort, and publish standards and a certification process to lend additional credibility to the program. For their part, DPAA is primarily concerned with driving advertising revenue to their members. Their establishment of standards is an effort to certify their members as worthy of advertiser trust and investment. Providing a certification service to non-members might be problematic for those who pay the very hefty dues levied by DPAA. So Chuck, it likely won’t be DPAA, but you are certainly on to something there.

The second comment was a bit more provocative. Chuck questions the status and future relevance of the digital signage industry itself in light of projected technology advances (emphasis added by me):

“I think we all know where it will go in the next 2-5 years with internet-ready flat screen TVs in American houses and geo-targetable smart phones in our hands. The question is whether OVAB (doh! DPAA) and this space we mistakenly call an industry want a more integrated role or to be jumped as an afterthought.”

I am ambivalent on this one. It is hard to argue that the natural progression of consumer televisions will not include integration of internet capabilities. This, combined with advances made by the cable industry will make many televisions addressable and potentially interactive. I read that smartphone penetration in the U.S. is going to take a giant leap forward in the next 15 months. It is also hard to argue against the thought that people are going to be targetable at home and on the go. I think the nuance here is that targetability in and of itself is terrific, but it is not the end game. Closing the deal is the end game.

One way to look at the different channels of traditional and digital media is through a lens that filters them on two axes: contextual relevance and ability to finish. Contextual relevance would be a measure of the relevance of any message received via that channel, given the context in which it is received. Ability to finish would be a measure of how easy or possible it is to act upon the message immediately. A take on how print, broadcast, online, DOOH and mobile media might map out on these axes is shown here (click to enlarge):

Messages delivered via print media generally have low contextual relevance. While the reader has opted-in and decided to receive the message, the context of the impression will only be relevant either randomly (Advil ad read while riding the subway) or in very specific circumstances (beer ad in the program at a ball game). In most cases, the message and the context will be disconnected. The ability to act on a printed ad generally requires specific actions: a phone call, a trip to a mall, a walk to a beer stand.

At the other end of the spectrum, online messaging is often optimized to to be contextually relevant. Enough is known about the nature of the site or page in question for advertisers to be reasonably smart about placement. And in an online scenario, the ability to finish is very high, even if the gratification is often delayed.

Digital signage by its nature has very high contextual relevance. Because messages are targeted to the environment they appear in, this is one of the real advantages of narrowcasting. Think about the laundry detergent ad in the grocery store, the beer ad in the convenience store, or the pharmaceutical ad in the medical office. Each is relevant in the context of the location of the display itself. The ability to finish for digital signage will vary, however. In retail environments, it is fairly high. In public areas, it is somewhat less. Chuck’s assertion regarding the need to integrate may not be far off base, at least as it relates to smartphones. It does seem clear that integration of mobile handsets and apps will be important to increase digital signage’s relevance and ability to finish. It will also extend the experience beyond the point of impression. His point that broadcast television will slide to the right in the chart above as TVs become internet-enabled is well taken. It is important to remember the mantra that digital signage exists along a continuum of media channels, and is not an end unto itself. I’ll disagree with Chuck and say that we are correct to call ourselves an industry, even as we struggle to find identity and leadership. But we’d be foolish to think of ourselves as an island. Thanks for the input, Chuck. Keep it coming.

Solving The Wrong Problem

2010-03-25T05:47:00.000-05:00

I read a comment somewhere last week that stuck with me. I should have written down the words and the source, but I didn’t know I would want to quote it. To paraphrase, it said, “People tend to solve problems that they are comfortable with, and often not the ones that matter.” It rang true, as it makes intuitive sense that humans will tend to veer directly into their comfort zone whether in personal or business matters. Organizations, from businesses to governments behave in much the same way. It happens all the time. That thought has been rattling around in my head for a while. This morning I read a blog post from Paul Flanigan on the decision by OVAB to change their name to DPAA. Paul respectfully applauds OVAB for their body of work and then scolds them for tossing their global brand in the dumpster. While I agree with Paul’s take, and that of others that I have seen so far, this is post is not about DPAA. It is about identifying the right problems.

In the case of OVAB, they had clearly struggled internally with the words behind their acronym. The membership apparently felt that it was somehow impeding their mission. Names don’t define missions, actions do. By way of historical comparison, a company called RCA sold an awful lot of televisions in their day despite the fact that the acronym stood for Radio Corporation of America. International Business Machines is unlikely to change their name even though most people call those machines computers today, and the bulk of their revenue comes from software and services. OVAB solved the wrong problem. Their most influential members wanted to lose “out-of-home” and “video” in the name, as it felt too broad. That wasn’t the problem. The core problem to be solved was to continuously enhance the relationship between ad agencies and DOOH networks. A name change doesn’t do that. Adrian Cotterill of the DailyDOOH offers concrete examples of both problems and solutions that OVAB could have dealt with here. All in all, the OVAB/DPAA name change is a classic case of feeling pain and relieving a symptom and not a cause... because that is easier.

Examining two approaches to advertising software for digital signage networks provides another example of problem identification. NEC’s VUKUNET was introduced in November with much fanfare, huge promises and a PR campaign that remains ahead of the results. The product was ambitious, and involved overlaying the VUKUNET software on existing digital signage distribution and playout software, regardless of platform. My opinions are documented and have not changed one bit. NEC assumed that the problem to be solved was one of ad distribution. Never mind that the distribution solution is flawed: the real problem to be solved was ad sales. In contrast, industry veteran Jason Kates over at rVue understood the core problem and developed a real DOOH ad exchange, allowing buyers and sellers to come together to make a deal. Getting the ad to the screen is a simple problem... getting the ad sold is the high value problem. Jason gets it, and he was willing to invest to solve the higher value problem.

As a solution provider, it is easy to get wrapped up in the idea that all problems can be solved with features, functions and prices. But aren’t those easy solutions for a software provider? In many cases, we are curing symptoms without attacking causes, and then proclaiming victory. We would all do well to think twice when we think we are solving problems. Are we solving the real problem, the high value problem? Or are we marching into our comfort zone and solving easy problems? History is kindest to those who identify the right problem and then solve it.

Bam! Taking Trade Show War Up A Notch

2010-03-18T09:55:00.001-05:00

Like Emeril LaGasse putting the finishing touches on one of his creations, JDEvents announced today that KioskCom and The Digital Signage Show will officially become Customer Engagement Technology World. The event organizers have taken it up a notch and added quite a bit of spice to the stewing trade show war with the Digital Signage Expo by moving their Spring event from Las Vegas to San Francisco. Bam!

On the positive side, getting out of Las Vegas will be a positive for the event, in my opinion. It is difficult for many companies, mine included, to justify running back to Vegas just a few weeks after DSE, which gets the jump on the annual calendar. Never mind the fact that GlobalShop appears to be generating significant interest in digital signage, also in Las Vegas, in March. Taking CETW all the way to San Francisco makes it easier for me to believe that there will be unique digital signage prospects at the new venue, as there are at CETW’s New York event. So San Francisco will have to be considered on the event calendar, where Las vegas was a stretch.

Changing the name is also a positive, as I never understood KioskCom, and The Digital Signage Show is generic, a mouthful and renders an acronym that also identifies a computer virus. Now we see a focus on customer engagement, which will open up the hot area of mobile engagement, and an acronym that will likely get reduced to CET. AT least it is easier to remember. Tactically, JDEvents has named its event after the customer, rather than after the customer facing technologies as in the past. While it may pay a small price from a marketing perspective, the gain in differentiation will likely pay benefits.

Programming will be very important in terms of both differentiating CETW and gaining new, and unique attendees and exhibitors. It will be very interesting to see how they build the program, beginning this Fall in New York, and evolving next Spring in San Francisco. Similarly, it will be of interest to note what competitive response, if any, is taken by the able organizers at DSE.

Make no mistake about it, this is just a first move. As postulated here four weeks ago, you can bet that the next step will be some sort of announcement from the Digital Signage Association designating CETW as the “official” trade show of the DSA, which would constitute a “proceed and battle” strategy in their struggle with the DSF. Then exhibitors, attendees and sponsors will have to vote with their wallets in terms of choosing DSE, CETW or both. There will be parallel choices made between DSA and DSF. Messy and unnecessary, but my views on that are public, and have been largely ignored as best I can tell.

JDEvents has done the right thing for their company and their key events. A repackaging of the concept and a relocation of the Spring event was definitely in order. They deserve kudos for understanding the marketplace and their customers. I fear that the next shoe to drop will be a politicizing of the trade show calendar for the industry, driven in large part by the folks on the wrong side of the screen. Not sure that will be as tasty as a classic San Francisco cioppino.

Capital and Content: Conflicting Messages

2010-03-15T12:38:00.002-05:00

Sometimes, we all get lost in the weeds, so engrossed with what we are doing, hearing and reading that we lose our sense of the big picture. This is especially true during the trade show season that we are in the midst of right now, with the tweets, blogs, press releases and contrived buzz reaching new levels of oppressiveness. Taking a step back from all the tumult, the digital signage landscape is filled with contradictions. To a certain extent, that seems to be a symptom of a fragmented industry struggling to find its own identity, even as it grows at a high rate. At the same time, it is also the result of a great number of dissonant messages from all over the landscape, attempting to define what is important. As an industry insider, I sometimes get distracted and confused. I can only imagine what newcomers have to deal with. Here are two examples of conflicting messages, and an attempt to reconcile them.

Consider the simple concept of capital. Few will argue the fact that deploying a digital signage network is a capital-intensive proposition. Capital, whether it be from angels, venture firms or private equity shops, has been very difficult for network owners to access for nearly 18 months now. I can think of several high quality projects that are “stuck” in the capital formation process. I am sure there are many more that I am unaware of. The trickle down effect of slow capital formation impacts all of the companies that would provide products and services to those networks, throttling their growth in the process. Conversely, we have witnessed increased investments made by several very large technology companies in the space during the past year. The exploits of Intel and Microsoft have been well-chronicled. NCR bought into the space. Oracle appears to be dabbling. NEC fancies themselves as software developers now (or should I say “for now”?) Cisco has been in the space for years, and is redoubling efforts to be noticed. What do the technology bigs see that investors do not see? Interestingly, I think they see the same thing, but from different perspectives: high growth, huge upside and a fragmented marketplace. The tech companies have the luxury of placing bets on themselves. But the angels and venture capitalists have to place their bets on others, and they are apparently finding it easier to fill out their NCAA brackets than to project the winners in each sector. I am told that there is quite a bit of capital on the sidelines, but all we have seen lately is some bottom feeding. Perhaps the actions of the big technology companies are a leading indicator of bigger bets being placed by traditional funding sources.

Then there is the area of content, coronated long ago and probably too many times as king. The basic tenets of digital signage content - to inform, to engage and to be relevant - are reasonably well understood and accepted. The level of execution of those concepts varies widely from network to network, and it seems pretty clear that even after years of evolution, few have mastered the one-to-many art form of a digital signage content strategy. Yet just as conference agendas and consultants finally begin to focus on digital signage content, we are witnessing a rush into mobile interactivity as a linchpin of content strategy. This constitutes a leap of the content chasm directly to one-to-one messaging. No one should doubt the power of the smartphones sitting in so many palms, pockets and purses. It is obvious that in most environments, extending the customer/viewer interaction to a mobile device and perhaps even to a home computer is sound thinking. Still, the rush to mobile in many cases comes off as a “me too” strategy, taken on by many networks who have yet to formulate a basic content strategy. Questions abound. Is content still king? If so, what is on the digital signage screen when your viewers have their heads down, waiting for a web page to load or an SMS message to appear? Are you ceding the task of engagement to a 3-inch screen? Is user-generated content relevant outside of bars and concerts? How do we compete for mindshare?

Traditional funding sources have become a bit gun-shy on digital signage, while established technology leaders are making big investments in the space. Network operators and industry wonks are finally paying more attention to developing a thoughtful content strategy, while those same people are chasing mobile strategies with a shotgun approach. How do we reconcile these conflicting indicators from the two cornerstones of a healthy digital out-of-home media industry, capital and content? Here’s my take: First, money talks and money attracts more money. The dam is going to break soon, else the money on the sidelines may miss a big opportunity. Second, content is still king, and digital content exists on a continuum. Digital signage will embrace the mobile channel, not become consumed by it. It will just take time for this to look seamless.

Association Standoff: Facts, Opinions and Solutions

2010-03-04T16:31:00.004-05:00

The distraction of the DSF/DSA standoff at last week's Digital Signage Expo (DSE) took a bit of lustre off an otherwise very strong event. (By way of disclosure, my company, RDM, is a dues-paying member of DSA. DSA also graciously provides me with space on their web site to post blog entries. I am also an interim Board member of the DSF.) I spoke with many people on both sides of the fence last week in Las Vegas. I also spoke with many who simply don't care. In the interest of advancing the resolution of the standoff, I present a series of facts, opinions and solutions for your consideration.

Fact: The industry can not support two trade associations. It is not completely clear that it will support one. Every day that goes by with competing association entities is a wasted day. Here is a tweet I saw from Larry Blaney (@OneElevenSystem) : "I couldn't help thinking I don't know another industry where there is so much hype. The digital signage market is under delivering." He continues, "vendors are keeping others from the show, new associations are forming because of distrust… in the end, the industry suffers." I don't know Larry, but his thoughts reflect what many people are thinking. Come together, solve common problems and move ahead.

Fact: Only a fraction of the potential members of a digital signage industry association have chosen to align themselves with either DSA or DSF. There is a great deal of apathy as demonstrated by people sitting on their wallets. DSF recruited 150 members at the DSE show with a 6-month free membership. DSA was of course equally aggressive. The missing point is that unless there is real perceived value in membership, people and companies will not join or renew.

Fact: All interested parties agree that an entity that represents the industry should be independent and nonprofit, e.g. organized as a 501c (6). Today, technically, neither DSA nor DSF has been granted that status with the IRS.

Opinion: A DSF with any ExpoNation executive on its Board is not independent.

Fact: The DSA voted to become independent and nonprofit at the recent DSE conference. It is not necessarily a slam dunk that the IRS will grant them non-profit status given their history and Board composition. The application form is complex, and our government works in strange ways.

Opinion: A DSA with any NetWorld Alliance executive on its Board is not independent. The DSA Executive Committee followed their very rational vote to become independent by fundamentally re-electing themselves, including Dick Good of NetWorld as Chairman. That, my friends, is a mixed message where I come from.

Fact: There is general consensus on the idea that in order for an industry association to thrive and meet its objectives, it must augment membership dues with revenue from events, especially trade show(s). This is borne out by observing the tactics and history of successful industry associations.

Fact: The industry currently has three primary trade shows that garner attention and exhibit hall participants. One is DSE, the other two are the Kioskcom/The Digital Signage Show (TDDS) events. Both are run by respected trade show management companies. DSE is typically in late February, while the TDDS shows are typically in April (Las Vegas) and November (New York). DSE is clearly the largest of the three events.

Fact: The DSA has recently focused its energy on finding a trade show management company to partner with "on management of an industry trade show".

Opinion: The industry will not support an additional (fourth) trade show. As it stands, DSE has established itself on the calendar as the place to be in February. It is not going away, despite the bluff and bluster of a few software vendors with large booths who did not sign up for DSE 2011 last week. And if it wasn't a bluff, they won't be missed. Their apparent belief that attendees come only to see them, or that they should control industry direction can only be viewed as arrogance. Read Pat Hellberg's piece here to understand why technology should not be the focal point of the industry. The power is on the other side of the screen. Those who think otherwise have their head in the sand, or some place even less pleasant.

Opinion: There are other entities that serve and represent pieces of the digital signage industry that need to be embraced, or at least considered by the eventual single association. Among those are POPAI, OVAB, Platt Retail Institute, and to a lesser extent, the Strategy Institute. International entities should also be considered. Related industry trade shows that create a digital signage interest area should do so with the blessing and support of the single association, perhaps even under its banner. This would include the NRF Big Show and Globalshop in retail and InfoComm in the Professional AV industry. These entities need to be approached after the standoff is resolved.

Solution: It seems very clear to me that there needs to be a meeting of the minds, and very soon. DSA has 430+ members and no trade show. DSF has 150 members and brings the largest trade show event in the industry to the table, its owners willing to negotiate financial support with a truly independent association. All parties want an independent trade association with the financial wherewithal to carry out an aggressive agenda of education and advocacy. Is it that hard to connect the dots? Here is what I think good faith steps toward resolution would be:

1. DSA suspends its "RFP" for a new trade show for four weeks and opens up negotiations with ExpoNation for its support of an independent entity. It should have parallel discussions with JD Events, the organizers of TDDS. The negotiations with both should be around an acceptable formula or scheme for revenue sharing with the association.

2. All parties agree publicly that the discussion does not revolve around "the" trade show, but around a calendar of industry events sanctioned by the association.

3. To protect event organizers that agree to an acceptable revenue sharing opportunity with the single association, I propose a calendar that has two major events (trade shows) and two minor events (focused conferences/seminars) during the year. Sanctioned events would be permitted to use the association logo, receive co-marketing support, and get programming support from the association. No two sanctioned events would be permitted in the same calendar quarter, or within eight weeks of each other. This would not preclude any non-sanctioned events from being scheduled at the time and place of the organizers' choosing. This would allow vendors, end users and other participants to budget the time and money for a rational industry conference schedule, and provide at least four opportunities for the single association to provide a venue for education and revenue generation.

4. DSA continues its path toward independence. This entails completing its application for 501c(6) status, the immediate resignation of all NetWorld Alliance executives from its Board, and the scheduling of a full-membership vote for a new, independent Board.

5. DSF continues its path toward 501c(6) status, as DSA's application is not assured of acceptance. Exponation remains without a DSF Board vote.

6. The parties agree to a merger in the event that negotiations are successful and that at least one 501c(6) application is accepted by the IRS.

7. The single association then hires (or retains) permanent staff to build and execute its aggressive and important agenda, to advance membership recruitment and to reach out to other important entities.

8. We have a party and get on with the business of digital signage.

Do you agree? Disagree? Not care? Let's hear from you.

Themes From DSE

2010-03-02T14:10:00.002-05:00

Let's take a break from the drama surrounding the DSA and DSF, which received enough attention over the past week. I'll have some new thoughts on that later this week or next. The real news is that the Digital Signage Expo (DSE) was held last week in Las Vegas and continued its own growth and maturation, matching that of the industry it serves. The exhibit hall was lively and featured many newcomers. The sessions received generally good reviews, to which I can add nothing since I never left the floor. Attendance seemed strong, despite the tough economic conditions. Thankfully, most of us managed to escape Lost Wages before the NASCAR fans outnumbered us. Someone mentioned that the Motorcoach Conference, which shared the North Hall with DSE, will have their 2011 show in Tampa. Now that is an idea I could really get behind! In monitoring the Twittersphere during and after the show, I saw a few recurring themes. Each is worth looking at in a bit more detail, as they are indicators of where we are and where we are going as an industry.

The first theme was a general complaint that there was too much technology sameness out there, both on the hardware and software sides. The question of "how are you different?" is a legitimate icebreaker, and without doubt some people answer that better than others. From a software perspective, let's back it up to the basics. At the highest level, what most of the software solution providers are trying to do is to enable centralized distribution of content over a network, with scheduled and managed playout of that content at the various end points of the network. Yes, there is a very significant amount of nuance in terms of how one can do that, and how elegantly one manages the the core functions of content management, network management and operations management. As a viewer at the end point, it should be very hard to discern how the pixie dust was sprinkled to make it happen. What ends up separating one offering from the next is usually features, rather than functions, and solution providers have developed lots of features that add some sizzle to the steak. Features are ideally a reflection of customer demands, and as such, solution developers consciously or subconsciously steer their feature sets toward their core. This in turn results in more focused and specialized offerings, and a self-selection of "what makes you different". In the end, what will differentiate technology providers will be their effectiveness in identifying and serving core markets. Solution providers that try to be all things to all people will not ultimately succeed. Focus is good, and focus will drive consolidation.

The second theme was a bit of a backlash against software as a service (SaaS). Interestingly, SaaS has driven the growth of networked digital signage, enabling network owners to focus their resources on site acquisition, content strategy and in some cases, ad sales. As networks grow, those SaaS fees become a bit more meaningful. There is always a crossover point at which the investment in an enterprise licensing scheme, as well as the attendant internal IT resources, becomes financially feasible. Buyers seem singularly focused on SaaS fee schedules, perhaps to their own detriment. While average SaaS pricing has fallen in the past three years, that has clearly been more of a competitive response than one driven by scale. The growth in deployed networks has been spread around to so many vendors that reduced pricing has only served to drive break-even deployment points higher. Fragmentation and competition, rather than economic reality, have driven pricing behavior that will act to thin the herd over time, as steadily lower SaaS prices will put pressure on providers in terms of their ability to serve their customers and to continuously enhance their products. That is not a good situation for buyers or sellers. I believe that successful solution providers will do two things well. First, they will be able to justify and sell SaaS priced in a manner that allows them to operate profitably and effectively (see comments on focus above). Second, they will provide a path to an enterprise license for their customers who "outgrow" SaaS as well as an enterprise offering for those that require it from the start. SaaS has not lost its broad appeal, especially in a marketplace where so many potential buyers do not have IT resources. But look for licensing flexibility to become as important as cost moving forward.

Finally, I experienced, read and felt a theme of community that was unlike any previous industry conference. The Tuesday night Preset Mixer (thanks again to the Preset folks and their generous sponsors) came off exactly as the planners had hoped. It was an opportunity to reconnect, get energized for the days ahead and to find common ground, if only for two hours. Terrific. While I missed the Wednesday DSE reception, I was told that it was also very good, although not as cozy as the mixer. At the show, we experienced a near disaster involving display mounts for our new booth. To make a long story short, Amy Moss of Peerless saved our bacon, driving us to one of her local customers so we could buy the exact mount we needed. At the same time, one of our customers, Mark Pickard, appeared out of nowhere with a tool box (he was there to assist his wife's company), and helped us drill new holes for the mounts. Somehow, the displays were up and perfectly aligned at 10:05. Thanks, Amy. Thanks, Mark. Also at the show, I saw several examples of vendors referring leads to other vendors rather than trying to make a square peg fit into a round hole. More proof that miracles do happen. Glimpses of compassion, respect and community. Wow, we may really be headed for greater things here!

Time To Come Together

2010-02-24T11:32:00.003-05:00

Last Friday, I received a call from the folks at Exponation, asking me if I was interested in an "unprecedented and historic opportunity" to serve as an interim Board member for the nascent Digital Signage Federation (DSF). Hyperbole aside, I was not terribly surprised by he invitation for two reasons. First, I had written a couple of fairly widely-read blog posts that called for renewed industry leadership and an independent industry association. Second, in forming an interim Board, DSF's search for representative vendor types was realistically limited in that many were already paying for the privilege of advising the Digital Signage Association (DSA). Although RDM is a dues paying DSA member and supporter, we are not on the Advisory Board. i felt flattered, but filled with mixed emotions. I told Exponation that I needed the weekend to think about their offer.

The choice to accept or decline the offer was not a simple one, or one taken lightly. During the initial call, my inclination was to pass. We do support DSA, and enjoy a good relationship with their full time staff. DSA has been generous in providing me with a second distribution channel for many of my blog posts, including the ones about the Association itself. We believe that DSA has done and can do many positive things for the industry. At the same time, having been quite vocal in pointing out the issues with an association owned by a for-profit media company, it seemed wrong and even cowardly to sit by idly and wait for the chips to fall wherever they may. So on Monday I accepted the offer to join the DSF interim Board.

Accepting the position is neither a "vote" for DSF nor one against the soon-to-be-independent DSA. Rather, it is an attempt to add an even-handed voice to the resolution of what has quickly become a somewhat political battle. Some people may be upset with me for breaking rank, but those people have assumed an end game that is not readily apparent to me. I have said it privately and I will say it here: I do not care which entity emerges in the coming weeks and months to represent and advance the industry. I only care that we come together and deal with the pressing issues of an emerging industry in a unified manner, and soon. The interim DSF Board is will exist only for a couple of months, after which there are expected to be enough members to elect a permanent Board, as dictated by laws governing non-profit entities. During that time, it is my hope that I can play a small role in bringing all interested parties to the table to figure out where we want to go as an industry.

Many people have questioned Exponation's motives in forming the DSF. As a businessman, I respect and appreciate their right to preserve their conference business, in which they have invested millions of dollars and many years of hard work. I asked some tough questions about their thought process and plans and received satisfactory answers that influenced my decision to serve. Rest assured, if Exponation does not follow up on their promises or if they act in a self-serving manner, I'll let people know it. My assessment at this time is that they are sincere about their intent.

I don't pretend to know how all this will end. I do know that the process, while potentially contentious, will be good for all involved. If some people want to throw rocks at me, I'll laugh it off. If others want to provide their thoughts, either publicly or privately, I hope to be an active listener. Lee Iacocca remade Chrysler's image with the catch phrase, "Lead, follow, or get out of the way!". Getting out of the way or blindly following rings hollow with me, so I will try to do my part to lead.

At this point, the situation requires that egos and agendas be put aside and common ground be established. True industry advocates will recognize that, as well as the fact that divisiveness is counter-productive. Everyone is watching, and as a group we have more important work that awaits.

The Genie Leaves the Bottle, Now the Fun Begins

2010-02-17T12:02:00.002-05:00

Well, our digital signage world just got a lot more interesting with today's announcement from Exponation, owners of the Digital Signage Expo conference. Exponation has created and provided initial funding for a 501-c non-profit industry association to be called the Digital Signage Federation (DSF). This raises the stakes on the discussion that has gone on here and in other places, including the Digital Signage Association (DSA) web site, regarding the future of industry leadership. By making the announcement, and by taking several very affirmative steps, Exponation has clearly outmaneuvered the DSA and filled a void that has been around the industry for years. If and how DSA responds will be interesting. If and how Exponation walks the walk will be of equal interest. And of course, the end game itself is still an unknown.

Within an hour of DSF coming to light via Twitter and DailyDOOH, I was asked by several people if I was somehow a part of forming the new association. I wasn't sure how to feel about that question, but to be clear, I was not. While it is flattering to think that previous posts are perceived to have played some role in the announcement, I suspect that wheels were turning well before those were published. Exponation has taken a number of steps that indicate a high level of planning. They appear to have already created the non-profit entity. They have a rudimentary web site up and running. They have an experienced association executive, John Johnson, already on board as a consultant and interim Executive Director. They have thought through membership categories and programming. They have created an ambitious agenda even before they begin. And most cleverly of all, they have timed the announcement one week before every potential member descends upon Las vegas at their captive conference, the DSE. Recent efforts to expand the nature of the DSE web site as an industry news portal are also signs that a plan has been in place for some time.

DSF has also assured itself of many members by creating member rates for DSE conferences, exhibit space and sponsorships that will very likely make the decision to join and pay dues an economically wise one for any company that attends or exhibits at DSE. I have asked Exponation directly what the financial relationship between Exponation/DSE and DSF will be going forward. Specifically, will revenue from Exponation events flow to DSF, and if so, on what basis? I received an email in return promising all answers at the show. Since I am a blogger and not a journalist, I don't feel the need to wait for an answer. We have a comment section for that. In my opinion, it will be vital to understand the exact nature of the relationship between Exponation and DSF beyond the very generous donation of seed funding to kick the process off. But let's not be naive here. One can not doubt Exponation's intent in terms of advancing the industry: it is in their best interest to have a vibrant, healthy non-profit association in place. To have it in their initial control also assures DSE's place at the vortex of conference activity. How quickly, clearly and effectively DSF becomes truly independent will dictate its survival and effectiveness. I trust that the founders have learned lessons from DSA.

The opportunity for Exponation to take this strategic and altruistic action was created by NetWorld Alliance's slowness to convert DSA to a 501c, which was no doubt partly due to their pay-to-play Board's inertia. Nature and business abhor a vacuum. DSA's planned meeting in Las Vegas next week will have a certain sense of urgency now, and you can bet the cell phones are melting down well in advance. They have options to consider. Here are a few:

1. Proceed and battle: DSA can proceed with the process of becoming a 501c and reorganizing as a non-profit group. That will precipitate a battle for the hearts, minds and checkbooks of members and potential members alike. DSF will have tremendous momentum from their recruiting efforts at their show next week. Some entities will happily join both organizations. Others will simply choose one, or neither. DSA would almost certainly have to go on bended knee to JDEvents to make a deal to have their conferences become official DSA events, given that DSE will not be a choice. Won't that be an interesting conversation?

2. Capitulate and partner: DSA can go to Exponation and negotiate a deal to smoke the peace pipe and merge the organizations, effectively short-cutting the route to non-profit status, dissolving the DSA Board, reorganizing, and starting over together. That has merits, if Exponation is open to the discussion.

3. Press on with the status quo: DSA can choose to remain a part of NetWorld Alliance, and refocus its activities and agendas to exist in co-opetition with DSF. Their connection to SSKA could give them staying power as is. But the genie is out of the bottle now: most people want an independent voice leading the industry. This choice is not likely to succeed or retain digital signage members.

It is hard to say where this will end, and there are a number of entities that will be heard from before this is over. For starters, how about InfoComm, JDEvents, Platt Retail Institute, Strategy Institute, POPAI, and OVAB? Each has some combination of assets, constituents, members, resources and events that influence our industry. It will be very interesting to see where all the chips fall. This is a good sign of our industry being here to stay. It will all get figured out, and we will press ahead with important business. See you in Las Vegas.

Digital Signage and the Shelf Space Wars

2010-02-15T14:42:00.004-05:00

An interesting article on CNNMoney.com today points toward the role that digital signage may have in the never-ending battle by brands for shelf space at retail. The article includes a nifty picture of a Wal-MartTV end cap where the featured product is boosted by an eye-level digital sign promotion.

The article describes how Wal-Mart and other large retailers are cutting brand name items from the shelves and promoting store brand replacements, which are almost always higher margin items. The article cites two examples where the brand that got cut negotiated its way back onto the shelves. The first brand (Hefty Bags) agreed to actually manufacture the store brand for Wal-Mart. I wonder if Wal-Mart's margins improved in that deal. The second brand (Arm & Hammer) got its detergent back into the stores by agreeing to boost advertising. Take a guess where those ad dollars ended up. But this is not a diatribe against Wal-Mart's well-documented business practices. Instead, it is a look at how digital signage may influence the merchandising mix at retail, and how perhaps the need to promote may drive some networks to be brand-based in the future.

No one has contested the idea that promotion at the point of decision and the point of purchase is highly effective. Numbers are starting to trickle in to support significantly higher effectiveness of digital signage over traditional P-O-P advertising. As the battle for shelf space continues in an environment of ongoing line extensions, something has to give. Retailers have invested millions of dollars on sophisticated tools to measure profitability of specific items and ROI on shelf space. They will continue to reward top performers with preferred or increased facings on the shelf…. that is just good business. Profitability calculations have traditionally considered trade promotions, including warehouse slotting fees, market development funds, co-op advertising dollars and other line items beyond simple gross margin. However Sarbanes-Oxley compliance requirements and FASB accounting rules have complicated the use and effectiveness of traditional trade promotions, especially for the manufacturers. It may turn out that in-store advertising support on a digital signage network may provide a significant benefit to the retailer and still qualify as a marketing expense (rather than an increase in COGS) for the manufacturer. This seems logical in cases where the in-store networks are not directly owned by the retailer, and the promotional dollars are not flowing directly to the retailer, and may also be valid in cases where the retailer controls the network.

Another potential outcome of the brand battle for shelf space may be brand-owned or brand-sponsored networks. In this scenario, brands may invest in owning or underwriting (perhaps as a category exclusive sponsor) a digital signage network within a channel. While this may be challenging in grocery and mass market retail, it is not at all inconceivable in the DIY or other category killer formats, where brands routinely underwrite the costs for in-store demonstration and "retailtainment". It has already appeared in some department stores, especially in the cosmetics department. If it means some level of assurance of shelf and floor space, along with the benefits of increased sales, you can bet the the brands will look at it seriously.

At one level, brands and brand marketing dollars are essential to the ultimate success of digital signage at retail. On another level, digital signage may offer the brands a very effective way to keep retailers happy, achieve high ROI on marketing dollars and still comply with Federal and FASB rules. Bring it on!

Study Provides Insight on Digital Signage Top Performers

2010-02-11T14:22:00.001-05:00

This week, Aberdeen Group has released a useful study titled, Digital Signage: A Path to Customer Loyalty, Brand Awareness, and Marketing Performance. I was looking forward to seeing the final product after spending time in November and December with an Aberdeen representative talking about potential sponsorship, which we ended up passing on. Aberdeen typically supports its research efforts by soliciting a limited number of sponsors. It then publishes sponsor logos and links within the document and provides some valuable marketing tools to those sponsors, ensuring wide distribution by making the reports accessible for free (with sign-in to fuel the marketing engine). While this study is not authored by the same analyst we had discussed, given the timeframe and topic, I assume it is the same report. If it is the same report, it came a long way during December.

My issues with the executive summary that I saw at the time included use of terms that did not demonstrate a deep understanding of digital signage and use of second and third tier case study deployments presented as best-in-class. To Aberdeen’s credit, those issues have been cleared up in this version. The Best-in-Class PACE Framework presented in the report is dramatically more relevant than what I had seen, and the data presented in the report is useful. The study utilized an online survey that had 138 respondents, followed up by “interviews with select survey respondents” to shed further light on responses to the survey. Of the respondents, 41% were from hardware, software, public relations and consulting firms. Only 8% were from retailers, 5% from financial services companies, and 46% classified as “other industries”. I would like to have seen more retailers and a breakout of responses from actual digital signage network operators, but sometimes you just take what you can get.

The report starts with a couple of nice and juicy observations. First, “decreasing effectiveness of traditional marketing tactics” (particularly content management and ROI challenges with traditional signage) and the “changing expectations of target audiences” are key drivers of digital signage justification. This is interesting in that the prospect of advertising revenue does not appear on the chart as a driver at all. The second observation is that best-in-class (top 20%) performers among early digital signage adopters are seeing significant upside with respect to brand awareness and cross-sell/upsell performance over the rest of the pack. This might support the ideas that location, clear objectives and execution make a big difference, and that there is a real path to ROI.

In a benchmark assessment of best-in-class performers against the rest of the respondents, it was not surprising to see markedly higher organizational dedication to digital signage tasks and functions among top performers, as well as higher usage of technology. What interestingly did not seem to click was the fact that only 17% of top performers had “the ability to link results of digital signage activities to increased revenues and other financial outcomes”, while 42% had defined digital signage performance metrics. Seems like a conflict in terms, or perhaps it makes sense given that many respondents were not measuring financial outcomes (e.g. non-retailers). Later, it is revealed that 67% of respondents plan to close that gap by working to link digital signage activities to revenue data. This would be a good thing for network owners, advertisers and investors alike, especially if the data became widely publicized.

Revealing my bias as a software solution provider, I was most heartened by a chart that showed the two greatest differentiators between leaders and laggards are the usage of content management systems and media server systems. Given the number of home-grown and non-networked “systems” still out there, it seems clear who the laggards are. The two least-adopted technologies among leaders were rules-based decision engines and mobile device integration. Want to take bets on where those go in next year’s survey? I say upward, based largely on actual availability of tested options.

Aberdeen offers good insights along with the raw data, and even offers customized steps to success for laggards, average performers and leaders. The study provides a baseline that will be of interest when trend analysis can be applied over time. It is well worth reading.

Time For Industry To Find Its Voice

2010-02-04T13:23:00.003-05:00

Last week, in a post titled “Getting The Message”, we discussed how three forces appear to be engaged in a battle for the hearts, minds and wallets of the digital signage marketplace. The unstated thesis of the post was that marketing dollars are likely to have a greater influence on buyer and investor perception of our still-young industry than unbiased analysis or hard-earned lessons from insiders. That was not a gripe: after all, you get what you pay for in this world. In any event, the post closed with a call for industry leadership and standards, without which we risk allowing the marketing machines of giant technology companies and advertorial publishers to define the industry and its priorities. In my mind, allowing that to happen would be a disaster.

The post, and in particular the call for leadership, opened a discussion regarding the Digital Signage Association (DSA), its work, organizational status and future. When writing the post, I had contacted David Drain, Executive Director of the DSA, and asked if DSA was a 501(c)(6) tax exempt, non-profit association. I knew that in fact it was not, which David confirmed. I chose not to open that can of worms in the post, because it deserves its own post, and a more detailed discussion with David out of courtesy. At this point, the discussion has been had, and this is the post.

Before entering the digital signage industry in 2004, I spent most of my professional career as a retail IT consultant, first with a Big 6 firm, then my own firm and subsequently with a public entity. In the course of those years, I was exposed to many industry associations: The National Retail Federation, the Direct Marketing Association, the Food Marketing Institute, the National Association of Chain Drug Stores, the National Association of Convenience Stores, and the International Mass Retail Association (renamed RILA in 2004). I was engaged on projects by both DMA and IMRA, have attended more conferences than I can remember, and presented at many. I came to appreciate that these associations are examples of effective voices and leaders of their industries. They have wide and deep support of suppliers, users and constituent companies. They provide advocacy, education, leadership on standards, and many member services. They have their own conferences, which provide a venue for all of their agendas and supplemental revenue to make them possible. Some have their own magazines that provide monthly or quarterly touch points with their members. Visit the links above and get a flavor for how those associations operate and serve their industry. Digital signage as an industry needs that kind of organization to take its next important steps forward. And to their credit, I think it is fair to say that DSA’s own leadership knows this. Getting there is the challenge.

DSA, established in 2007, is a part of NetWorld Alliance, a for-profit media company focused on B2B communications. To be fair, in 2007 and probably until now, a standalone non-profit association was probably not feasible in our young industry. NetWorld took the initiative to get the ball rolling and has underwritten (and presumably benefited from) the growth of the DSA. Under NetWorld’s auspices, DSA has accomplished many positive things. However, the call to separate DSA from its for-profit roots is out there, and it seems to be the correct call at this point in time. Here’s why: A true advocate must be independent. A true neutral advocate cannot have a web site plastered with advertising, or share resources with a sister industry web portal business (Digital Signage Today) that only allows external hyperlinks to paid advertisers in its content. To be clear, DST can and should have whatever editorial and advertising policies it wants (even bad ones like the link policy), but DSA’s relationship to it undercuts their desired position as a neutral advocate and leader.

There are over 400 members of DSA today, and room for aggressive recruitment of many more. Part of the recruitment drive should be fueled by a new vision of what the DSA is going to be. Until DSA is split from NetWorld legally and organizationally, it will not achieve the type of presence and leadership that other industry associations have achieved. If getting to that level is not their goal, it will open the door for another entity to step through and make it happen.

In 3 weeks, most of the people reading this post will converge upon Las Vegas for the largest trade show in our industry, the Digital Signage Expo. Six weeks later, back in Las Vegas, and again in November in New York, The Digital Signage Show will also offer great venues for education, selling and networking. DSE and TDDS are run by terrific companies with great people and both provide important services to the industry. That being said, if a non-profit association is to emerge as the linchpin of the industry, it will be absolutely vital for it be in the conference business. Its conference(s) would be a hub of association meetings, the key event from an educational perspective, and an important source of revenue to advance the goals of the association and the industry. Again, look at the other associations mentioned above. Doing so seems to make it clear that a precursor to an independent association would be development of a plan for owning and driving an industry conference schedule. This would not preclude the existence of non-association conferences, but like anything else, supply and demand will find their balance. In my opinion, an independent association (whether it is DSA or a new entity) would be a non-starter without this vital piece.

Digital signage is experiencing explosive growth, consolidation at many levels, the entry of very large corporations, and the scrutiny of people who don’t necessarily get it or share our enthusiasm for this emerging media channel. We need and deserve a neutral, non-profit industry association to drive education, advocacy, standards and industry presence. The DSA currently has the best shot of becoming that voice of digital signage. If they don’t seize the day, another entity will surely fill the void. Let the discussion begin.

Getting The Message

2010-01-25T16:15:00.003-05:00

Take a moment to ponder the plight of someone from outside our industry and community trying to get smart on digital signage. What would a potential network owner, advertiser or investor, see when they start to undertake some diligence on the business many of us work in day-to-day? When you take that step back, you will see several constituencies at work, pumping varying messages and agendas through various channels to prospective customers. These messages and agendas will often seem to conflict, even though the desired end game of all the players is presumably a larger, faster growing, more robust industry that creates more opportunity for profit. What a newcomer may perceive will be greatly influenced by what they read and hear, and how they come across the information. In the absence of leadership and standards, money will likely drive perception.

At a macro level, there are three loosely-defined constituencies within the industry speaking to potential customers with different messages and agendas. The first group is the big technology companies, with a message that it is technology that matters, and an agenda to sell their specific technology to the exclusion of competing technologies. Think Intel vs. AMD; Windows vs. Linux; NEC vs. Samsung and LG. These giant companies are makers of building blocks that are not industry-specific, with relatively few competitors in their defined space. The potential volumes are huge, however, and the stakes are high. Strategies to win the hearts and minds of influencers are fueled by incredibly large marketing budgets. If you don’t think big budgets help, do a search on Twitter for “Intel digital signage concept”, and understand that the related news is now over two weeks old. That exercise will reinforce the thesis that money drives perception. A newcomer reading press releases from CES and NRF might think that the state of digital signage art is 7-foot touch displays with holographic images, facial recognition software and the ability to “select” the ads you see. Very Minority Report-like. The fact that this is not an available product or that there is currently no real market for something that expensive is not an important part of Intel’s message. Their goal was to demonstrate what can be done with their technology. That it might create a perception that it should be done is less important to them. The same exercise can be undertaken for the Intel-Microsoft “open standard” announcement, the recent NEC/VUKUNET announcement, and the upcoming Cisco Ad Exchange announcement. A newcomer might think that they each re-invented some aspect of digital signage.

The second group is the army of digital signage foot soldiers: the solution providers, content producers, aggregators and consultants. These are the people with the deepest experience and the most customer touch points. To the extent that one can generalize their message, it is that execution matters most and that their products and services drive execution excellence. Their agenda is to leverage technology in a manner that advances their corporate goals. Most of the industry’s players live here, and with them, most of the lessons learned at the vanguard of the industry. As a group, though, their total revenues may be less than the ad budget of a Cisco, Intel or Microsoft. So the lessons learned and their messages seldom get the attention of a big tech announcement.

To compound the challenge, the large number of competitive offerings across each space makes messaging and differentiation problematic. For example, a solution provider must slay dozens of potential dragons to win a customer. The resultant struggle to differentiate has caused outlandish claims, odd behavior and lots of confusing messages. It is hard to imagine how a newcomer might sift through all of the clutter to gain actual insight.

The third constituency is the digital signage mediasphere, consisting primarily of the trade press, web portals, non-corporate bloggers and trade show operators who have entered the news and editorial space of late. Their core message is that information matters most, but each applies their own filter and level of analysis to the flood of information available. Their agenda, in addition to building readership, sponsorship and/or attendance, is to raise the tide for all the boats in the industry. Each of these entities relies upon sponsors, advertisers and exhibitors to keep the lights on and web servers humming. None should be expected to treat their customers without some degree of deference. But how is a newcomer supposed to know where the bones are buried?

There is even a layer of pseudo-media out there, best evidenced by what is now an annual Digital Signage/DOOH Supplement to USA Today, published by Media Planet. If last year can be taken as a guide, then the supplement will mix some analysis of the digital signage space with case studies, quotes and insights from… wait for it… yes… the companies that paid to sponsor the supplement! Where I come from this is called an advertorial, a vehicle where marketing dollars can buy you the imprimatur of best-in-class. But a newcomer might mistake it for actual research. I find that scary.

We live and work in an industry that is growing up rapidly. Make no mistake: the battle is on to gain mindshare of newcomers and veterans alike. Three distinct constituencies are driving separate agendas, and all are driven by potential profits. Sorting out the relevant and useful information will be a difficult task for newcomers. Helping them do so is a requirement for the continued expansion of our market. How we collectively do that will be no easy task. The late, great Warren Zevon once penned, “send lawyers, guns and money.” Money isn’t going away, but maybe instead of lawyers and guns we can settle on leadership and standards. But that is a discussion for another day, hopefully before the next line in Zevon’s song is operative.

Big Tech Embraces Digital Signage at The Big Show

2010-01-12T14:58:00.004-05:00

As I waited for the ice to melt off the windshield of the car in my Southwest Florida driveway, I pondered three important questions. When did the Bostonian in me come to think that 32 degrees is cold? How much extra roll will a golf ball get on frozen bermuda grass? Do I regret missing the NRF (National Retail Federation) Big Show for the first time since 1988? The answers came to me slowly as the defroster warmed up and the washer fluid ran out. My perception of relative coldness probably went off kilter when I parted with most of my skiwear in the mid-90's. The extra roll on a frozen fairway is only an operative concept if the ball is in the fairway. And while I am uneasy not being at the Javits Center this week, I feel comfortable with the idea of staying in the (relatively) warmer climes of Florida to tend to important tasks. Last year's lackluster attendance and generally scattered understanding of digital signage on the show floor made the decision easier. But it may not be so easy next year.

If one were to gauge the value of the conference by monitoring Twitter or industry blogs and news feeds, then it would appear that monumental things are going on over on 11th Avenue this week. Several big technology companies have moved their roadshow from last week's CES show in Vegas to New York this week. While the sales and marketing teams have probably switched out as the focus came east, the PR machines have remained in high gear, putting a retail spin on things. The clear goal is to get reviewed, You Tubed, blogged, tweeted or otherwise noticed. To be singled out for notoriety at the monstrous CES is often a gateway to capital, orders and general buzz. NRF, on the other hand, is much more of a community gathering, with a defined application and services space. Job mobility is very high between and among retail-focused service providers, technology vendors and retailers themselves. As a result, it seems as though everyone at the Big Show can connect through less than the seven degrees it takes to get to Kevin Bacon. So effectively creating buzz in this large but tight community is a very powerful strategy.

What we are seeing this week is a wave of digital signage announcements, driven predominately by the largest vendors in the retail technology space. Several digital signage companies have made announcements at NRF, but they just don't have the juice to create real buzz. While the exhibit hall presence of pure digital signage vendors appears to be relatively flat from last year, it looks like the big technology providers have recognized that digital signage is going to be a part of the retail application portfolio going forward. This alone is good, because as we are witnessing, the marketing machines of the huge IT vendors can not be matched by those of the nascent digital signage industry. The overriding effort of the bigs appears to be the establishment of retail digital signage credentials, building talking points that will sell more product, and positioning to become the go-to visionary advisors in the space.

Without doubt the most attention in the news and the Twittersphere has been Intel's digital signage concept, unveiled at CES last week, and recycled at NRF with retail spin. Ably covered by Dave Haynes on Sixteen-Nine, complete with pictures and video, the concept combines gigantic side-by side floor-standing displays. One is more or less traditional digital signage, albeit with the ability to select which ad you want to see (someone needs to think that feature through!). The other is a holographic display that combines every hot techno-buzz feature possible to support wayfinding and suggestive selling: augmented reality, interactivity, mobile integration, camera-enabled video analytics, and more. All, of course, made possible by the Intel Core i7 processor. Intel makes it clear that the exhibit is a concept, a vision of what can be. They want to take both a thought leadership and a technology leadership position as retailers prepare to place their bets. It is the right path to take for Intel, given the nature of their product: unseen but critical. They know very well, as most readers of this blog do, that the reality of today's mainstream marketplace does not include 7-foot holographic displays or even Core i7 chipsets. Cost factors drive the vast majority of the market toward lower cost processors such as Intel's Atom and Core 2 Duo (full disclosure: our media players are based on those chipsets today) and smaller, more manageable and affordable displays. But making a clear statement as to where this could lead is an important step in making retailers understand what can be. The retailers will be pragmatic as always, and walk before they run, but Intel has done a nice job of making the possibilities known. That elevates the conversation. So, thank you, Intel.

In a related move, Intel and Microsoft jointly announced "optimized digital signage solutions based on the Intel Core i7 processor and Windows 7-based Microsoft Windows Embedded Standard 2011" in an effort to "better standardize a fragmented market". The idea of standards is laudable, and the Wintel combine (more disclosure: we use MS Windows Embedded Standard, a/k/a XP Embedded, on the vast majority of our media players) is no stranger to establishing and marketing them. No doubt, this announcement will be followed by a series of software vendors rushing to become certified on the new "standard" platform in order to become beneficiaries of both the power of the Wintel technology capabilities and their marketing muscle. Again, proven tactics and good strategy. However, the new Wintel "standard" will be established at the high end of the marketplace until the cost curve on the Core i7 makes its way south. Currently, Intel's web site shows a reference price for the Core i7-720QM processor 74% higher than the Core 2 Duo P8700. The prices will come down, as they always do. Until then, buyer requirements in the mass market are going to focus the big volume on lower cost processors. Intel still wins by providing cost effective technology today while also making the capabilities of the next generation abundantly clear. Microsoft wins by positioning the next generation of embedded OS even while it is quite happy to be selling thousands of the current generation. Perhaps equally important, their agenda is to provide a clear value proposition versus Linux, which is unburdened by MS license fees. The concept displays may have helped them in that regard.

The NRF Big Show is an important venue for retail technology. With the time, money and effort being spent by the biggest technology players to promote and support the notion of digital signage, it will likely (finally) become an important venue for digital signage going forward. Looks like I'll have to do the golf ball research on the frozen fairways of 11th Avenue next year.

Mobile Integration Points: Handicapping The Horse Race

2010-01-05T09:57:00.025-05:00

Mobile integration with digital signage networks and displays is certainly a hot topic, and is likely to remain hot for the foreseeable future. After all, highly sophisticated smartphones have become the norm for consumers and business users. In March, 2009, iSuppli reported global smartphone sales at 173.6 million units and predicted an increase to 192.3 million units in 2009. That is a lot of computing power in the hands of very mobile and economically viable users worldwide. The standard web browsing and email functions are augmented by increasingly available and fast 3G networks, integrated cameras, third party apps and GPS capabilities, to name a few. Even more advanced functions are most certainly on the way. To ignore all of that capability in the pockets of digital signage audiences would be, at best, a missed opportunity. The questions of “if” or “when” related to mobile integration appear to be moot. Steve Gurley has done an excellent series of posts on the Digital Signage Association website that provide great background on the “why” and “what” related to mobile technologies, and they are worth a read. The goal of this post is to look at high value and high likelihood integration points and how they are likely to appear in the marketplace.

The motivation to integrate mobile technologies with digital signage must go beyond the simple idea that we can. Ideally, leveraging the power of all those smartphones would enable network owners to engage, inform and even identify and/or measure viewers in a manner that adds value to their networks. The timing of how individual mobile technologies get integrated with digital signage will be directly related to how easily that can be accomplished. That in turn is related to two factors: consumer penetration of the underlying technologies, and the cost to implement them within a digital signage context. For the purposes of this discussion, four mobile technologies have been examined: SMS, Bluetooth, QR codes and near field communications (NFC). GPS-related technologies and applications have become increasingly common, but seem less relevant to digital signage, since any media player can be reasonably assumed to already be location-aware. For that reason GPS is left out of the discussion. A look at the four technologies against the parameters of penetration and cost to implement looks something like this:

Given the high penetration and low cost to implement SMS and Bluetooth, it is not surprising that they have been seen already in some digital signage environments. But are they going to be long term players? If the real value of integrating mobile technologies is in the ability of the technology to engage customers while increasing measurability and the potential for transactions, then the map may change to look something like this:

As Bluetooth is essentially a passive technology, the level of customer engagement is low. The very nature of NFC makes measurability and transaction potential very high. A look at each technology provides some insight.

SMS, more commonly known as text messaging, is a staple feature of consumer handsets, even on less advanced phones. It can be used within a digital signage environment in a few ways. A simple way is to embed a message to text a keyword to a short code (“text ‘specials’ to 12345 to receive coupons on your phone”) in order to receive information, links to web sites, or even coupons. We have also seen the use of SMS as a gateway to user generated content (UGC) in bars and public venues through text-to-screen applications. The beauty of SMS is that user cell phones can be identified, and users have opted-in to engage with an offer. In some cases, this may become a drawback, as privacy concerns may limit participation from some consumers. Texting as a method of interaction may fall behind due to the level of manual effort involved in utilizing smartphone keyboards and the fact that SMS is primarily the domain of the under 40 crowd, although that will change over time.

Bluetooth is also a widely installed feature in a large percentage of cellular handsets and smartphones. For the most part, Bluetooth’s short range data transfer capabilities are used by consumers for wireless headsets, hands-free calling in cars and quick data transfer between devices. The ability to broadcast information via Bluetooth requires only a little bit of hardware, a little bit of software, and a discoverable phone on the other side. Viewers could easily be informed that additional information can be downloaded via Bluetooth from as far as 30 feet away from the source. Applications of this capability are numerous. However, there are two challenges to attaining a high number of discoverable (Bluetooth-on) devices in any given environment. First, leaving Bluetooth on drains phone batteries faster than using it on an as-needed basis; and second, consumers have demonstrated a wariness to leaving their devices discoverable and open to unwanted “Bluespam”, even though most legitimate Bluetooth marketers would offer an opt-in to discovered prospect phones. As a result, Bluetooth may never achieve that “always on” status that would make it a prime candidate to drive integration with digital signage.

QR Codes, those customized 2-D barcodes that have recently appeared on storefronts courtesy of a Google promotion, provide another way to engage the viewer through their mobile phone. Upon using their phone camera to “scan” an image of the code, the web browser of consumer’s smartphone is automatically directed to a specific URL. The applications of this technology are interesting. Customers can be directed to web sites that can both provide and gather information, build brand, make offers, or conduct ecommerce. QR codes can be displayed within relevant content, or in a sidebar alongside the video window. (Finally, a productive use for the sidebar!) The customer interaction is opt-in, and involves launching an app on the smartphone and aiming the camera… nothing else. Customer identity is secure as the phone is used as a read-only device. Measurability, however, is high, since click-throughs to QR web pages are very quantifiable. Of course the QR app has to be on the phone, and the consumer has to be willing to use it. As mentioned in a post last year, the issue of built-in app standards may come up, but last week I was able to find a free app for my iPhone, BeeTag Pro, that worked fine. We have created a QR code for you to test it out on (inquisitive types who do so will be able to check out an advance look at a one-of-a-kind new product):

You won’t see much of this in 2010, but you can bet it is coming. A lot will depend upon how fast smartphone users load software onto their devices, and when phone makers decide to include a QR reader app as a core feature of new phones. QR’s success in Asia and the apparent support of Google will likely accelerate its adoption in North America and Europe.

NFC is an extension of an RF technology that many people have already used, although not in conjunction with digital signage. Contactless cards and fobs used for retail payment (think ExxonMobil Speedpass, contactless credit cards) have been around for some time and have a significant installed base. NFC will enable data exchange and even transactions between an NFC-enabled smartphone and either active NFC devices or passive RFID hot spots. It is set to emerge as a new standard feature in smartphones early in this decade. The concept of the cell phone becoming a transactional device is not a new one, and is highly accepted in Asia, where one can wave a phone at a soft drink machine and receive a cold beverage immediately, with the charge being processed through a credit card previously set up for such transactions. Now imagine a “smart spot” adjacent to a digital sign where one can swipe an NFC-enabled phone (whether it is powered on or not) and receive information, coupons and offers. The content of the digital sign presentation could make the viewer aware of opportunities to “wave and save” at the designated hot spot. Again, this opt-in technology puts control in the hands of the customer, and provides for many potential applications in a variety of environments. It is highly measurable, and geared toward transactions. As with QR, adoption will depend heavily on phone makers adopting it as a feature to include with their phones. Consumer acceptance will be likely be less problematic, given the success abroad as well as security concerns being addressed in a simple manner.

There are attractive alternatives for network owners to consider in their plans to integrate mobile technologies with digital signage. Each has benefits and drawbacks, and each will have its place in certain environments. Cost and consumer penetration would point to near term integration being centered on SMS and Bluetooth. The level of customer engagement and the potential for measurability and transactions bodes well for QR codes and NFC becoming the preferred mobile technologies for integration over the next 2 to 3 years.

Technology moves fast, and marketers and advertisers will begin driving mobile requirements in the near future. The ability of digital signage network owners to make their place-based displays both more engaging and relevant to their viewers and more compliant with the needs of advertisers may separate the winners and the losers.

Time To Change Ad Sales Tactics

2009-12-22T09:31:00.002-05:00

After years of waiting, some false starts, and even more false hopes, it appears that the flow of advertising dollars to a large number of DOOH networks has begun in earnest. All signs point toward a significant influx in 1Q 2010. This follows on the heels of good activity in 4Q 2009, which was a bit of a surprise given the dismal environment in the first three quarters. This would seem to be great news for all network operators out there, right? Maybe so, but it also marks an inflection point with regard to how these networks go about managing their business. It is time to put down the ad sales shotgun, and pick up the rifle.

Many of the larger and more mature networks out there have a dedicated ad sales team working the major brands and agencies. That allows them to present a consistent pitch and rate card to potential buyers. Some, but not many, also have an outside agency working the street for them in tandem with the captive sales force. These folks understand the dangers of channel conflict, and do their best to avoid it. On the flip side, in an effort to grab any available ad dollars, many other networks have signed up multiple agencies and aggregators, conflicts be damned. This situation has become the norm, with network owners using the rationale that without an inside sales team, a “team” of agencies and aggregators makes sense. As we noted in October, that tactic has a limited shelf life. It is a topic worth revisiting, because it is important on many levels.

DOOH may be the only media channel where multiple agencies routinely represent the same property to ad buyers. It doesn’t happen in the traditional media, or on the web. It doesn’t happen because it does not make much sense to have it happen. Here’s why:

1. Media buyers don’t hide their intent to launch campaigns. In most cases, all players in the industry “see” the larger opportunities out there. Whether they capture them or not relates to how they position and price their offering(s). So having multiple agencies does not mean missing any big deals.

2. Having multiple selling agents only serves to confuse the buyers, and often results in different pitches, pricing, or terms. When this happens, buyers don’t know what to believe. With all the options open to them, they often opt for the less confusing route. We have already heard about this happening in DOOH.

3. Exclusive relationships force the agency to either perform or risk losing the account. Competitive pressure makes everyone better.

Digital signage networks are finally reaching the point where the viable properties are beginning to see consistent and growing demand for their ad inventory. At the same time, there is tremendous competition for those dollars both from other networks and from other media channels. To the extent that ad buyers are confused or irritated by mixed messages and repetitive pitches, they are quite likely to look elsewhere: in DOOH and beyond. Reality is that you will lose deals by having multiple outside reps. To make matters worse, because some ad sales agencies play games with pricing in an effort to differentiate… some selling at established rate card, some above, some below, you can bet that buyers who want a network in their campaign will force the buy through the low bidder. This only has the effect of driving overall CPM rates downward. And that carries over to other buys. You have enough competitors: it is not wise to add yourself to the list.

Agencies and aggregators know that the end game will include exclusive arrangements between a network and one outside agency, as it is in other channels. Having talked with several agency types, as well as with folks on the buy side, none are particularly worked up about the prospect of rationalization and consolidation. The selling agencies would rather focus on core properties without the noise of their competitors. Buyers want to have one avenue of access to a given network or group of networks. When the friction of multiple pitches is removed, the selling process will be smoother and easier. And that begets relationships, frequency and higher rates over time.

This, then, is a call to all digital signage network owners out there. If you have multiple agencies and aggregators representing you on the sell side, the time to select ONE is now. The reasons for doing so are quite real, and have spillover effects beyond an individual network to the entire industry. Your pitch and price structure will be consistent. Your ability to build a relationship with brands will be enhanced. Your reporting requirements will not be all over the board. Your ability to judge the actual performance of your agency will be enhanced. You won’t be left out of large buys for lack of exposure. And buyers will find it easier to buy. Make your decision on whatever parameter you think is best for you: past performance, cost, reputation, understanding of your segment and personal relationships all matter. If for some reason you believe that selling is a function best managed by technology and not people, then you can choose the owner of the “best” technology, and good luck with that.

If 2010 is to be a year when DOOH emerges as a viable channel for ad buyers, we need to do our best to make them feel comfortable working with us. Start the process by calling your multiple agencies. Tell them you are going to an exclusive arrangement in 30 days. Ask them why they should be the one. Most will welcome the opportunity. Then make the best choice for you. With that done, the discussion can move to the higher-order tactics of execution, compliance and measurement. At least then you will only have one outside firm pushing you on all three issues, working as a partner and making you both better.

December Odds and Ends

2009-12-16T17:43:00.003-05:00

In what has become a very busy end-of-year rush, a lot of passing thoughts have bubbled up and are taking up too much RAM in the underpowered device beneath my skull. So it is time to unload a few of them in order to free up processing power.

Foxes in the hen house, or fish out of water?

It does not take an advanced degree to figure out that when all is said and done, the money that will drive hyper-growth in DOOH will flow from advertisers. As such, I suppose we should not be surprised to see non-traditional, non-media companies enter the fray to chase the big bucks. First came NEC with their VUKUNET offering, announcing their intent to bring order and lots of money to anyone who trusts a terrific hardware manufacturer to write software and sell ads. Now, rumors surface via DailyDOOH that Cisco is about to launch an OOH ad exchange. Despite the fact that there are several established, specialized and entrenched entities booking ads and aggregating DOOH screens, as well as several new and focused entrants, these two industry giants seem to think they can move markets outside their normal scope of operations. Maybe they will, but I wouldn’t make book on it. However, if a company like Google or Microsoft decides that they are coming into the space, they would be doing so from a position of experience and power. If that happens, the hardware guys will get schooled by people who understand both software and ad sales. The best of the established aggregators and agencies will continue to prosper based upon relationships with brands and networks and their specialized knowledge. Hardware people will return to hardware sales.

Can we agree on how to measure success?

There has been a lot of discourse on the topic of press releases, their content, claims and general usefulness. Most players in the industry are eager to get their names into the public consciousness in any way possible. Apparently, using key buzz words, fantastic claims and large numbers has become the accepted method to get attention.

So when vendors talk about how many screens they control, or how many connected network devices they serve, they are trying to publish the largest and least meaningful number possible. If you sell software, the yardstick is licenses, end points (media players, not screens) or locations. Each of those can somehow be related to actual scale, revenue and success. When we start counting screens and unidentified connected devices, it only serves to cast doubt on the claim itself. I doubt that anyone is trying to be dishonest, but using sleight-of-hand to make something look much larger than it is (even if it is actually large in the first place) doesn’t fool too many people.

2010: The year when digital signage and mobile get serious

I am not sure any topic is more buzz-worthy than how mobile technologies finally get married with digital signage technology. There are so many flavors of mobile applications, so many potential use cases, and so many providers on both sides of the equation, that it can make your brain freeze. I don’t think the answers are obvious, but it seems clear that the network owners, the brands and the consumers are all eager to make use of those smart devices in every pocket and purse. As a result, 2010 will see many cases of proof-of-concept testing of mobile-digital signage application integration. I am not a supporter of the idea that mobile screens will displace large format DOOH screens. But networks and solution providers are going to have to figure out how to embrace mobile devices and applications in order to raise the bar and their appeal to their many constituencies.

Naughty and Nice

I had planned to do a humorous post in the theme of Santa’s annual list, offering appropriate toys to the nice people in our industry, and lumps of coal to the naughty. I even solicited (and received) input from others via Twitter. I got a whole lot more input on the naughty side, some quite humorous. My experience is that the nice folks are in the vast majority and make this a fun industry to work in. You nice people out there… you know who you are and don’t need to be reminded. On balance, it feels more appropriate to just wish everyone the happiest, safest and warmest holiday season possible.

A special thank you to the RDM team, our partners, friends and of course our exceptionally brilliant customers for an exceptional year. I can’t wait for tomorrow.

Peace.

Connect The Dots: Consumers, Streams, Experience

2009-12-02T10:15:00.004-05:00

Long weekends are always a good time to decompress, reconnect with family and friends and to catch up on reading. I did a lot of reading, both for business (online) and pleasure (Kindle). Three streams caught my attention, and while they seem only tangentially related at first, connecting the dots results in some usable insights.

The first stream was a series of Manolo Almagro's pieces on user-generated content (starting on November 19th, here). Manolo is particularly wired into the UGC trendsphere both from a personal and professional perspective, and his travels expose him to trends well beyond North America, especially in Asia. So his insights and enthusiasm have a strong foundation. His presentation last month at the Strategy Institute conference in Chicago provided a number of excellent examples of how UGC can make the transition from online to OOH seamless for the person he defines as the "new, new consumer". In his presentation, Manolo pointed out that the new consumer:

- Seeks out new and different experiences with brands

- Prefers active engagements vs. passive

- Ruthlessly filters messages, seeks to personalize

- Expects 2-way conversations with brands

- Consumes or creates some form of digital media on a daily basis

In subsequent posts, he advocates for UGC and moderated content filtering, while making sure that readers take note of the very real ubiquity and dominance of mobile devices. New consumers armed with powerful smartphones consume and create media in addition to consuming brands. They want those experiences to be integrated. Hold on to those thoughts for a moment, we'll get back to them.

The second stream related to a presentation given by Danah Boyd at the Web 2.0 Expo in New York. Ms. Boyd is a well-regarded Social Media Researcher, and her work in academia and business has associated her with brands like Microsoft, Harvard, MIT and Berkeley. She is a frequent and sought-after speaker on social media. Her presentation was a new pitch titled, Streams of Content, Limited Attention: The Flow of Information Through Social Media. It was remarkable for two reasons. First, it provided some terrific thoughts that can be applied to the digital media space; and second, the presentation itself was reportedly a debacle, as a giant screen behind her was used to post tweets from the audience in real time, which flustered her and took her off her game. It seems the audience had issues with the speed or her delivery, and the comments degenerated into personal attacks. Ironically, the social media expert was being skewered by unfiltered UGC delivered via Twitter! The show producers did something (real time twitter backchannel) to force interactivity in a forum designed for one way delivery. It backfired.

Boyd's talk, which got somewhat lost in all the controversy over the presentation, was actually quite thought-provoking, and has some elements that relate to DOOH. Here are some notable points:

- She introduces the idea of "…content streams, streams of information. This metaphor is powerful. The idea is that you are living inside the stream: adding to it, consuming it, redirecting it."

- We have transitioned from "…an era of broadcast media… to an era of networked media."

- In this era of networked media and living in the stream, we are "consuming (content) to understand, producing (content) to be relevant."

- "…what matters is not the act of distribution, but the act of consumption. Thus the power is no longer in the hands of those who control the channels of distribution, but those who control the limited resource of attention."

The third stream was Paul Flanigan's take on Black Friday, which was really a reflection on his time at Best Buy and how he watched the metamorphosis of the big day. Paul is yet another person who falls under the heading of "Totally Gets It". He shares some observations:

- Best Buy (and other retailers) let the customers make a bigger deal out of it than it really was. Corporate definitely paid attention, but the customers themselves are what drives the advertising.

- By leaking deals, you get them to wait in line at your store. Once in line, they stay there… They have made the commitment.

- I have seen the customer change because it is no longer about the deal, it is about the event.

Paul goes on to observe how Black Friday is no longer about item discounting, because retailers are discounting year round these days. Instead, it has become "a cultural event". Black Friday may as well be renamed Campout Thursday, to more accurately reflect what it is now all about: the experience.

Now connect the dots: New consumers want to connect with brands in new ways… the power belongs to those that control the limited resource of attention…. the experience matters more than the deal. These observations were made in wholly different contexts, yet cobbled together, there is something to take away. We are facing seismic cultural and technological shifts that should be regarded as game changers to an industry that wants to position itself as legitimate alternative media distribution channel.

Clearly, as producers of this emerging channel of content distribution, DOOH network operators must be mindful of the dual concepts of the stream and the experience, and make efforts not to dead-end their evolving consumers. If we think that the stream begins and ends with DOOH content or ads, without allowing consumers to somehow engage, link or produce within our stream, then we may be taking their precious attention for granted. In today's networked culture, that might be a big mistake.

There is no silver bullet for achieving relevant consumer engagement. While mobile-fed and moderated UGC is appropriate for Times Square billboards and bars, it is probably not quite as appropriate in medical environments or branch retail outlets. QR codes, NFC and Bluetooth show promise for serving up links and new opportunities to connect with brands and content producers. Social media tools will find their way into the stream, perhaps through links or portals for UGC where it makes sense. In any case, DOOH networks need to find a way to become part of an experience that is relevant to their audience, leveraging the attention the consumers grant them. To ignore that imperative would put them in danger of suffering the limitations of broadcasters.

NADS Index a Valuable Tool

2009-11-25T10:45:00.002-05:00

The Platt Retail Institute (PRI) released its first North American Digital Signage Index this week, which examined activity in this year's third quarter, as well as the outlook 3 to 6 months out. Steven Platt has developed a strong and well-deserved reputation as a provider of high quality research on digital signage and retail. The PRI team was recently upgraded with the significant addition of Margot Myers as Director of Education and Training. She was most recently the Manager, Retail In-Store Programs for the USPS, and was fully immersed in their digital signage and interactive initiatives. I spoke with Margot at the recent Digital Signage Show in New York, and she is fired up about what PRI can do as catalyst for education and research in digital signage. And well she should be. Their own academic and business qualifications along with their affiliation with the Chicago School of Professional Psychology lay the foundation for quality research. From this scribe's perspective, in tandem with the efforts of the Digital Signage Association, PRI has the opportunity to really raise the bar in terms of education, research and establishing some common metrics and methods. The NADS Index may well be a first move in that direction.

The detailed report contains definitions of the sub-segments of the industry that were polled to establish the index. The sub-segments include Software, Hardware, DOOH Networks, Professional Services, Captive Networks, Content and Agency/Brand Firms. The Index is reported both for current (3Q 2009) and near term outlooks. Some of the information is quite interesting. To the surprise of absolutely no one, the most optimistic sub-segments (as measured by the sub-index level)were the software and DOOH Network firms. It is gratifying that there is not a disconnect between the two, which would be problematic. On the surprise side, the next most optimistic group were the Agency/Brand firms. This would seem to bode well for improved advertising activity in the space, and may in fact be the basis for the optimism of the DOOH Network owners. In any event, it is welcome news.

The welcome news continues as PRI reports current stability and planned growth in employment across the industry, along with very robust plans for capital expenditures. These two trends are certainly strong signs of optimism borne of increased business activity.

One notable tidbit in the detailed sub-segment data is that the Software and DOOH Network segments, while maintaining the highest overall indices, show a smaller percentage increase from the current quarter to the coming 3-6 months than several other segments. Rather than interpret that as tempered optimism, I think it may be that those two sub-segments are leading indicators, while segments such as hardware, professional services and content may actually lag a quarter or two, and are now in "catch-up" mode. The outlook of software companies is highly dependent upon the launch of new networks and the continued growth of existing customers. Most networks, in turn, tend to be highly dependent upon availability of capital and of course advertising activity. Both segments are difficult to forecast, especially with respect to timing. Hardware companies, on the other hand, depend upon actual commitments to develop forecasts that drive inventory decisions and manage their pipelines. Their need to be conservative in that approach combined with their strong outlook would lead one to believe that a lot of go-forward commitments are on the books. Overall, it certainly appears that the digital signage industry is bucking the downward economic trend, and sees a clear path to continued, vibrant growth.

PRI's newly introduced NADS Index will prove to be a valuable tool for assessing industry trends. Industry players will find it useful for gauging their own outlook, while external players, including the financial community, are likely to use it to corroborate other data points when looking at investments in the industry. Kudos to PRI for stepping up and offering something of real value to the industry.

Digital Signage and Kiosk Apps: A Future of Coexistence

2009-11-16T13:14:00.003-05:00

The recent KioskCom/Digital Signage Show served as a metaphor for the discussion of the future convergence of interactive applications and digital signage. The interactive apps were on red carpet, with the digital signage crowd on blue carpet in a smaller area. Only two vendors made a convergent statement by literally straddling the two sides. Ironically, one (Netkey) had been sold days earlier to NCR, a major player in kiosks with their own booth squarely on the interactive carpet. Is there a market imperative for the full convergence of digital signage and interactive apps? Or is the future simply a matter of coexistence of related, yet distinct technologies?

Understanding the fundamental differences between interactive applications and digital signage provides some insight into where convergence might occur. This table summarizes the high level comparisons:

Digital Signage	Interactive apps
One-to-many	One-to-one
Mostly dispensing information	Collecting and dispensing information
Synchronus operation, driven centrally	Asynchronus operation, driven by user
A call to action	A transaction
Impressions and results difficult to measure	Engagement and often results collected on the fly
Fundamentally, a presentation	Fundamentally, an application

At a high level, digital signage is a one-to-many form of communication, usually executed with large format screens. Conversely, interactive applications are generally one-to-one in nature, and as such are more often found on smaller format displays. The objective of digital signage tends to be to inform, sell and reinforce brand, while interactive apps generally have a transaction as the end game. Digital signage tends to be a scheduled, synchronus presentation, managed centrally. Kiosks are asynchronus applications, operated by the user.

While there are distinct differences between the two technologies, there have been some hints of convergence, or perhaps adaptation. We have seen digital signage software co-exist on kiosk devices, driving the screen with dynamic, centrally-controlled content when the device is idle. Back end tools can manage digital content that might be used in either environment. On-demand capabilities have appeared in digital signage, whereby a content loop can be suspended and a menu of stored videos can be accessed with a remote control. User generated content (UGC), generally in the form of SMS messages or Twitter tweets displayed on a digital sign, have been hailed as a sign of convergence. But while it has its uses and some sizzle, UGC does not make digital signage one-to-one or truly interactive, and does not take it out of the presentation realm into the application realm.

Key non-technical reasons that the technologies are unlikely to evolve into one application stream are these: First, kiosks tend to be internally owned by operational functions, while digital signage is usually marketing-centric. As such, the budgets, buying cycles and objectives are quite different. Second, kiosks tend to be owned by the venue owners, where we still see a large number of digital signage networks owned by third parties. Again, this drives decision making into different hands. Additionally, it makes integration with corporate systems more likely for kiosks, as companies are loathe to integrate strategic internal systems with third party-controlled applications. Finally, privacy concerns, especially in health care and corporate environments, makes it less likely that interactive applications will be deployed in a one-to-many, digital signage type environment.

Mobile tools that leverage the smartphones carried by so many consumers have the potential to bridge the chasm between digital signage and kiosk applications from a content-centric angle. Digital signage content with calls to an SMS campaign or related URL can result in opt-in interactivity where the user is identified and receives additional information and offers. The emergence of 2D barcodes may be the best use of the often-controversial sidebar. Imagine the barcode displayed alongside a playing advertisement, allowing users to capture the code with their cell cams, and then receive coupons or other offers. These tools, perhaps along with Bluetooth (usage of which has lagged in the USA) will make digital signage active, but not fully interactive.

There are many reasons why digital signage and interactive applications are unlikely to fully converge. By their fundamental natures they strive to meet different objectives, require different development skills, and are generally implemented by different functional owners within organizations. Despite their differences, there are clear opportunities for each technology to learn lessons from the other. The market (defined as technology buyers) has not demanded that they converge, and the technical, organizational and functional obstacles to true convergence make such a requirement unlikely for the foreseeable future. Digital signage and kiosks will continue to coexist. Buyers who “force” or assume convergence may very well sub-optimize both their interactive and digital signage capabilities.

Sizzle... or Fizzle?

2009-11-12T10:27:00.003-05:00

For reasons previously discussed, we took a small space at The Digital Signage Show in New York this week, bought a new pop-up display, and gave it a shot. It was a good decision and a good use of time and money, but that is a topic for another post. We were sandwiched between Samsung's large booth (super nice video wall and some neat content) and what appeared to be a new display vendor, VUKUNET. One wall of their booth faced us directly, sporting a gorgeous 80" HD display in portrait mode with breathtaking still images rotating throughout the day. There was also a large format LED display, a projector/screen getup that looked nice, and a bunch of conventional LCDs. I was not observant enough to figure out the hardware was all NEC, so I was really caught off guard when someone laid a press release on the table and revealed that VUKUNET is in fact NEC, and they were introducing VUKUNET as their entry into the advertising market. After pausing momentarily to schedule a snipe hunt for next week, I read on. The press release was remarkable in its restraint, waiting for the third paragraph to say that this will "...address all the issues in this space..." All righty, then.

I think Dave Haynes captured the gist of most peoples' reactions in his post here. Suffice it to say that there is every reason to be skeptical of a display manufacturer stepping simultaneously into the worlds of advertising and software solutions. It may actually be a good piece of software, although I am told that demos were not forthcoming and that screen shots would have to suffice. But no matter. This venture raises more questions than answers, solves the wrong problem, solves it in the wrong way, and will likely be a tree falling in the forest with no one to hear it. Here's why:

1. Solving the wrong problem. VUKUNET purports to be the game-changing solution that allows digital signage networks to make themselves more attractive to advertisers. This is accomplished by becoming part of a network of networks, from which advertisers can buy as many or as few screens as their campaign warrants in a single transaction. A fine idea, but not a new one: I think it is known as aggregation. VUKUNET approaches aggregation as a delivery vehicle (more on this later), whereas others have approached it as sales vehicles. The problem is not ad delivery, at least not today. The pervasive problem in digital signage is ad sales. There is an ad sales problem because advertisers are concerned about issues such as measurement and compliance. Our industry has a lot of work to do to make advertisers comfortable with operational standards across platforms, network owners and verticals. The ad buyers care much more about whether the ad plays properly when and where it was promised than how it got there.

2. Solving it the wrong way. VUKUNET claims to be platform agnostic, as long as the platform is Windows-based and is open to installing their software on the media player, and giving over certain controls to that tool. They apparently believe that their solution is so compelling that network owners will retrofit and maintain their media players with this plug-in. Here is what they don't seem to understand: Google AdSense, who Mr. Haynes posits as NEC's aspirational role model, works using a plug-in inside published content. You sign up, paste the code on the appropriate web pages, and it works. And it is truly browser- and publishing tool-agnostic. The VUKUNET paradigm is to insert proprietary software tools across numerous software platforms, most likely running on numerous versions of Windows. (That they ignore Linux platforms is a minor transgression in the scheme of things.) If I have read the release and web site correctly, they are suggesting that their software will have a role in the critical function of playlist playout. This is core function, folks. The chances of a rational vendor allowing third party software to coexist with its own software at that core level are quite low. I may not be widely regarded as rational, but I can only imagine the fingerpointing that would ensue when the first software hiccup or version change occurred at the player level. I will have to use my imagination with that scenario, because it won't ever happen here.

The right way to solve the problem would be a twofold approach. First, I believe that a third party certification service will have to emerge that would give the equivalent of a Good Housekeeping seal to participating networks and software providers. They would take on the task of vigorously measuring and monitoring operational and technical compliance, and thereby assure advertisers that they have a very good probability of getting what they are told they are buying, and that the post-campaign reporting is accurate and complete. Second, the cross-platform delivery "problem" will not be solved by a silver bullet software plug-in. It will be solved by establishing a standard format for ad placeholders that can be updated/changed/skipped dynamically within a playlist. These steps work to solve the existing problem first, and then create a standard content format that allows each software platform (even those that run under Linux) to properly receive ads from a cloud-based server and track playout in its own environment. NEC's apparent need to own both delivery and verification inside someone else's environment is hard to understand. Making the content smart is a better approach than trying to interoperate with dozens of software platforms.

3. More questions. Why will this approach to aggregation sell more ads? It won't, because as noted, delivery is not the issue. Yes, NEC promises to field plenty of ad sales professionals to fuel their planned network of networks. But they will learn two things very quickly. First, that there are plenty of unemployed ad pros available to hire (for a reason); and second, that the agency game is a relationship business, and despite the fact that NEC is a great company with terrific products, their imprimatur brings no sell-side credibility to the advertising world.

If getting other software providers to play nice is potentially important to the strategy, why offer free content management software to VUKUNET participants? A cynic might respond that the decision was taken after an intensive evaluation of the NEC CMS product. Or perhaps that they are hedging their bet with regard to software vendor cooperation. Or that perhaps they are aiming at the large number of small networks who run on proprietary platforms or some sort of pseudo-freeware. Or maybe they are trying to overcome hardware pricing and currency advantages that their Korean competitors are enjoying. In any case it is a puzzling piece of the story.

While the announcement caused quite a bit of buzz, a closer look at the strategy reveals that the concept, which has merit at a high level, did not translate into a transformational solution. The approach demonstrates an apparent lack of understanding of both the fundamental problem and the digital signage landscape itself. I wish I could buy into this as the fire starter for a frenzy of ad placement activity in the space. That would be great for everyone. Unfortunately, it looks a lot more like self-immolation from here. For a contrasting approach to strategic thinking, listening to customers and leveraging internal strengths, read about Christie Digital's introduction of MicroTiles display technology.

NCR-Netkey: Another Brick in the Wall?

2009-11-03T10:53:00.007-05:00

News of NCR's deal to purchase the assets of Netkey is of course an interesting, but not unexpected development. While it is still early, and details have not been provided or leaked beyond the official press release, it is worthwhile to examine what we know and to assess the implications.

NCR has a long history and a longer client list in retail as a result of its core business. After all, NCR once stood for National Cash Register, which dates it somewhat, since the term "cash register" disappeared from the retail lexicon long ago. Today, a cash register is an electronic cash drawer with limited capabilities. The vast majority of retailers of any scale moved decades ago to "POS applications", which are intelligent, connected and integrated with other core retail systems. NCR, of course plays in the POS space now, and they understand store-level integration as well as anyone. They also play heavily in the kiosk and ATM space, and have significant market share and presumably existing relationships that could be leveraged for additional business. NCR has made other kiosk-related acquisitions in the past, including Kinetics (airports), InfoAmerica (QSR) and Tidel (ATMs). The Netkey deal would position them more solidly in the retail space, where Netkey has garnered quite a few nice kiosk clients. Given that, the deal makes great sense for NCR from a kiosk perspective.

While the Netkey website now refers to itself as "NCR Netkey", the guess here is that the Netkey brand will disappear completely once the current client base of Netkey is appropriately notified, stroked and otherwise assured that they will be served as well or better than in the past. NCR has learned over the years that it prefers to leverage its own brand and sub-brands rather than integrate the brands of its acquisitions. This is common practice and Marketing 101 for big companies. The structure of the deal, an asset purchase, is similar to the structure of the Tidel deal, in which NCR did not buy the company, but rather the Tidel Engineering subsidiary of Tidel Technologies. This deal structure would appear to leave some element of the acquired company (perhaps any existing debt?) in the hands of Netkey shareholders, although it may merely be the preferred form of transaction for NCR from a taxation perspective.

The fit of Netkey's kiosk base is obvious. The plans for the digital signage pieces, which Netkey added when it acquired Webpavement in 2007, may be a bit murkier. Given that the NCR headline refers to a solution that includes both kiosk and digital signage capabilities, it would seem that they now own the digital signage assets outright, and plan to go to market with them. However, this leads to a few additional questions that will probably be answered in the coming weeks. First, the NCR site already touts digital signage as an offering, reportedly utilizing Cisco's solution. If that is the case, is NCR about to change digital signage horses, or go with two entries? One would assume that NCR would make a switch based upon a belief that it hitching up to a stronger, faster horse. Further, if they are going to go exclusively with the Netkey offering, will they limit themselves to combined kiosk-digital signage deals, or attempt to compete in pure play digital signage deals? Will NCR invest in the ongoing development of the digital signage tools, or focus on the kiosk software that it clearly coveted? How NCR spends its marketing dollars post-acquisition will be telling.

Netkey shareholders presumably made a deal that they found to be both timely and palatable. The Netkey team members that I have met are good folks, and hopefully come out of the deal in good shape. NCR added to its arsenal in the kiosk space, and will now grapple with its go-forward digital signage strategy. In any case, this is another brick in the digital signage consolidation wall, as Netkey leaves the ranks of the independents. As long anticipated, both networks and solution providers are now beginning to be rationalized. Having a huge technology company like NCR buy into the space is yet another sign of an industry approaching a critical stage in its development, and that can only be a good thing. There is an argument to be made that this was more of a kiosk software deal than a digital signage deal. Nevertheless, watch for more action in the coming months. Big companies tend to react to the moves made by other big companies.

Can We Take It Up A Notch?

2009-10-26T08:39:00.005-05:00

I try to use this space to offer opinions, insights and discussion points of possible interest to all participants and observers in the digital signage space. I have a point of view, but I do not consider myself the voice of anything larger than myself. That being said, lately I have found myself shaking my head in disbelief based upon the actions and behavior of others around the industry more often than usual. We work in an industry that is growing rapidly, while still struggling to define itself, its semantics, its leaders and its future. As such, there is sometimes a real Wild West mentality out there. People think they can define the rules of the road to fit their needs, since there is no sheriff in town. The behavior of the bad guys casts a pall over the industry, impeding its to advancement.

I am not talking about lesser, all too common transgressions that occur routinely: ridiculous and misleading claims related to market share and deployments by software vendors; bad mouthing of competitors in the heat of battle; rip-off pricing for services and content foisted upon unknowing clients. I am talking about questionable ethics and lack of class that begins to stain our entire industry. It is time that people get called out for such behavior, and that we try to take it up a notch in the integrity department as an industry. Here are a few examples, some of which I have observed from a distance, one of which I have experienced first hand. They touch all elements of our space.

We have a reseller partner who takes great pains to reinforce the fact that his company is “vendor agnostic” and tries to match each potential deal to the vendor/partner who is most appropriate. In reality, that means whoever brought him in, or whichever vendor provides the greatest opportunity for margin (as opposed to success) in a given deal. Not shocking at all, and rather common behavior. Recently, we had an existing customer who was preparing to launch a new network. As the good negotiators they are, the customer took the opportunity to look at all the competing offerings, and agreed to let us provide a proposal once they had all the others in hand. An unusual situation, but one that is being handled with respect and open communication. Frankly, we aren’t worried. Lo and behold, we find out that our aforementioned “partner” has proposed a solution to our customer with a competing vendor. Certainly that is their right, but where I come from, a person with integrity makes a phone call, acknowledges the situation and acts, well, like a grown-up and a partner. Not this guy. He went slinking in, trashed the incumbent (that would be us) and proposed something that makes me laugh. We found this out from our customer. With friends like this guy, who needs enemies? Digging a little deeper reveals that this is his typical M.O. His goal is not to add value, it is to skim dollars from the unsuspecting. Good luck, pal. You have one less arrow to shoot now.

This past week, the intrepid Adrian Cotterill of The DailyDOOH exposed what appear to be ethically-challenged practices at DigitalSignage.com (link omitted intentionally). The web site operates as a so-called portal for digital signage information, and supports itself (at least in part) by selling “leads” that come through its site. The issue raised is that Nate Nead, who owns the domain and operates the site, is also employed by Helius as National Accounts Manager, according to his own LinkedIn profile. This fact is not disclosed on the web site, or in sales pitches to prospective lead buyers. Helius, for the uninitiated, is a digital signage solution provider. It also appears that Mr. Nead has, or at least had a position at Deploid, another solution provider and advertiser on his site. This too, is not disclosed. Prospective lead buyers would almost certainly be interested to know of such a clear conflict. For someone who describes himself as “obsessed with knowledge”, Mr. Nead clearly does not feel the need to impart relevant information when money is at stake. Smug and off-point comments posted by Mr. Nead’s lead salesmen (sic) and Mr. Nead’s silence on the matter to-date speak volumes. Caveat emptor. Caveat lector.

I was recently speaking to a person responsible for making decisions on hardware, software and services for a potentially large network. In the course of reviewing our proposal he was open about which vendors were “in” and which were “out” at that particular point in the process. One company who was identified as “in” surprised me, and upon questioning, he revealed that he was impressed by one of their qualifications. It turns out that they claimed responsibility for one of the larger and more visible networks of another company. They told him that they “did” the network “through the other vendor”. It was easy for an industry insider to see that their claim to the network is that they currently employ one of the other vendor’s former sales engineers, who worked on the network in question. The case didn’t involve my company, but I was furious. That is just slimy. I suggested that he call one of the executives at the company that actually owned the deal and ask for a comment. That ought to be interesting. Doesn’t anyone think that people will find out when you flat out LIE? I am still shaking my head.

Finally, there is the case of the wannabe aggregator. This person has designs on aggregating networks across a certain vertical. Suffice it to say that if the ringleader was that good, he’d still be at his last job. The scheme here is to present the networks as a single buy, and to utilize his “considerable” expertise in ad sales to bowl over the advertising community. He approached network owners that I know with his pitch, his outlandish claims, and one of the funniest, semi-literate contracts I’ve ever seen. His aggregated networks included public failures, small and unattractive properties, his own network that is “still under development”, and one that claims to have hundreds of sites, yet has many fewer actually working. The best word to describe the core properties is “distressed”. He needed the network owners he approached to add actual deployments and credibility. Unfortunately, when you lead with distortion, sleight of hand and delusions of grandeur, credibility will always be a stranger. His pitch fell on deaf ears.

We all exist in a very competitive environment in a tough economy. But it would help everyone if people redoubled their efforts to act with integrity and honesty. Some people just don’t have it in them, but most do. It is time for the good citizens to stick together, even if they compete, and to acknowledge integrity when they see it. It is OK to tell a prospect that one of your competitors is honest, or a good person, or that they have a worthy offering. Customers would rather hear respectful assessment than rote bad mouthing. Let’s resolve to take the discourse and the integrity level up a notch. It will make the bad guys easier to identify for everyone. And they will get run out of town.

Passion Trumps Skepticism

2009-10-15T08:56:00.004-05:00

There is a lot to be said for persistence. The folks at JD Events, the conference organizers of KioskCom and the Digital Signage Show, have been after us for years to participate, attend or otherwise acknowledge their conferences in New York and Las Vegas. Our stance had consistently been that there were size, venue, timing and relevance issues. We felt that we didn't want to be lumped in with interactive vendors or those who claim to be the world class in both interactive and digital signage. There wouldn't be enough attendees focused on digital signage.

When Lawrence Dvorchik finally tracked me down this summer and scheduled a phone call to discuss the matter, I felt well-armed and had every intention to make it a brief conversation. However, when confronted with passion, energy and differentiation, I become a good listener. Those are three qualities we try to hang our own hats on around here. And to give props where they are due, Lawrence has all three. When the call was over, we had booked a small booth on the exhibit hall floor and agreed to participate in a couple of sessions. How did that happen?

The consistent theme that Lawrence leads with is that quality trumps quantity, both in attendees and content. They take the concept of qualifying attendees very seriously, effectively barring non-exhibiting vendors, rogue marketers, and other hangers-on from getting into the show. They want buyers on the floor, and no one else. They promise to bounce anyone who slips through the process and starts distributing sell sheets, producing media players, displays and other hardware from backpacks, or otherwise sub-optimizing the selling time for exhibitors. Basic trade show math says that if you source and close one decent lead from a show like this, then you have generated ROI from the effort. Anything beyond that is gravy. Having spent so much time at so many trade shows through the years listening to non-buyers and other vendors, my interest was piqued by their approach.

On the content side, sessions are closely vetted for content. To be fair, I think this is increasingly the case in all trade shows. Here, I am told, anyone observed doing any "selling" in their session is barred from future opportunities. Sounds right to me, and will hopefully become common practice.

The fact that the show is in New York at a pretty good time on the calendar actually removed some "risk" for us. We can always connect with customers, partners and prospects in the NYC area if the need to get a bang for our travel bucks surfaces. We hope to do all of the above at the Javits Center.

The size of the Digital Signage portion of the show (small) made it logical to take a smaller space than we normally would and still have presence. Anyone who is there to narrow the field of digital signage vendors will have the opportunity to visit all relevant exhibitors and have meaningful conversation. We welcome the opportunity and the context.

While we are there, we will try to add some value in the content portion of the show, presenting a Tech Talk on the Show Floor on Tuesday. On Wednesday, I will be moderating a panel on "The 5 W's of Advertising on a Venue's DOOH Network", with Leslie Armour of Tween Brands and Rob Hoyt of Seventh Generation providing their perspectives. Looking forward to great interaction with the audience at both venues.

Lawrence's passion and energy has turned us from doubters to engaged participants. It is a lesson in persistence and believing in your product, something we can all internalize. There is still a distance for them to travel to make a major splash as a pure digital signage marketing vehicle, but building a base on quality is one way to get there. I have a feeling it will be a busy and worthwhile two days. See you in The City.

The Third Leg of the Stool

2009-10-05T09:10:00.004-05:00

In this space and in other articles and blog posts, the increasing signs of industry acceptance and maturity have recently been trumpeted and applauded. Most of the discussions have centered on flow of capital, corporate interest, technology advances, and consolidation of network and technology players. For an industry whose future is so highly dependent upon its acceptance as a legitimate competitor for advertising dollars, relatively little time has been spent looking at the mechanics of that side of the business. The same level of noise that exists on the network and technology sides exists in the advertising side of DOOH. Changes are inevitable if we are hope to win the hearts, minds and wallets of agencies and brands.

On a trip to New York City last week, I had the opportunity to meet with two people who work for digital agencies, both of whom have had significant exposure to the digital out-of-home space. A good conversation starter was Lyle Bunn’s timely piece, which conservatively estimated the number of unique ads playing on DOOH displays at 1,080,000. My opening position was that a million unique ads would seem to indicate that we have some serious traction and mind share. Both agency types responded the same way: the number may in fact be conservative, but it is hardly reason to pop champagne corks just yet. The issue, they said, is that from their perspective, the vast majority of the unique ads playing on DOOH displays today are actually local ads rather than national ads. The big national dollars that can flow to an entire network with the stroke of one pen are just beginning to look at DOOH in a serious way. We are talking about the brands that we all see on TV, on the web and in print, and these are the brands represented by the agencies, and they are still treading carefully. Media buyers are not risk takers by nature.

When pressed as to why the big brand dollars are flowing slower than anyone hoped, three themes became apparent: network profiles, channel conflict and execution. The addressability and targeting capabilities of digital signage networks is a two-edged sword. The fact that advertisers can buy, as Mr. Bunn puts it, “based on demographic profile, Designated Market Area (DMA), geography and even the activity in which they are involved (shopping, transit, café, workout, attending a game, etc.),” means that savvy media buyers are able to cherry pick venues even down to the zip code levels… and they do. Networks with locations of varying quality and value are finding that they can’t sell the whole network. In fact, they are finding that the incremental locations they deployed just because they could are actually becoming overhead rather than revenue generators. Networks need to consider what they are selling when planning their deployments. More is not always easier to sell. Quality DMA coverage, identifiable (and desireable) demographics and sustainable traffic need to be part of any decision to deploy to a specific location. Operators need to have a strategy as it relates to location selection, and some may have to rationalize what they already have to get maximum ROI. It is better to “own” a region, DMA, neighborhood or demographic than it is to shotgun several. Without doubt, the network aggregators have served a great purpose here. They are able to present multiple networks (or segments of multiple networks) efficiently to the buyers, which reduces the potential pain of making dozens of individual buys. But they have their own pain, as we will see.

The second theme is that of channel conflict. In their urgency to generate ad revenue, many networks have enlisted both direct sales teams and multiple aggregators and rep agencies. The major aggregators, Adcentricity, SeeSaw Networks and rVue, are joined now by PRN, which is clearly repositioning as an agency of record (AOR) for DOOH, leveraging what is left of their now-ravaged model. Other rep agencies, such as Immersion OOH are making progress, and we are seeing some attempts at venue-specific alliances, some with value and others that are actually loose affiliations of the damaged, dying and desperate. The result of all this is that some networks have four or more people representing them, often to the same prospects. The value proposition, sales approach and often the prices are different. Buyers become confused, and confusion drives them back to the comfort of existing traditional channels. Somehow, this channel conflict needs to be resolved. All of the reputable aggregators will be very quick to tell network owners that they are not designed to be the “go to” sellers of ad inventory. In fact, their job becomes easier if the networks create some scarcity (and price firmness) by selling a good percentage of their inventory directly. Networks who try to go direct after an account is opened by an aggregator ignore the fact that the original sale was in the context of a multi-network buy. But there are cases when a buy is network specific, and the appropriate action is to go direct. So the answer is not to dump the direct sales force or the aggregators, but to communicate, work together and even team sell when appropriate. It will make everyone look better to the buyers.

Even with better communication, the time is drawing near when networks will have to choose one aggregator or rep agency and grant them exclusivity in order to reduce the potential for channel conflict and media buyer confusion. Very much like the networks and the solution providers, this would be a driver for the consolidation in the aggregation business, or at least the clear definition of winners and losers. The ad buyers want this. Ignore them at your own peril.

The third theme is execution, which falls back upon the networks themselves. Graeme Spicer recently posted a series of observations on the Adcentricity blog, and echoed the sentiments I heard in New York. He noted that “(Agencies) have high expectations of the DOOH industry to deliver campaigns as contracted, and they are becoming increasingly vigilant in ensuring that they are getting value. This means physical venue audits by the agencies are now becoming commonplace, and the results aren't always casting DOOH in a favorable light." What this means is that agencies are unlikely to simply accept location counts and playout affidavits at face value. They want some assurance that the displays are properly placed, functional and turned on. We will see agencies auditing network locations before and after campaigns in order to create assurance of value beyond affidavit numbers. Media buyers see this as a requirement for their own credibility and job security, and you can't blame them. Networks will need to be able to demonstrate high levels of compliance, not just playout records. Compliance means that displays are on when they are supposed to be on, content plays when it is supposed to play, sound is on and audible where appropriate, and errors are corrected before they have material impact on a campaign. This goes well beyond reporting playout data in a vacuum.

One of the challenges the agencies see, and clearly a pain point for the aggregators as well, is the huge disparity in the technical and operational capabilities of the various networks. Large numbers of networks run on home-grown applications of varying sophistication. Others run on any number of commercial applications, again with varying ability to support ad-driven networks, especially to the satisfaction of ad buyers. At the same time, the ability of network organizations to execute campaigns and manage their assets varies widely. Just as agencies are auditing venues to see what they are actually getting for their ad dollars, so too will they (and the aggregators) go through a process of vetting networks and software providers for accuracy, completeness and compliance. Dollars will flow to where there is confidence.

When the industry deals with rationalizing networks, channel conflict in ad sales and technical execution of ad campaigns, we will be a lot closer to the comfort zones of ad buyers. That evolution of this critical facet of our industry has to take place. We already know DOOH works. Now we have to make it easy for ad buyers and brands to invest with confidence. All three legs of the DOOH stool: networks, solution providers and ad sellers will need to work together. Those who remove the pain points for ad buyers will see more ad revenue sooner.

Winners Can Monetize

2009-09-25T08:12:00.002-05:00

There are a few digital signage companies out there offering “free” digital signage software. The goal, it is assumed, is to grab a huge market share comprised of people who value mission critical software at zero and then convert them to premium products for a fee. Good luck with that. The model for monetizing a free service is Google, who made themselves the top search engine with a great tool, and monetized it with ad dollars and applications. The difference, of course, is that Google positioned itself as a premium offering against other free services, and had a better product. They also faced off against a bigger market.

Yesterday, the increasingly omnipresent Twitter, a non-revenue company, achieved an implied valuation of $1 billion when two venture capital firms agreed to provide $100 million in cash for what my math skills compute to be 10% of the company. Reactions varied from a scoffing reply from Dr. Evil to a hilarious “so there” press release from 37 signals. More serious people observed that the VCs are betting that there will be a liquidity event, most likely an IPO, which would value Twitter far in excess of $1 billion. But first they will have to win the bet that Twitter can monetize their groundbreaking micro-blogging platform. Here is one man’s roadmap to monetization:

1. Interstitial advertising in free accounts: Twitter could sell ad tweets that are placed on the home page of non-premium users. They would have to figure out what a reasonably frequency of ad tweets would be without upsetting free members, but still providing value to advertisers. Their ability to micro-target users based on keywords, locations and frequency of use would drive ad rates higher. Maybe 5 bucks a year buys you out of ads. If Twitter reaches a 100 million accounts, I bet they’d love 5 dollars from 10% of that base! Twitter founder Biz Stone has already gone on record as saying there will be no ads this year, but it is already October.

2. Develop a premium product that users will pay a nominal annual fee for: Here are some services that might be worth 25 bucks a year to me:

Real spam filtering: The spammers may actually pay to gain access to all users, so Twitter will need to take a more serious approach to identifying and purging spammers from the premium twittersphere. If they were getting paid to do it, they would likely be more diligent than they are today.
Search result filtering: I have “digital signage” as a saved search term that allows me to monitor all tweets with that phrase in them. You would be amazed at the drek that shows up along with some terrific insights and news. The ability to tag users as useful (show me their relevant tweets) and useless (never, ever show me their tweets) would be a nice feature. It would also be nice to never see tweets in search results from people you have blocked.
No ads: (see above)
Voice mail tweets to other premium users: The ability to send a short audio tweet to a phone might be very useful. It is also consistent with the roots of Twitter as a cell phone-centric tool.
Upgraded Twitter home pages and page view tracking: Provide premium users with enhanced home page features and let them monitor how often the page is visited, and by whom.
Longer message lengths: I know, tweets are limited to 140 characters to accommodate cell phone constraints, but many users compose and view all their tweets on computer screens. Maybe letting premium members have 180 characters to spew their thoughts would be of value. Cell users and non-premium members would see truncated tweets or perhaps a link to a web interface for viewing the full tweet.

3. Develop a premium RSS feed service: Twitter feeds are emerging as a new source of user-generated content on digital signage networks. Others are using dedicated Twitter accounts to transmit information to a network. The ability to filter, preview or edit RSS feeds, and a new, custom interface to provide more features to business users might be something businesses would pay for.

4. Develop and sell TwitterChips: We have already seen how people are developing hacks using Twitter to make devices report on their status. Why not develop Twitter-ready chips that could be embedded in smart devices and appliances that would have dedicated accounts and the ability to tweet vital data to owner or monitor accounts. Think about cars tweeting their maintenance needs and operating parameters to owners (and dealers)… office printers tweeting when toner levels are low… TiVos tweeting when there are programming changes, recording conflicts or special events… swimming pools and hot tubs tweeting when water chemistry is not optimal. The possibilities are endless, and Twitter could easily partner to make this effective and inexpensive enough to be everywhere.

5. App Store and applications: It seems that Twitter already missed the boat on the opportunity to build the first app store for its platform. oneforty.com was unveiled his week (I was made aware by a tweet from @manolo_almagro), sporting access to over 1,300 free and not-so-free applications and tools for Twitter. Even in beta, is already creating a community and gathering a fan base. Look for Twitter to buy or mimic this Guy Kawasaki-advised start-up. Twitter could also start building add-on applications itself.

With a rapidly expanding user base of over 15 million in place world wide, and the ability to move markets, governments and businesses, Twitter is in a good place. Now they have to build a good business. Some users will be put off by attempts to monetize the Twittersphere, but if it is done right, better features will appear for all users. I doubt that any of these ideas are original (isn’t it said that there has only been one original idea, ever?), but it seems certain that something has to happen to justify the huge implied value. Stand by, and think up the other features you might pay for, because you can bet its coming. As for the free digital signage guys pulling something like this off... not so much.

Model Behavior

2009-09-22T10:00:00.003-05:00

Yesterday, I sent a tweet saying that markets fix broken business models, not government dollars. I was reacting to pieces I had seen related to newpaper and (of all things) VC bailouts. Today, two pieces of news arrive that restore my faith in capitalism and the power of the marketplace.

First, related to the newspaper business, I read (courtesy of the eagle eyes at DailyDOOH) of the Knight News Challenge. The John S. and James L. Knight Foundation, the legacy of the Knight brothers of Knight Ridder fame, will award $5M in a contest seeking “innovations that use new or available technology to distribute content in local communities”. The contest dictates the use of digital (and open source) technology, among other requirements. This is a great example of how innovation and market forces can work together to reshape a chronically ill newspaper business. And it is being funded by a fortune made when newspapers were innovative and highly relevant. Kudos to the Knight Foundation, and good luck to the participants. Somehow I think out of home digital screens may be part of a winning formula.

Second, and even closer to home in the digital signage-sphere, is the revelation of a poorly kept secret: TargetCast Networks has purchased Ripple TV. We had speculated that the plug would be pulled back in July. Yesterday the rumor went from coast to coast that the consideration was one dollar. I am not sure I am buying into that idea, since the deal effectively has one VC (Claremont Creek) offering a lifeline of sorts to a failed deal of others (DFJ and Trinity), which would imply a deal more complex than a cup of coffee. There is probably some equity, contingent payments or earnouts that can bring some value to the VC investors at Ripple down the line. You can bet that the Ripple employees and early investors are out of work and out of luck, respectively, as the Grim Reaper removes human redundancy and his step brother, Liquidation Preference, ensures that any of the limited dollars coming back go to the preferred (VC) investors. So it goes: execute or prepare for execution.

The Ripple TV model was broken for a number of reasons. Their famously busy screens were difficult to view at times, and their placement in the venues that I have been in have left much to be desired. Clearly, the concept was not resonating with advertisers, despite the roster of highly visible venues, which is a mixture of coffee shops, bagel places, and Borders. I am not aware of what kind of arrangements they had with their venue owners, but it is reasonable to assume that some kind of revenue sharing was in place. They are left with lots of flat screen displays in high traffic, low dwell time locations, some sort of technology base, and a bunch of content partners. A diamond in the rough? Probably not, but at the right price, a great footprint and an opportunity to utilize a different approach to monetize it.

The press release indicates that TargetCast plans to “rebrand existing Ripple TVs in fast casual locations, integrate the content and advertising delivery into a single format and use its patented TargetCaster hardware and software products to scale growth into new locations”. Given TargetCast’s model, and the fact that they are the surviving entity here, it is a good bet that the Ripple screens will now show live TV framed with the TargetCast “L-bar”, and powered by TargetCast’s box and software. This makes sense because part of the power of TargetCast’s model is that it uses TVs that are already in place (the bar TVs at Chili’s, TGI Friday’s, Applebee’s and others) and leverages the free content from broadcast TV, leaving the only content investment to be made for paid advertisers. Whether you believe in the model or not, it has quite a bit more leverage than models that require the acquisition of compelling, relevant and targeted content on dedicated displays (a/k/a digital signage or narrowcasting). So, it’s a big buh-bye for the content partners of Ripple as well.

And then there is Borders. The press release refers to rebranding casual dining locations, which would not seem to include Borders. I never understood why Borders wanted Ripple or vice versa. The guess here is that TCN will support the Borders locations as is until the contract term runs out, and/or try to sell it. Borders is not a candidate for the broadcast TV/L-bar content strategy, and TCN won’t want the expense of running the Ripple technology platform for any longer than they have to.

So some of the takeaways here are as follows:

1. The market works, and good business models trump bad business models
2. VCs are not afraid to cut their losses when more cash is not the answer
3. There is usually a buyer out there when there is value to be salvaged

Our industry marches on. As it should be, the market decides who wins and who loses.

OMMA Mia!

2009-09-21T14:01:00.002-05:00

The OMMA Global event going on in New York this week is spawning a stream of tweets, articles and blog posts of interest. OMMA stands for Online Media, Marketing & Advertising, and is a magazine property of MediaPost Communications. The first piece of good news came in a post that projected a worldwide gain in digital media from 13% of all spending to 15%, with an expected total internet spend of $65 billion in 2010. It is worth noting that in the US, the digital share is expected to reach 17%. The drivers of the robust gain in the US are search and video, whereas mobile is a greater driver outside the US. US banner ads and sponsorships are actually declining. As digital signage person, this leads me to the conclusion that context really matters, and that advertisers recognize this. Rob Norman, CEO of GroupM Interaction, which presented the forecast, has a great insight on this, saying:

“Search marketing is becoming intention marketing and is moving beyond results pages to activating and responding to the social graph.”

Well, I don’t know what the “social graph” is, but I do love the idea of “intention marketing”, and I believe that soon advertisers will awaken to the fact that digital signage in the right venue is an opportunity well beyond the results page, and very possibly a more effective way to spend advertising dollars creating and satisfying intentions. In the online context, search is attractive because advertisers can infer some interest, if not intent. If one Googles “arthritis”, there is a reasonable chance that they have a vested interest in learning more, and may be susceptible to a pitch for some sort of therapeutic relief. And pitch they do, at least for now. If one assumes that the shift of dollars from Internet banner/display advertising to search engine advertising was driven by the higher value of inferred intent, then is it a great leap to think that the next shift will be from search results to contextually relevant out of home networks where intent is joined by availability?

The second post of note was a bit puzzling to me, but raised questions. One of the featured speakers was Jon Miller, the CEO of News Corp.’s Digital Media Group. His comments were widely covered. In one observation, Miller postulated that the gap between online ad spending and usage was 3 to 1. Blogger Nina Lentini notes that this means, “…advertisers are spending a third of the money they should, given the amount of time that they spend online.” In the same post, Terence Kawaja asserts that Miller is underestimating the size of the gap, because users are spending a greater percentage of their online time in social channels. I am not sure how Mr. Miller or others arrive at the ratio of usage to spending, or why they are concerned that it feels so far out of line. However, they are in agreement that there is money on the sidelines looking for a home. If advertisers are “underspending” online by a significant amount, it would seem to imply that there is unmet demand for vehicles for their various campaigns. If those needs could be met efficiently online, the dollars would have been spent. I think the advertisers are actively looking for a better answer. Talk amongst yourselves and draw your own conclusions.

Signs continue to point to a fertile environment for massive gains in ad spending in our channel. We need to keep working toward standards, measures and quality offerings in order to start the ball rolling in earnest. If the high road doesn’t bring quick results, maybe we should practice intention marketing and get digital signage onto the first page of results when someone searches for “efficient digital media”.

DVD Fuss Actually Makes Case For Networked Solutions

2009-09-16T10:42:00.003-05:00

I have often written and spoken about how people need to be careful in using WalMart and/or Focus Media as benchmarks for the digital signage industry. When business plans dredge up statistics or anecdotal "evidence" of the sure fire success of their network based on either of these two companies, I tend to stop reading and listening. WalMart enjoys both a uniquely strong position with its vendors and virtually unlimited human and financial capital. Focus Media enjoys a market that can't be duplicated and labor costs so low that sneaker net costs less than broadband. So to base business assumptions on conditions that can't be duplicated makes little sense.

At the same time, people love to take shots at big guys, and the recent hullabaloo over the porn videos played in an Arkansas WalMart amounts to a tempest in a teapot. Two employees swapped out DVDs in a device controlling 6 TVs in the furniture department. They got caught and will pay the price for their "prank". Bloggers and tweeters around the world were quick to jump on this as an example of why you should not give employees local access to a digital signage network, and why security is so important in digital signage. What they fail to understand is that the simple fact that this involved DVDs means that it had nothing to do with WalMartTV and their networked digital signage. Although I have no confirmation from Bentonville, I am guessing that this is a case where a vendor, with WalMart's blessing and associated invoice, installed a cheap, DVD-based promotional network in the furniture department in order to sell more furniture. It is probably an area of the store underserved by WalMartTV, and ripe for a promotion such as that. Vendor promotional efforts are quite common at WalMart. While the pundits are correct in their statements about security and access, their rush to judgement, and the implication that a high profile, second generation digital signage network was compromised, causes pain for all digital signage industry players. If you want to get porn onto WalMart TV you will need to gain access to a highly secure central application. Good luck with that, but if you can get that done, your criminal skills may be better rewarded by other central systems. But the assumption that someone cracked the network will now result in all kinds of backlash and unfounded fears in potential network owners. The truth is, it is actually an indictment of NOT being networked! I tweeted this yesterday, but the misdirection and hand waving has continued. Someone has to say it definitively: This is a non-issue. If I am proven wrong, I will post an apology.

Three On The Money

2009-09-09T16:19:00.005-05:00

Last week, I took a stab at seven predictions for the digital signage industry. Well, it seems that the prediction of new consulting practices entering the fray may already be coming true. In the wake of the blog post, I heard from an industry friend who gave me the scoop on plans he and two partners have to start up a consulting practice that blends the skills and backgrounds of the three principals. I don't want to take all the wind out of their sails by naming names (hint: neither Athos, Porthos and Aramis nor Moe, Larry and Curly) or even revealing the name of the new firm, as they plan a public announcement on Monday.

What I can tell you without betraying confidence is that you will recognize and respect all three partners, and quickly see the value that they will be able to offer to potential clients. As a former career consultant, I can't help but see the opportunity to build a significant practice across several competencies in our space. The need is there, big money is entering the fray, and the traditional IT and management consulting firms are pretty much clueless on our industry. These folks are going to be busy, and will likely engage others as they grow. Moving from a preponderance of single-shingle operators to the emergence of a real, scalable practice is a sure sign of legitimacy for our industry. My guess is that they will be able to establish a strong beach head before the usual suspects move in. Good luck to the entrepreneurs!

UPDATE: (9-14-09) The news is public now.... The Preset Group, comprised of partners Dave Haynes, Pat Hellberg and Paul Flanigan is open for business. Good luck, gentlemen!

Lessons From Online Marketing: Eyeballing ROI

2009-09-08T10:03:00.005-05:00

In an insightful Online Media Daily blog post today, Zephrin Lasker, CEO of Pontiflex, makes a case for a progression from traditional online CPM-based pricing toward a CPL (Cost per Lead) or CPA (Cost per Action) pricing model. Granted, Lasker’s company has placed its own bets on lead generation and the CPL model, but his points are worth noting and have some applicability to DOOH.

Lasker notes, “According to the IAB, revenue from CPMs was down 6% last year. This reflects not only a tough economy, but a growing awareness that paying for impressions does not provide the insights or the ROI that marketers are looking for.” His point that paying by impressions may be losing favor is well taken. However, I am not sure I am buying the point based on lack of ROI, as market pricing tends to reflect at least a perceived balance between cost and return. On the other hand, the notion that advertisers are not getting the insight they want from CPM models has more intuitive traction. Buying based upon impressions requires a certain leap of faith that collecting eyeballs builds brand, and that brand building eventually results in measurable revenue. The problem has traditionally been tying that revenue to specific campaigns. Lasker notes that CPC (Cost per Click) has been a very effective tool for bringing performance into the discussion. He accurately classifies CPC as a direct response methodology, and if you think about it, a simple click-through signals some intent, and certainly an opportunity to convert, but it also remains anonymous until and unless the clicker volunteers their identity. Yes, a response has been counted and billed, but the marketer likely doesn’t know much (or anything) about the people who did not convert.

Lasker explains the nuance of CPA and CPL this way: “CPA is based on transactions -- credit card applications, loan inquiries, etc. It represents low volume and is better suited for ecommerce than branding. CPL, on the other hand, is about acquiring contact information from consumers for re-marketing purposes.” In both cases, the customer is providing the marketer with personal identification, and either explicit requests for action or opt-in permission for further contact from the brand. This goes beyond the positive response of CPC because the marketer now knows who is interested, can measure conversions and also gain important insights from non-conversions. It isn’t hard to see the imperative for many online advertisers to want more than eyeballs.

Does this have any bearing on DOOH advertising? How will DOOH advertisers get more insight from their out-of-home buys? In a pure digital signage scenario, which is a one-to-many vehicle, there is generally no keyboard or a way for a viewer to “click through”, input personal information or otherwise indicate immediate interest. That being said, there are at least three methods that quickly come to mind that advertisers and network owners can collaborate on in order to bring performance and insight into the equation. In decreasing order of technological complexity, they are:

1. Mobile marketing: A call to action within a video advertisement that leverages the cell phone that the vast majority of viewers carry is likely to continue to gain favor. Whether that involves a CPL type of opt-in via a short code campaign (“text BrandX to 12345 for more information”), or even that rarity in today's text- and email-centric world: a phone call, the ability to capture interest and information from a mobile device should prove to be very valuable. The advent of 2D (QR) barcodes, readable by cell phone cameras with the right software on board, would offer another way to opt in. In order for network owners to gain revenue from mobile marketing, they will have to partner with mobile marketing providers who control the campaigns.

2. Web marketing: An increasing number of digital signage networks will invest in ancillary web sites that will provide another vehicle for exposure of the network and its advertisers. If viewers are intrigued by a piece of content or an advertisement they saw, they will have a way to access that information at home with a keyboard in front of them. Network web sites would provide extra value to advertisers, where products and services can be explained more fully, and both CPA and CPL opportunities will exist. This would potentially add a performance-based kicker to the pricing model.

3. Collateral marketing: Yes, good old fashioned collateral has its place in many environments. Presenting a coupon or mini-brochure to a customer who has had their interest piqued by a video ad makes sense, and can also be very measurable. Network owners can facilitate this by adding the collateral “slots” to their display fixture and charging for fulfillment and participation. Uptake can be measured by the number of pieces moved per site in a given period, and conversion and ROI can be measured by redemption or other actions that are easily tracked and attributed to the collateral. Having a coupon available in the same environment where both the ad message was conveyed and the product is available is a huge advantage over online offers.

These methods for adding some sense of performance measurement and ROI to DOOH advertising campaigns are not likely to supplant CPM-based pricing in the near term. Instead, they will augment it where appropriate, and provide tangible measures for the effectiveness of the digital signage campaign. As is the case with all markets, the pricing model will adjust over time in a manner that will make a dollar invested in a multi-touchpoint digital signage campaign equally or more effective than a dollar invested elsewhere. Mr. Lasker's identification of an important online trend will take some time to be adapted to the out-of-home market. While we can learn from the travails of online marketers, we are likely to continue counting impressions even as we strive to engage and learn more about the people behind the eyeballs.

Kicking Off The (Crystal) Ball Season

2009-09-04T10:43:00.003-05:00

As the summer comes to a close, Labor Day approaches and the football season begins, it feels like as good a time as any to break out the crystal ball and do some prognosticating. No sense in waiting until January… that is too conventional! With that in mind, I offer you a touchdown (and an extra point) worth of predictions.

1. Big hardware players make big moves: Look for HP, Cisco and potentially Dell to make moves to expand their presence in digital signage. Intel may also be ready to leverage its position in embedded systems beyond chips and boards. Cisco has not gotten what it hoped for out of its Tivella acquisition, and no one should be surprised if they don’t take a second shot, perhaps with more of a hardware (media player) slant this time. Some of this was signaled at the recent DisplaySearch Conference in San Jose, as reported by Dylan Jones. I don’t expect the big players in displays to make acquisitions outside of their sandbox. Most of them are simply not culturally able to manage the less forecastable software businesses, and the Planar/CoolSign experiment was a fine example of vertical deals not always making sense.

2. Big software may move in as well: While some players in the digital signage software field fancy themselves as being big, none actually are. Enterprise players in retail, healthcare and hospitality will likely look to digital signage as a new market for line extensions and integration points. IBM has learned a lot in its DS dabbling for several years, and you can bet that Oracle is keeping an eye on how newcomer Starmount, an Oracle Partner Network member, fares. Big players in analytics may also be tempted, given the huge volume of data that flows through a busy digital signage network. And then there are a couple of software companies named Microsoft and Google. They have lots of reasons to want in, and Google already has patent applications in digital signage. Of the two, my take is that Google may be less comfortable outside of web-based businesses, and may tread carefully, while Microsoft has more hands-on experience in digital signage. Both bear watching.

3. Capital for network deals will get smarter: Venture capital, private equity and even angel money will flow to larger scale, well-conceived network deals, and it will get tougher for under-capitalized, independent networks to scale and survive. With all the lessons learned in the past several years, investors have a keener sense of what they are looking for: mature management, realistic ramp rates, and strong evidence of advertiser interest for ad-supported deals. It is clear that there is money on the sidelines, but the hurdles for prying it loose are higher than ever.

4. Smaller, ad-supported networks dwindle in number: Many of the smaller networks will become attractive to larger entities and be receptive to takeover deals due to weak cash positions. Those less fortunate will simply disappear. Others will band together in smaller-scale mergers in an effort to achieve scale and efficient operations. Declining costs are not enough to float the boat on small networks, as it is and always has been about generating revenue. Scale and reach matter a lot to advertisers. As such, combinations that provide penetration in attractive DMAs may make more sense than ever, and we will see them happen.

5. The recession and the natural software cycle produce two interesting effects: First, as we have noted before, savvy retailers have a penchant for investing during downturns, so that implementation occurs ahead of recovery. We are already seeing the signs, and expect to see more retail activity than has been the case over the past 18 months. Second, while the retail activity picks up, so will software replacement as a source of new deals for solution providers. Many early players have fully depreciated the capital expenditures from their first foray into digital signage, and are now ready for second generation solutions. WalMart TV 2.0 was perhaps the first and most well known example of this. Look for early adopters to set up very competitive processes as they re-invest.

6. New consulting practices will cater to big players: With bigger entities and the attendant bigger money entering the space, the need to build a business case and clear strategy will become greater, whether it is in support of a start-up network, an acquisition, or a new product. Big retailers, huge high tech companies and venture capitalists are not shy about using third party experts to provide perspective, validation and process. To-date, consulting in digital signage has tended to be niche-oriented (content, technology), and we expect to see more generalized, business-oriented practices emerge and win some large deals, while perhaps engaging some niche experts as subcontractors.

7. Solution winners will emerge by marketplace: Without doubt, there is a global market for digital signage. But by their nature, digital signage networks tend to be country or region-specific. For the most part, each major region/continent also tends to have its own set of solution leaders. In the coming months, in parallel with the emergence of the previous six predictions, technology winners and losers will be more clearly defined by major marketplaces: North America, Europe, Asia, Australia, South America and Africa. The seeming imperative to be “global”, which some use as the yardstick for measuring “leaders”, may come at the expense of consolidating a home market first. True globalization will likely be fueled by entry of truly global entities.

Jumbles, Rumbles and Stumbles

2009-08-24T15:15:00.005-05:00

Cleaning up the dustbin that my brain has become lately…

More on the "L-Frame" Jumble
The ongoing discussion on multiple zones and live feeds continues. David Weinfeld recently posted an interesting piece on the infamous “L-frame”, and featured a quote from yours truly that was gleaned from a comment I made weeks ago to a post on another site. My comment essentially argued that framing a live TV feed with an L-frame was more enhanced television than digital signage, even if you chose to use digital signage software to pull it off. Weinfeld seems to agree in principle, but then goes on to describe what he thought was engaging L-frame content he saw in a bar. As I encounter more approaches both as a technologist and as a consumer, I tend to side with the “less is more” camp that argues for a full screen approach to digital signage. But that is just my personal preference, and I don’t get too exercised about it when a customer or prospect gets all heated up about multiple zones. To be sure, there is a place within certain content strategies for tickers and even sidebars.

Sometimes it is interesting to look at what people are doing in “old school” media and advertising to get perspective and to learn. With that on my mind, I ran across an innovative and effective use of an L-frame in a static billboard. James Ready, a Canadian brewer, and its agency, Leo Burnett, launched an award winning billboard campaign this Spring. The video summary is here. They created an L-Frame on a billboard, with a James Ready bottle providing the vertical interest, and invited customers to provide content for the “main window”.

Needless to say, they were flooded with entries, and created a way for thousands of beer drinkers to connect with James Ready. It ended up being a great vehicle for user-generated content on a billboard campaign. Sort of like RMG/Danoo, but with lots of dead trees. The James Ready website is also creative, funky and brilliantly done. A tip of the hat, and a twist of the cap to both James Ready and Leo Burnett.

Rails Rumble
We made a decision a couple of years back to re-platform our NEOCAST Media Server application to Ruby on Rails. We went that way fairly early in the Ruby life cycle because we thought that it would provide a robust and easily extensible environment. We took a few shots from customers and competitors along the way who challenged the scalability of the platform, to no avail. As the Ruby world has grown, the tools and libraries have also grown beyond our hopes, and it has been everything we hoped for and more. And it has scaled extremely well. But enough about us.

This weekend marked the annual Rails Rumble, where teams across the country gather and have 48 hours to write and deploy a web-based application “using the awesome power of Ruby and Rails”. Teams are allowed to do design but no coding before the contest, and the event organizers use a variety of tools to ensure that the code is developed on the fly. We had RDM’ers on two Tampa-based teams who came up with a couple of pretty nice apps, while reportedly bagging a significant amount of sleep during the process. Here is one: Omnominator, which helps solve the age old problem of “where do we go for lunch?” And here is the other: GetThinkin!, which provides a platform for brainstorming and collaboration with real time tallying of results. Judging is going on this week, and Omnominator is getting some early raves from independent sources. A lot of the other applications are extremely cool as well, and you can access them from the Rails Rumble site. As a non-developer who supported the instincts of the developers to use the platform, I observe two things. First, that Ruby on Rails supports rapid application development quite nicely, indeed; and second, that there are some really talented people who have hitched their wagon to Ruby. I’m good with that.

Vendor Stumbles a Sign of the Times
Finally, while I do not take any pleasure in reporting it, there are signs of some desperation out there in the solution space. One vendor has employed 12 different Twitter IDs to spam-tweet, among other things, a drawing to get a single free digital signage “system”. Why have a drawing? Just offer a no-cost limited time test. Associating the word "free" with your product can turn out to be a marketing ploy that backfires. Another vendor, in the SaaS space, has taken to calling around to customers of competitors and offering a monthly SaaS fee that does not allow for profitable operation (trust me on the math). Sort of a strategy statement that says, “We lose money on every deal, but make up for it on volume”. The fat lady is warming up her pipes for those folks.

These are more signs that the consolidation is upon us. We’ve already seen it start on the network side, where mergers are easier to pull off. On the solution side, mergers will be a lot tougher to execute due to the inefficiency of managing multiple code bases, and the difficulty of transitioning to a single base. As such, the weak are more likely to simply disappear than to be absorbed by competitors. It is classic industry life cycle progression, accelerated in part by the weak economy. Not pleasant, but not unexpected. The consolidation on both sides seems to be starting as the acceptance and absorption of digital signage is exploding. This would portend a very different playing field a year from now.

FUD Hits With a Thud

2009-08-11T11:14:00.003-05:00

The tempest in a teapot created when David Keene of Digital Signage Magazine attempted to “sort out” digital signage software architecture with some generalizations about the premise-based versus SaaS approaches has resurfaced. Mr. Keene has published an article in the July/August issue of DSM on the topic, with follow-up articles by guest contributors from both camps. Leading off was Jeff Collard, President of Omnivex, representing the premise-based crowd. Before diving into Mr. Collard’s statements and apparent motives, let me state unequivocally that there is no silver bullet: SaaS is not always the answer, and neither is premise-based. Our own approach underscores that belief. We are fundamentally a SaaS provider, and currently derive 100% of our software revenue from that model. That being said, we have no less than three enterprise (e.g. premise-based) proposals in various parts of the sales cycle, and we anticipate more. I’ll circle back to why shortly.

Mr. Collard begins his article with similar disclosures and assurances that one size does not fit all. Then he dives into his case for premise-based software by comparing SaaS to riding a bus, and premise-based to owning a car. It seems that the bus is fine for city-dwellers who have a defined need, but the family BMW is where it is at for those in control of their own lives. Ignoring the subtle implication of class distinctions, his argument that premise-based software provides more flexibility and control than SaaS (“a general solution that caters to a broad base of requirements”) just doesn’t hold water. Here’s some enlightening facts: core digital signage requirements do not vary widely. One must manage and distribute content, playlists and campaigns; manage media players and locations; gather and manage data and develop reports; manage central and local users; and allow for significant scaling, among other things. If someone desires functionality that is unique to a specific environment (say a hotel), that alone does not make them a lock for a premise-based solution. The ability to adapt a software solution is not unique to premise-based software. A SaaS provider would want to use an approach that can be generalized to multiple use cases, and therefore more valuable to a wide variety of customers. That requires a higher level of abstraction of the requirement, and perhaps more thought in the design process. It also maintains the concept of single image, multi-tenancy that is core to SaaS. A premise-based provider can also modify their software, but that tends to drive them down one of two paths. The first is multiple versions of their software deployed in the field that require maintenance and can make enhancement of the core product more difficult and costly. The second is the creation of a series of point solutions (e.g. the “hotel” version, the “cellular store” version, etc.), which drives the product into niches and narrows its appeal. Not that there is anything wrong with that, as George Costanza would say.

Collard’s next argument is even more specious. He says, “If all you want to do is greet visitors in your reception area or entertain them while they wait, SaaS might be the right model for you. If you want to motivate your staff with their performance against targets or indicate what meeting is in what room based on your meeting room scheduling software, then a premise-based product would be a much better solution, because it can tap into other databases… to create targeted messaging.” Suffice it to say that staff motivation and presentation of data from other systems and sources is not unique to premise-based software. I am sure Omnivex spent a lot of time interfacing with hotel scheduling software to meet customer requirements. But their success in doing so was based upon their development skills, and was not in any way tied to their premise-based approach, and to assert that it was is disingenuous at best.

Apparently anticipating that particular daylight test, he goes on to head off this argument by invoking fear, uncertainty and doubt (a/k/a FUD). He contends that sharing business data with an external system, such as a SaaS server, is a scary security threat. He claims that “you never know where (your data) is located or who has access to it,” and that “you don’t know what country it is in or if it is being backed up somewhere else.” Time out, Jeff. Let me lead a parade of SaaS vendors who will disclose the scary secret of where their servers are, and invite others to chime in. Our primary server is in Tampa, Florida, in a highly secure, state-of-the-art facility managed by Peak 10. Our failover and backup site is in Peak 10’s Charlotte, NC site. In the unlikely event of secession of either state, we could easily relocate to any number of Peak 10 facilities. Customers and contracts determine who has access to their network data, and we consider the fact that each network’s data is backed up daily to be a service, not a threat. I wonder how many of the tens of thousands of Salesforce.com SaaS customers stay up at night worrying about who has access to their sales pipeline. I am pretty sure that is more valuable business data than the fact that the Rotary Club will be meeting in Skyline Room B next Tuesday.

Selling through FUD is the tool of those with little else in the toolbox. Collard’s FUD techniques continue with the classic “what if” scenario used so well by FUD subscribers. He wonders whether if you are silly enough to trust a SaaS vendor with business data, then what would you do if that company was “sold to someone less scrupulous”? Come on. I feel like Dan Aykroyd in SNL’s old Point Counterpoint bits.

Collard states the fact that SaaS customers rely upon their vendors to “provide adequate bandwidth, uptime and security”. Yes, they sure do. They also rely on their SaaS vendor to provide infrastructure and services that provide ROI when measured against an internally-based solution. When he implies that browser-based access is slow and sub-optimal he thumbs his nose at modern software architecture, web-based computing, and the internet itself. He knows very well that even an interruption in internet access will not send a properly designed SaaS-connected media player into darkness. But it serves his purpose to imply it would.

He stays with the FUD tactics by implying that the demise of a SaaS vendor would hobble a customer, whereas the demise of a premise-based vendor would not. Most SaaS agreements are (or can be) backed up by an escrow agreement that would release code in the draconian scenario. Proper diligence in the selection process would normally prevent the selection of an insolvent vendor in the first place. Do Mr. Collard’s customers sleep well knowing that their company’s goals are not tied to the success of Omnivex? If so, I would assert that would make them just another vendor, and not a trusted business partner.

I mentioned above that we have seen the need to make proposals for enterprise (premise-based) licenses of our software. These situations were not reactions to customers’ security issues, viability concerns, or worries about browser speed. They were generally the result of scale. When a SaaS-based network grows to a certain size, the monthly subscription fees will eventually reach a level where an analysis of self-hosting vs. external hosting is in order. We consider that scenario to be a telltale sign of success of the customer network.

SaaS vendors and their customers by definition have a stake in mutual success. The evolution from a SaaS model to an enterprise model is a natural result of growth and mutual success. A premise-based deal as described by Mr. Collard sounds a lot more like a one-off deal than a long term relationship. It would have been more interesting to read arguments based upon Return on Investment, speed to deployment, the merits and tradeoffs of single image/multi-tenancy, the scalability of location-based software, and the case for and advantages/disadvantages of user-driven enhancements in each model. Unfortunately, the arguments presented for premise-based software were based on subliminal and direct attempts to position SaaS as less secure and SaaS vendors as less viable. It is clear that the marketplace does not buy into those arguments. FUD is so 20th century.

Trick or Tweet

2009-08-08T16:23:00.004-05:00

Wow! What started as an interesting story angle developed by Bill Yackey at Digital Signage Today has exploded into one of the most re-tweeted, linked-to and re-posted stories that I’ve seen related to digital signage. In mid-July, Bill solicited input from his @DigSignageToday Twitter followers (who currently number 644) regarding how they use Twitter in their business. Of course, he solicited that input in tweets of 140 characters or less. On the first Monday in August, Bill posted the brief article, “The convergence of digital signage and Twitter” in featured space on the Digital Signage Today web site. He tweeted to announce the article, and it clearly got read worldwide, based on a look at all the re-tweeters. The apparent fascination with this convergence is both encouraging and a bit frightening. It is encouraging that digital signage is getting associated with the trendy web tool du jour. It is frightening that people leap to the conclusion that because you can, you must plaster it on a digital display. It is reminiscent of the sometimes reflexive need to scroll news and weather, regardless of the environment, that we see so often.

The article leads with a discussion of LocaModa’s Wifitti application. It ends with some tips on integrating Twitter feeds from our own Gavin Stark. Whether you feel the need to include a third party social media tool (Wifitti) clearly aimed at bars, or to get tweets to the screen on your own, it might be a good idea to think through your use case before proceeding. Read the tweets behind the gentleman in this picture to understand the need to filter user-generated content of any kind. If the Denial of Service attack on Twitter this past week doesn’t make you wonder what a Twitter zone on your screen might have displayed, it should. With those caveats shared, Wifitti has certainly found its niche and a case can be made for using Twitter RSS feeds within a Flash template or ticker to display network-generated content, as opposed to user-generated content. Think about location managers in hospitality, restaurant, retail and corporate or college campuses using Twitter to update events, specials and alerts. Certainly manageable, and using Twitter would not require being a user on the digital signage application. Security of the Twitter account would still be a concern in most cases.

As an aside, I haven’t figured out the killer app yet, but there may be something interesting in the concept of giving appliances and machines the ability to tweet their own state. I think of coffee makers tweeting when fresh brew is ready, or donut ovens tweeting the arrival of a new batch, but the odds are good that someone will come up with a slick application of this concept.

Twitter is an evolving and interesting tool. It can be integrated with digital signage in many ways. But like anything else, a decision to use it should be part of an overall content strategy. And it is worth considering the difference between user-generated tweets and network-controlled tweets before jumping in.

Retail Winners Get It

2009-07-30T10:46:00.005-05:00

This week, Retail Systems Research (RSR) Managing Partners Nikki Baird and Paula Rosenblum published a benchmark study entitled Enabling the Shopping Process: In-Store Marketing for the Empowered Customer. The 30-page report, conducted in partnership with RIS News, delivers some very interesting insights based on survey responses from 88 retail responders. One facet of the study that is of particular interest is how RSR interpreted many results from the perspective of “Winners”, those companies delivering sales growth above industry averages, and “Laggards”, or those who were below the average. Among the key findings of the study is not just that Winners use more in-store marketing tools, but that what sets them apart is the quality “… in objectives set for marketing tools, and the processes used to ensure successful integration into the shopper experience.” Put another way, a shotgun approach of in-store tools may not be as effective as a series of rifle shots squeezed off with a plan in mind. This is consistent with messages delivered by many experts in the digital signage field, who have encouraged the development of objectives and strategies ahead of the selection of technology.

Of course, our focus is on what we can glean from an in-store digital media perspective, and the study delivers useful nuggets to consider. Winners clearly feel compelled to provide more information to consumers in the store, and have invested to understand customer behavior. This is welcome news, and when combined with the identification of “Traditional media’s effectiveness is eroding” as the number two overall business challenge, it certainly sets the stage for increased usage of digital media on the store.

In reporting that respondents focused on the importance of driving sales and margins and providing a consistent marketing message across various channels, the authors note that this represents a “serious disconnect” with the way in-store digital media has been discussed to date. They point out that the apparent focus upon concepts such as “opportunity to view” and “dwell time” obscures the only metric that really matters to retailers: sales lift. I think they are on to something here. The measures that have been getting the attention have done so because they make brand managers and ad buyers more comfortable with making a digital signage network buy. The measurements are an attempt to calibrate a digital signage ad spend along the lines of the eroding traditional media’s established metrics, and from a retail perspective that is a disconnect. The wonderful opportunity of in-store media is the ability to measure effectiveness through product movement at POS. TV ads (other then direct response infomercials) have no choice other than to rely on impressions. In-store media has the unique ability to measure product sales at the point of message delivery.

Do advertisers really care how many people SAW the message, or how many people ultimately ACTED on it? The study showed that in-store media is by far the top vehicle for collaboration with brands, again underscoring the value of measuring differently. It is time to move the dial on this, and it is not going to happen until retailers take ownership of the digital media technologies inside their stores. When they do, and they marry message playout logs with POS movement data, huge insights will be gained. DS-IQ was on this early, and perhaps too early, but the idea is absolutely dead-on. Analytics based on retailer-owned network data and retailer-owned movement data should be far more valuable than only knowing how many people viewed each message. Uplift can easily be measured by comparing control stores (no digital messaging) to active stores. And this won’t happen until one entity owns all the data: the retailer.

There is good news in that there appear to be signs that Winners are starting to connect the dots. They see the opportunity to leverage localized messaging and promotions; they are nearly twice as likely to be using in-store digital media as Laggards; and they are far more concerned with the ability to manage third parties on in-store marketing efforts. All of these trends point toward organizational willingness to take on in-store media as a strategic technology, owned and driven from the inside. This would be a seismic shift.

The study is chock-full of interesting data and insightful analysis, which makes it valuable to anyone who follows, understands, or hopes to play in retail from a marketing and technology perspective. The long awaited shift that will land in-store digital media on the retail application portfolio map seems to be underway. That will have a dramatic impact on the adoption, measurement and value of the technology itself. Bring it on!

ROI Matters

2009-07-23T13:38:00.007-05:00

We recently referenced some apparent casualties on the solution side of the digital signage space. Meanwhile, there has certainly been no shortage of action on the network side of the digital signage space lately. Amidst mergers, the occasional new network and expansion of existing networks, come rumors that both Ripple TV and CBS Outernet’s Grocery Network (formerly known as SignStorey) are potential casualties in the near future.

Whether the rumors are true or not, the notion that industry consolidation and rationalization would accelerate during a recession should not be counterintuitive. If the rumored situations of Ripple and SignStorey are reality, then they offer separate but somewhat parallel scenarios to discuss, and are part of an important financial trend in our industry.

If in fact Ripple TV is foundering in July after a $4M venture capital injection in late March, then they are burning cash at a rate worthy of a masterless samurai. Further, if their very well known and deep-pocketed financial partners are not stepping up to another round, then they have likely assessed the situation, and must see a further investment as good money after bad. Without passing judgment on Ripple’s strategy or execution, it would seem that someone has determined that the chance to achieve a positive ROI may have gone by the wayside. What else can one infer if two VCs appear willing to turn off the funding spigot?

As for SignStorey, the ROI monster had to rear its ugly head at some point. CBS’ willingness to pay over $70 million for SignStorey a couple of years back was without doubt a watershed event from any perspective. But given the size of their network at the time (1,400 locations), and their reported lack of profitability, it is hard to come up with a rational basis for valuation approaching half the price paid. No subsequent network deal that I am aware of has even approached that level of over-valuation, and it is doubtful any will for the foreseeable future. If one accepts that CBS paid a huge premium above fair market value for SignStorey, it is not a great leap to imagine the suits in New York calculating the IRR on that deal in best, worst and most likely case scenarios. It sounds like the numbers were not encouraging, which is unfortunate.

It is ironic that CBS’ grocery network is often co-located with PRN’s Checkout TV, with CBS on the perimeter, and PRN in the checkout lanes. The fact that PRN, acquired by Thomson 2005 for a princely sum, has been on the block for quite some time is not a secret. The executive brain drain is ongoing, and there doesn’t appear to be many takers for a company that was once the darling of the industry. The fact is that the people who got ROI on PRN were the sellers in 2005, and did they ever cash in! Thomson, on the other hand, has already done the math and made it clear that they just want to recover whatever they can on their purchase. Regardless of the cause for the decline, at the root of it all is the fact that Thomson (like CBS) overpaid, perhaps based on the unmet expectation that WalMartTV would be a cash cow for them, or that synergy with Technicolor would unleash even more value. Again, buyers and investors demanding ROI appear ready to cut their losses.

The brutally over-analyzed Danoo/IdeaCast/NCM deal spawned debates and comparisons to the PRN and SignStorey deals in terms of their significance to the industry. All three are significant, but the comparison ends there. Because the SignStorey and PRN deals were behind the ROI eight-ball before they started, the current chain of events was a high probability event. Where the difference lies is in how the Danoo deal was done. I commented on a post-mortem written by Dave Weinfeld on his blog:

“By comparison, NCM bought into IdeaCast by assuming debt and wiping out the equity holders, according to reports. They subsequently leveraged that position into a 20% stake in Danoo, becoming partners with Danoo's deep pocketed backers, Kleiner Perkins. The cost was manageable, risk shared with savvy investors, and an exit strategy appears obvious, at least to observers like us. The variable, of course, is the subsequent performance of the new company. So it is not a slam dunk, but RISK has been managed by both NCM and Kleiner. The terms and the shared risk and vision make this deal very different than the others.”

There are two clear trends, the veracity of the rumors notwithstanding, to be observed here. First, that every deal must eventually demonstrate a clear path to ROI to investors in order to have access to continued funding; and second, that the experienced institutions are looking harder at both valuation and risk management on every deal. Combined, they portend more realistic valuations in funding and M&A deals, and more creative partnering to mitigate risk. If more realistic valuations also come with a commitment to see the investment through, then perhaps that is not a bad tradeoff.

Scattering Our Way?

2009-07-18T08:04:00.003-05:00

Our industry has been showing some serious signs of maturity lately. Breathless press releases touting 20 location deals have been supplanted by news of consolidations on the network side, thinning of the ranks on the vendor side, and even initial attacks from privacy advocates that signal acceptance of the technology just as much as fear of its reach. Business activity during a deep global recession has been surprisingly brisk. If there is one missing piece from the puzzle that would transform the industry in a permanent and significant way, it would be the meaningful acceptance of digital signage by media planners and buyers.

To be sure, there have been signs of movement and nice tests from very big brands, perhaps most notably Schering-Plough. And make no mistake, some networks are consistently selling advertising, although there is no doubt each would benefit from higher CPMs that increased demand might lead to for them. But one does not get the sense (yet) that digital signage as a media is a part of the plan for most media buyers and brands. Anyone who navigates through the web will intuitively know that the major automobile companies have internet advertising as a budgeted part of their media plan. There are certain sites that are more or less permanent parts of their Internet buy, probably signaling measurable ROI. And it is clear that buyers will test new and ostensibly attractive sites in hope of finding a winner. In any case, there is little doubt that Chevrolet, for example, has a certain number of millions earmarked for web-based advertising. That same clear evidence of an earmarked budget for digital signage has just not become obvious. It is fair to say that certain networks have developed relationships with some brands that are mutually beneficial, but there is a long way to go. When we get there, the better networks will realize higher rates, and the developing networks will get more chances to prove their value.

There are many signs that it is not just wishful thinking to imagine digital signage having a visible slice of the pie chart at the quarterly budget meetings. Inside our industry, more and more ad-selling businesses are popping up to compete with the leading DS aggregators, Adcentricity and SeeSaw. While their models and value propositions may differ, the emergence of offerings like rVue and Entourage certainly indicate that investors and entrepreneurs see opportunity, and there will be others. Alliances of networks in related businesses have also cropped up, in an effort to cross sell advertising and to gain expanded reach. These will work, where the quality of the networks working together is uniformly high. We have already seen alliances of the nearly dead that will not fool anyone.

Externally, there also appear to be signs that there is more than hope. In an excellent, must-read blog post, MediaPost editor-at-large Diane Mermigas examines the apparent movement from traditional TV upfront buying to a strategy of “scatter” buying. Indeed TV ad buying seems to be moving to a just-in-time mentality, even if spot costs in the scatter market are higher than upfront costs. The logic would appear to be that buying the right spots as needed (with the luxury of determining need dynamically) is worth a premium. The fragmentation of TV audiences, universally referenced in digital signage pitches, is finally resonating as well. Mermigas observes:

“The ever-dwindling ratings and audience shares continue to be a drag on advertiser enthusiasm. More advertisers are feeling comfortable with more targeted, quantifiable ad placement online and a collective multimedia strategy that includes TV.”

Hmmmm. That sure is music to my ears, coming from someone who lives in traditional media. Ms. Mermigas quotes OMD’s CEO Alan Cohen from an interview in AdAge this week, "This situation has made us look at some alternatives that will give clients the ability to reach broad audiences in a different way." Somebody buy that man a drink! This is a tidal movement. While digital signage may be hidden behind words like “alternatives” and “multimedia”, we appear to be on the radar where it matters.

TV advertising has absorbed billions of dollars annually for decades. That industry is clearly undergoing fundamental changes, driven by advertisers’ desire and ability to target ever more efficiently. You can bet the TV networks will respond with better deals upfront, and probably punitive rates for high demand scatter spots. But the die seems to be cast, and advertisers and their media buyers are looking our way. Mermigas ends her post by saying, “…advertisers, agencies and media companies are embracing alternatives that will hold long after the recovery is underway.”

As digital signage networks position themselves to receive that embrace with quality offerings, standard metrics and tangible results, the last piece of the maturity puzzle will fall into place. When it does, things just won’t be the same, in a very good way.

Chalk Talk

2009-07-14T11:13:00.004-05:00

It probably won’t make me many friends in Seattle, but as a card carrying Starbucks addict, I am going to go ahead and call out the Kings of Caffeine. In the spirit of full disclosure, I am also a card carrying digital signage evangelist and solution provider, but I think that is clear from the blog site. So here we go: it is time for Starbucks to drop their stance that digital displays would be out of place in their ubiquitous and delightfully aromatic locations. The chalkboards are cute, and it does amaze me that every location seems to have someone with the ability to draw a caramel macchiato that looks exactly like the one across town. But let’s be honest. The average Starbucks has become a maze of hand drawn signs, computer printed announcements, and corporate-mandated posters and banners. From a marketing perspective, it is an absolute minefield of missed opportunities. Here is a picture showing a glimpse of the messaging mess at the cream and sugar counter at my local store.

Not in the frame were the huge basket urging customers to contribute food to a local soup kitchen, a promotion on coffee beans, several pieces pushing smoothies, special deals on discontinued espresso makers and much, much more. More than I can process before that Grande Bold hits my brain.

Let’s take a look at the marketing messages that are wafting through the air at a typical Starbucks:

1. Buy the new breakfast foods with a special combo deal
2. Try a Vivanno smoothie. (Not sure if this one has caught on yet)
3. Buy beans
4. Buy a mug or coffee maker
5. Donate to our troops or homeless people
6. Starbucks is green
7. Starbucks believes in fair trade and ethical treatment of growers
8. Starbucks has eliminated artificial ingredients in the prepared foods
9. Buy the music you are listening to
10. Grab the free iTunes download of the week
11. Get a Starbucks gold card
12. Get a Starbucks credit card
13. Think about a lunch sandwich
14. Come back after 2 PM for an afternoon pick-me-up
15. Enjoy the WiFi
16. We are part of the community
17. We sell really good coffee

There is a lot to impart to the folks as they wait to order, receive and doctor up their drinks. Starbucks relies upon a mixture of printed collateral, handmade signs, chalkboard announcements and expensive posters to get some of these messages across. They apparently hope to impart some messages subliminally. Regardless of what they may believe, while that approach may reinforce a casual, non-threatening feel, it does not take advantage of the multiple marketing opportunities presented by every customer visit. And it gets messy.

With just a single digital screen in the average location, Starbucks could clean up most of the clutter and deliver a consistent, updated and location-specific set of marketing messages that address every item on the list above, and 17 more that I probably missed. They would not have to (or ever want to) make it an ad-based network, as they are all about branding and experience. That is a huge positive. I do not claim to be a content expert, but it would be easy for Starbucks to come up with an appropriate and superior content strategy that differentiates it from Danoo, Ripple and other digital signage operators that have played in the coffeehouse field. They could easily reset the bar.

Think about how they could market the music more effectively. Think about the possibility of using a zone or a full screen segment in the loop to engage customers who have a Starbucks app on their cell phone. Imagine getting someone like me to consider a Vivanno or some Perfect Oatmeal. Picture a description of today’s brews scrolling along the bottom. Think about the potential to reinforce the Starbucks brand and experience with great video content (no sound required). I once actually saw a digital display in a New York location, but I could not tell if that was a test or a random event. Maybe Starbucks is testing something now, or has tested digital signage in the past. If those tests failed, they should take another look and engage smarter consultants and partners. I haven’t seen a more obvious case for using digital signage to advance a business strategy.

The time is now. The need and opportunity to drive sales increases is readily apparent. The technology works. The bandwidth is there. The ROI is easily measurable with a simple and inexpensive test. Customers might actually appreciate it. And call me crazy, but I’d wager that a well-produced, 10-second video piece showcasing that caramel macchiato will sell better than the chalkboard picture. Dive on in, Starbucks, the water’s fine!

Sensing a Trend

2009-07-01T07:36:00.003-05:00

It is always worth doing some investigation when you see an example of two West Coast venture giants fighting over the right to fund an early stage tech company... in SoHo. For Silicon Valley types to get hyped up about a technology idea that exists more than a hour’s drive from the Pacific Ocean is unusual. My theory on this is less about techno-xenophobia and more about a distaste for flying to Board meetings. In any event, the news of Sense Networks receiving $6 million in funding from Intel, who beat out Sequoia for the honor, deserves attention.

Sense Networks was founded in 2003 and incorporated in 2006. The founders are a group of “top computer scientists” from M.I.T. and Columbia. I get the feeling that the water cooler, foozball and lunch table chatter at their place is on a level out of range of my intellectual radar. Given their origins, I wonder how much Red Sox-Yankees smack talk works its way into debates over Minimum Volume Embedding and Machine Learning. The company has used those two principles to make some sense out of ubiquitous location data that emanates from “…cars, buses, taxis, mobile phones, cameras, and personal navigation devices.” The company takes opt-in and anonymized (they even have a Chief Privacy Advocate) location data from the various devices, and through a series of algorithms, historical normalization and external data analysis, comes up with what appears to be useful information. They are able to categorize behavior and movement data into “tribes” of similar people who exhibit similar “spatiotemporal” activities. I am hoping one doesn't go blind from that. A visual representation of tribal movement on a San Francisco night is in the middle of this page.

Sense Networks has introduced its first application, called Citysense, which lets opt-in smartphone users determine the age-old night time question, "Where is everybody going right now?" In this case “everybody” are those people in the city where you are at the moment who have exhibited similar spatiotemporal behavior to you, wherever you may live. The application pops up a list suggesting where your tribe is hanging out (or tribes, if you tend to mix it up). Pretty neat.

So why would a digital signage geek care about this? Let’s think about applications that may be useful. Wouldn’t potential advertisers be interested in the movement behavior of network viewers before and after their exposure to a marketing message? Or perhaps learn a bit about the multi-tribal characteristics of viewers based on time of day? Would it be effective to understand what percentage of doctor office visitors went to a pharmacy after their appointment… and which one? Could real time data on the nature of viewers in proximity of the screen be used to drive “smart” content and advertising playout? There is something there.

Whether or not Sense Networks breaks through and finds the way to monetize their slick algorithms and management of data is not important in the big picture, although I wish them much success. What is important is that investments are being made to help make sense of the marriage of mobile devices, location data and personal preferences. This insight will find its way to digital signage network operations. Prepare yourself for context- and audience- relevant content. It makes Sense.

Is There a Free Lunch In Your Future?

2009-06-15T19:48:00.003-05:00

I remember reading Wired Magazine in its edgy infancy, when it was a much thicker publication than it is today. Wired has retained much of its edge, and today I enjoy reading what is rocking their world via RSS feed. Free. Today, Wired’s Editor-In-Chief, Chris Anderson, opened Wired’s Dispruptive by Design conference with a discussion of the disruptive power of a zero price: free. Not coincidentally, Anderson distributed a pre-release copy of his book, Free: The Future of a Radical Price, to attendees. Free.

Anderson argues that prices, particularly for digital content, will naturally drive toward their marginal cost. The historical and economic principles involved make sense. Driving prices down expands markets, expanded markets create economies of scale, scaled distribution becomes profitable. In his presentation, Anderson refers specifically to “music, video and video games… news, books and email”, where the marginal cost is effectively zero.

The implications for digital signage are interesting. Certainly music, video and news are important elements of many digital signage network presentations. Today, their cost can hardly be described as free. However, as the battle for a rapidly expanding market ensues, prices for each are nearly certain to become commoditized. “Free” content is out there already, but most network operators still opt for paid content. Anderson refers to this behavior as risk avoidance, as there is some promise of quality when something is paid for. There is also a halo effect. One can glean news, weather and business information from many sources that are low or no-cost. But when the desired information is branded with the imprimaturs of Reuters, AccuWeather and The Wall Street Journal, the credibility and quality associated with those brands is conveyed to the network. It will reliably be partly cloudy and 95 degrees in Florida tomorrow, but somehow it feels more reliable when a trusted source like AccuWeather says so.

It is fair to assume that in the future, many networks will reduce their costs with commoditized content, if they are not already doing so. This would enable them to expand their networks with lower operating costs. If the same principle applies to advertising, then their CPM rates will also fall to the marginal (and lower) cost. Food for thought, but my guess is that advertisers will always pay up for measured audience, impressions and dwell time on digital signage networks. Low-cost content operators will have to prove that they can keep the eyeballs on the screens. This will be interesting to watch.

Dave Haynes extends Anderson’s concepts to the software end of the business. Indeed, we have already seen “free” digital signage products pop up, but their business models do not contemplate being free forever, as Dave aptly explains. My father always used to say, “you get what you pay for”, and he never knew much about software. In his presentation, Anderson related the story of how Bill Gates explained why software couldn’t be free. He said that if people wanted features to expand, if they wanted technical support, if they wanted some assurance that their provider would be around in three years, then paying for software was a no-brainer decision and in their own best interest. Things worked out pretty well for Mr. Gates.

The marginal cost for software is arguably near zero. Once an application is developed, providing that code again and again is merely a case of transporting bits and bytes. But given the fact that software products are never finished, that argument does not hold water. Enhancements, bug fixes, new features, and user interfaces must continually evolve in order to meet customer requirements. For applications upon which customers are betting their business, the marginal cost must include the investment required to support what exists already and to develop what isn’t yet there. It is much more than transporting bits and bytes, it involves real people listening, coding, testing and training.

“Free” is a compelling and attention-getting word. And in the grand scheme of things, there is a place for free. After all, we make use of Linux and open source code for certain elements of our infrastructure. Software engineers like to remind us user types, “Linux is free, if you value your time at zero”. To create software applications that are differentiated and compelling, even “free” elements must be extended (and of course contributed back to the open source library), and surrounded with original software design and code.

A commenter on Wired’s site, from Outlandos Music, put things very well: “When we create music, products, services, and experiences that make consumers feel so good that they want to tell the world about them, people will pay for them…” Indeed, you can hear passion in great music, read it in great books, see it in great movies, feel it when you get great service, and sense it when you use great products and software. It creates buzz, it creates fans. Free goods and services in a marketplace drive innovation and a passion to justify market prices. So free is good… and Dad was right.

Strikes and Voids

2009-06-08T18:28:00.004-05:00

As we begin a long, hot summer, a few things happening in our industry and technology in general strike me as worthy of comment. In each case there is a void to be filled, and the sooner, the better.

I am struck by a digital signage industry that appears to be so ready for dramatic breakout (yes, even in this economy), but which still struggles to define itself, its business models, its semantics and even its leadership. The void in market and industry leadership leads to a bit of Wild West mentality. People seem to passively accept the practice of some companies routinely issuing breathless, yet newsless press releases and disseminating blatantly misleading data on their own customer base. It is almost as if those companies think they won't be challenged or get caught. Well, integrity is one of those things that comes out in the wash, folks. The combination of a down economy and increased competition makes it a market where buyers will be more selective, and more willing to dig deeper on any claim. So if you want to stretch the truth, engage in hyperbole or otherwise gild the lily, prepare yourself to be called out.

I am struck by the buzz surrounding the InfoComm show next week. It is a show known largely as an AV reseller show in June, in Orlando, yet it seems that it has an unusually high amount of interest this year. We don't have our own booth at the show, although we will have some presence. It seems to me that either the timing is somehow right or that the show promoters have done a great job. In any event, it just feels like it will have more buzz than usual. I would take that as a good sign for everyone, but even a strong InfoComm won't make Exponation's decision to cancel DSE East a bad idea. In fact, it would only underscore the need to fill the void in the Fall with show drastically different than their big show in February.

I am struck by the fan base of Apple and how people multi-tasked as Apple presented its new products today at WWDC. The bizarre strategy of non-removable batteries on the Macbook, MMS with no network support from AT&T and nothing really NEW starts to sound a lot like the guy on the left side of heir terrific commercials. Seriously, Steve, do you think I am throwing down for a new iPhone when you haven't made the case for spending that kind of money? Love all the Macbook features, but I am troubled by the battery deal. Maybe they are waiting for the economy to recover before introducing a really new iPhone, or a netbook computer. The old Apple would be more aggressive, but in a certain way, they suffer from a void of leadership as well, with Steve Jobs obviously ailing. I hope he recovers soon, and pushes the envelope once again.

There is more to talk about, but as a baseball fan I have to respect the concept of three strikes and you're out. It will have to wait until next inning.

Bailout in DC

2009-05-29T08:53:00.000-05:00

News of the cancellation of the Digital Signage Expo East, previously scheduled for September in Washington, DC, comes as a welcome non-surprise. The paucity of activity at the inaugural fall event last year in Philadelphia has been well documented, as has the seeming glut of shows trying to leverage the growth of our industry. We will proudly wear our 7-years lapel pins next year at the DSE show in Las Vegas, which remains as the de facto big show in this side of the pond. We shed no tears for the euthanasia performed on DSE East.

It is easy to assume that the show organizers simply read the tea leaves and determined that it was not going to be a success, and to be sure those signs were probably quite evident. Many exhibitors simply did not reserve space; others committed to smaller spaces; the economy points toward less travel budget for potential attendees; and no doubt a payment deadline loomed from the convention center. On that level it seems like an easy business decision for Chris Gibbs and his team. On another level, it is actually a strategic decision to protect their brand.

DSE has become an acronym with meaning to everyone associated with the digital signage industry. The mention of those letters evokes images of a bustling, buzzing, busy exhibit hall and packed session rooms. The fact that a name can evoke an image and even an emotional response makes it a strong brand. The foray into a second show was essentially a brand extension for Exponation, and it can only be compared to Starbuck’s soon-to-be-failed attempt at instant coffee. It degrades the image of the flagship brand and big breadwinner… never a good thing. By shuttering the DSE East show and rethinking its strategy, Exponation is able to create a bit more scarcity and urgency around the big show, and should expect further growth in 2010. It is a very good decision for their company and for the industry.

Exponation’s comments on the cancellation indicate that they are noodling over a second show with a different format for 2010, and Dave Haynes’ reliable spidey sense has indicated that a show around content may be the ticket. I can hear the groans of my fellow technology vendors as they contemplate an exhibit hall stalked by creatives and not technology buyers. My two cents worth is that a five-city autumn road show of focused (and possibly varied) seminar content coupled with a limited vendor/sponsor area would be useful, and would leverage the DSE brand beyond giant expo hall venues. Just a thought.

Attack of the Zombies

2009-05-28T13:08:00.003-05:00

Disclaimer: As a practice, I do not use this space to directly promote RDM and our solution. This post discusses a real life example of a topic of technical interest, using an RDM-specific experience. For more heavy-handed self-promotion, feel free to call or email.

Like most software companies, RDM is loud and proud in proclaiming our solution to be scalable. Nothing we have seen in the field has led us to believe anything otherwise, but we have always pondered what the load capacity of a single NEOCAST Media Server should be pegged at. We have our own selfish reasons for wanting to understand that number. First, to establish a clear threshold at which we would add another server to the rack, thereby avoiding any potential traffic jams or degradation in service. Add it too soon, and you have expended capital unnecessarily. Add it too late, and you have disappointed customers. Second, providing a scalability test framework would allow the team to test the impact of any new feature on server performance without having to take a “put it in production and wait” approach.

Until recently, we had set an arbitrary and comfortably conservative number for our threshold, and held to it. We had also designed capacity test plans, but did not have an efficient way to execute them. Even the design was tricky, because it is nearly impossible to design a generic network customer. Every customer’s size, content strategy, update frequency, content types, reporting requirements, usage of features such as SpotSwap and other important criteria vary as much as snowflakes.

Recently, we were challenged by a potential customer to produce and run a capacity test that could be replicated and verified by a third party if need be. In this case, we were able to use that network’s key parameters as the gold standard for testing capacity. So what remained was the method for creating an army of “zombie” media players and the method for having them “attack” a production server until it cried “uncle”. Since our infrastructure is replicated exactly between our primary and disaster recovery sites, we were able to temporarily recommission the DR site to serve as the target for the zombies. To the engineering team’s credit, they devised a way to create the army of simulated players utilizing a customized OS image deployed to virtual servers in Amazon’s EC2 cloud. What they did was write a simulated NEOCAST Media Player that could spawn any number of zombie players with the exact network characteristics of the potential customer. Tests were run to find out what the maximum number of simulated players each virtual server could handle, so we would know the natural increment of players we would add with each server. The simulated players were then programmed to begin their cycle of call-ins, status reports, log dumps and content updates randomly over a 15-minute period, and to continue running until the test ended. Then the fun began, as more and more virtual servers were deployed from the EC2 cloud to communicate with the server. We had defined a number of “fail” conditions that would be indicators of having reached capacity, and kept adding players to the zombie army until we got to a fail condition.

The process was eye-opening in many respects. During initial dry runs of the test plan, we were able to uncover and patch a few bottlenecks that were not obvious when not running a server to the “max.”. We also came up with several potential code optimizations based on analysis of the load test data, but actually ran the official test without implementing them, as we wanted to report “as-is” metrics to the customer. We could have tweaked up the results quite dramatically by quietly introducing the code optimizations, but we carry this millstone called integrity around our necks, and we chose instead to disclose the optimizations as potential upside. Hopefully, that did not go unnoticed, because that is how we roll. And we had some fun internally by having all the employees post their guesses as to the final capacity number, with the winner picking the restaurant for our next team dinner.

As a result of the process, we ended up with an improved capacity test plan, a great method for executing the test, clear direction for throughput optimizations going forward, a nice benchmark number for server capacity, and a baseline against which to measure the impact of new features. The potential customer was able to assess our claim of scalability against competitors based on a test that they had a hand in designing. It was a process well worth the investment of time and money. From the cloud we got some clarity. And it doesn’t look like I will get off cheaply on that team dinner, but at least I won’t have to invite all those zombies.

Touching on a Trend

2009-05-21T16:00:00.002-05:00

Kudos to David Weinfeld, who examined last month's news of the termination of the TouchTunes-Victory Acquisition merger in a recent blog post. Well worth reading. David took the time to examine the proxy statement, something I was guilty of not doing in assuming the deal was all but done. He points out that Victory had spoken with several other companies in unrelated businesses before settling on TouchTunes as a target. This is not surprising, as the purpose of a Special Purpose Acquisition Company (SPAC) like Victory is to find the best potential acquisition(s) possible. It appears that Victory’s door to TouchTunes was opened through a relationship with a friend of Red McCombs, who had invested in Barfly prior to its acquisition by TouchTunes. McCombs is one of America’s wealthiest people, having made millions in the car business and as a co-founder of Clear Channel Communications. He has the kind of wealth that allowed him to own three professional sports teams at one time or another, and to endow the Business School at the University of Texas. Red is no slouch, and it is easy to see why having his track record associated with TouchTunes, even indirectly, made it more attractive to Victory.

Weinfeld goes on to examine the risk factors listed in the proxy statement. While the risk factors are very scary statements, they are fairly boilerplate and designed to cover the rear ends of the company making the offer and its investment bankers by making an investor aware of every possible thing that could cause their investment to go south. Those statements are probably not enough to scare off someone who had already invested in a SPAC with no declared target.

However, Weinfeld’s post does review the three daunting things that probably did sour the Victory voters. First, that the hockey stick revenue projections presented in the proxy require a significant leap of faith. Second, that TouchTunes has yet to generate any ad revenue from either Barfly or its massive network of jukeboxes, which relates back to the first item. And third, the astute observation that its PlayPortTT wireless product may have been better deployed as a smartphone app. Of the three, it is the ad revenue dilemma that resonates as an industry-wide challenge.

TouchTunes has over 35,000 video jukeboxes installed that are by any measure a great example of how the internet and digital technology can effectively disrupt and displace entrenched solutions. Their digital screens are seen by millions of people every month, which would presumably be attractive to potential advertisers. But the devices were designed to be digital jukeboxes, and the S-4 filing indicates that TouchTunes expects to make substantial expenditures to continue “its expansion into additional revenue channels, including digital advertising”. So it appears that there is some work to be done to provide the scheduling, distribution, playout and reporting to support that expansion. The proxy statement makes it clear that TouchTunes has that expansion as a priority. Its 2008 acquisition of Barfly, which uses the oft-seen “L-frame” to wrap promotional messages and advertising around a live TV feed in bars, may or may not provide the foundation for some of that work. What is clear, however, is that the same conundrum that has slowed the flow of capital to the industry may well have impacted the TouchTunes/Victory deal: advertising sales.

There is an ongoing circular exercise going on between network owners, advertisers and sources of capital that has been seriously impacted by the fallout of the recession. Network owners need capital to launch their networks. Investors want to mitigate their risk more than ever before and are asking for evidence of revenue (advertising dollars) before investing. Media buyers want to see locations and independent assessment of reach and impressions. Network owners can’t provide that without capital.

The leap of faith to make the DOOH buy has been harder for media buyers to take even though we know they are moving toward out-of-home buys, because advertisers are cutting budget as well. It’s the old trickle down theory, and it is not fun to be the one getting trickled on. The result of all of this is that potential breakout deals like TouchTunes/Victory get shot down; terrific network concepts get delayed or never leave the incubator; and others can’t get past a pilot despite good performance.

The winners in this environment are the networks with existing footprint and advertiser relations and networks being launched by entities that don’t need other people’s money (corporations). I would advance the theory that forward thinking investors will invest in the best new network deals ahead of a recovery, and at advantageous terms. There won’t be a better time to get in than now. When the economic cycle recovers, ad budgets will expand, leaps of faith will be made, deals will be struck and capital will flow like its 1999. That can’t happen soon enough.

Hunters and Gatherers Choose Sides

2009-05-15T10:07:00.002-05:00

The current economic climate, coupled with the rapid acceleration of interest in the benefits of digital signage has produced a number of interesting indicators of change. We have long anticipated an industry consolidation, both on the network and the solution sides. A little bit of that has started on the network side, notably with the creation of Outcast in the U.S. network space (the merger of Bhootan and Fuelcast). We have also seen some network failures, both in North America and Europe, while at the same time new network launches continue unabated.

Perhaps the most significant change has occurred on the solution side, where it appears that the field has evolved into two groups: elephant hunters and gatherers of nuts and berries. New and large deals are out there to be had and scores of smaller deals pop up every month. There are advantages and disadvantages to pursuing each. “Elephants” typically take longer to close, are more competitive in every respect, and operate on corporate time (i.e., not fast). “Nuts and berries” deals are greater in number, smaller in size, less competitive, and bring generally higher prices, along with proportionately higher support costs and risks. The evident split between hunters and gatherers is even more apparent when one looks at the signals from two of the more visible entities on the solution side: BroadSign and Wireless Ronin.

The actions of BroadSign, formerly a prodigious hunter of elephants, are remarkable. The company recently abandoned their direct sales force, moved toward a reseller channel model, and now recently announced a turnkey SaaS offering with Bell Micro. This represents a 180-degree turn in strategy, and it is fair to say that they are betting the farm on this approach. As a competitor, I couldn’t be more pleased, as it signals that BroadSign will be less able to control its market messaging and will encounter challenges in competing for and servicing the elephants. It also signals a move toward a generic and mass market approach that takes them closer to the folks starting new businesses in garages and incubators, and away from the differentiated, focused and lucrative market where elephants are known to graze. Wearing a more impartial hat, I would assume that their own analysis indicated a large enough installed footprint (and recurring revenue level) to make an attack on the mass market that VARs can sell into more cost-effectively.

Another signal comes from the public face of the solutions space, Wireless Ronin. Rather than join the chorus of those critiquing Ronin’s financial performance, it may be more useful to understand what they now consider to be “big”. The company had put its chips on Chrysler and KFC, and it now seems apparent that the Chrysler gambit isn’t going to work out very well. As for KFC, after years of work, there are 124 locations live, and a thin promise of more to come, but only in new and remodeled stores. The elephant in this deal is the retro-fit of existing KFC stores, but after sifting through the answers to softball questions lobbed by their own investment banker, it doesn’t sound like a retro-fit is on the radar. It sounds more like the Colonel’s secret recipe now includes nuts and berries. Finally, Ronin has been relegated to trumpeting a deal that will never leave the domain of granola: 33 installs at 76-location Sun Tan City. That is less than one install for each remaining Ronin employee. It is interesting to see that the two biggest spenders at digital signage trade shows have shifted gears: in one case rethinking sales strategy and in the other changing the threshold of what is “big”.

Another highly visible industry veteran, Bill Gerba of Wirespring, recently introduced a stand-alone, repackaged version of the company’s FireCast software, dubbed EasyStart, designed to attract smaller deals for “just a few screens in a few locations”. Given the cost and time required to produce a new product, it would seem to be a hint that Gerba sees more opportunity (or less competition) at the low end of the deal spectrum. A line extension at this stage is an interesting indicator of one person’s assessment of market dynamics.

A final clue to impending change in the solution space comes in a recent blog post from Nate Nead. In his post, Nate contemplates the emergence of “white label” and “private label” digital signage programs, as well as the benefits and issues with such an approach. The clear implication of these programs is that new companies will emerge as solution/service providers, without the need to invest in intellectual property by developing their own solution. Rather, they will repackage existing solutions, which may be easier to come by as existing providers search for new revenue opportunities. This type of business model, which could be termed SESaaS (Someone Else’s Software as a Service), is clearly geared toward the mass market of smaller networks, where pricing can support the required overhead.

It may be premature to assume that digital signage penetration is high enough to support a global shift toward the smaller deals of the mass market, although evidence seems to indicate that such a shift, if not underway, is at least on the minds of many industry players. There still appear to be many elephants left to hunt, and it is likely that the ranks of the hunters will narrow in coming months.

Random Blog Hopping

2009-03-25T15:55:00.002-05:00

A few thoughts on potential blog posts have been running through my pollen-soaked and congested brain over the past week or so. The common theme is that each has emanated from other sources in the DOOH blogosphere, so perhaps commenting on all of them will result in something readable… or at least clear my head.

Congratulations to TouchTunes on the pending deal with Victory Acquisition Corp. announced yesterday. I was travelling all day yesterday, and only learned of the deal on Dave Haynes’ Sixteen:Nine blog. Under the terms of the agreement, it appears that TouchTunes will become a publicly (NASDAQ) traded and very well-capitalized company. Ron Greenberg and his team have built an impressive company and a gigantic network by any measure. It looks like one of the goals of the deal will be to further monetize the TouchTunes network and relationships with advertising. Looks like a good plan to me, and I am happy to see M&A activity of note in the industry.

Over on Wirespring’s blog, where the prolific Bill Gerba has enlisted a cadre of guest columnists, industry consultant Pat Hellberg posted a piece decrying the sameness of “elevator pitches” at a trade show. I can imagine that a potential buyer walking the floor gets an earful. As a long time trade show dray horse, however, my view is that people who have done a little homework never get an elevator pitch, they get a discussion. The folks with fake names on their badges who walk up and ask “what do you do?” get the elevator pitch. Meanwhile, Pat felt compelled to lob a couple of gratuitous softballs for EnQii and Reflect executives to smash down the fairway in sanctimonious fashion. I can't fault them for swinging away, but what was the motivation there? Forgive my inquisitiveness, but I wonder why Pat didn’t seem inclined to provide a platform for the CoolSign folks he selected when he ran the Nike network. Slipping into his industry hat, Pat puts out a call for an industry “meta-pitch” by asking rhetorical questions about what we are nas an industry. My take on that? We are neither “advertising”, nor “storytelling” nor “information exchange” per se. We are targeted out-of-home communications, capable of highly customized rich media messaging in the most appropriate delivery context. Not sure if that is elevator worthy, but I gave it a shot.

Aka.tv ran a piece by AV integrator Gary Kayye with his take on the DSE conference in Las Vegas. Mr. Kayye makes some good points about fragmentation, PCs and integration with personalized technology. Most of his points, as one would expect, come from the perspective of an AV person. A couple of interesting observations emerge: First, he describes the best pitch he heard as coming from a non-exhibitor, Westinghouse, who had set up camp in a suite at the nearby Hilton. Thanks for your support of the industry, Westinghouse. Way to go! Mr. Kayye also references Wireless Ronin as a “biggie” in the industry. I have tried mightily to refrain from piling on with regard to Ronin, but they are very publicly not a biggie, unless your barometers for bigness include executive turnover, wasted marketing dollars and cash incineration. Finally, Mr. Kayye makes an excellent point related to the chasm between AV integrators and IT integrators, and how the Europeans have done a better job of embracing the former. There is something there to learn from.

DailyDOOH uncovered a piece in Mediaweek by Show+Tell’s Phil Lenger. I have to agree with Adrian, it is a compelling and quick read. The article led me to Show+Tell’s website, which has some nice presentation of industry landscape. Well done.

Last stop on the blog tour is Nate Nead’s Digital Signage blog, where in a rambling post on content, Nate asks (with an intro that pays homage to David Bowie), if “Content is King, _________ is Queen?” Nate, even David Bowie would have to agree: Freddie Mercury is Queen. Rock on.

2-D or Not 2-D: The Question is When, Not If

2009-03-17T16:34:00.003-05:00

There has been lots of talk about convergence, with different combinations of digital signage, mobile and interactive getting most of the play. One of the more interesting points of convergence is digital signage and mobile. LocaModa has made lots of headlines and lots of friends with their very slick method of turning a cell phone into a remote control that can drive content on a digital screen. In effect, their method converges all three elements, using mobile to make digital signage interactive. As such, LocaModa has carved out a niche as a fulcrum between digital signage and interactive applications. But what their product does not do is make the phone itself interactive, it simply uses it (and the attendant network) as a tool for interactivity. It seems inevitable that using software on the phones themselves may well be the future lever for convergence.

The evidence is piling up: Apple’s iPhone AppStore has been a phenomenal success by any measure. The millions of iPhone users have shown little hesitance to add function to their device if it is cheap and easy. AppStore is both, perhaps with cool thrown in as a kicker. With the advent of pervasive 3G networks in the US, users are likely to evolve their view of cell phones toward way they are used in Europe and especially Asia: portable computing devices that happen to have phones built in, rather than phones that have some other capabilities built in, as we tend to see them in North America.

An interesting article in AdAge discusses one way that this merging of channels is likely to occur. 2-D barcodes, known as QR (quick-response) codes in Japan, are starting to make their way to the US. The technology allows cell users with a simple application installed on their phones to use their phone cameras to actually scan a simple barcode. The software interprets the code and redirects them to a web site that provides more information, special offers or coupons. Japanese 2-D campaigns have been launched from “magazines…outdoor posters…(and)promotional materials”. It is not a great leap to envision embedding a 2-D code in advertising or promotional content on a digital sign in order to gauge response and offer coupons and other opt-in information. The possibilities are endless, and case studies exist already. Scanning a 2-D code is clearly a step ahead of a text message/short code in terms of convenience, in that the phone does the communications work once the camera does its thing.

As the article discusses, there is the usual battle over standards and some element of cell carrier hegemony over choosing application providers and embedding 2-D scan software on the popular devices. But like anything else, demand and money will drive the carriers toward making choices to stay apace with their customers. As North American cell phone users adopt a more Asian-style view of that device in their pocket, we can expect software on the phones to play an important role in helping make digital signage content more engaging and effective. 2-D looks like an early favorite to be adopted, but there is certainly room for innovation.

The Value Of Results

2009-03-15T12:28:00.003-05:00

A breakfast chat at DSE about measurement as it relates to DOOH advertising has lingered in my mind. As mentioned in a post-DSE blog entry, Nikki Baird of RSR observed that advertisers and agencies seem to clamor for their comfort zone of traditional CPM (cost per thousand impressions) when evaluating a DOOH buy. Despite the increasing number of devices and schemes being brought to market to provide some proxy for measurement (of traffic, eyeballs, and with some occasional gaffes, gender) in a digital signage environment, it seems to me that the angst of the agencies is NOT about measurement itself: it is about value.

It is fair to say that advertising dollars do not and will not grow in aggregate in perpetuity. Recent evidence from big agencies seems to indicate that the big ad bucket will actually hold less water in 2009. So what really matters is how those precious dollars are allocated. To be sure, over the past two or three years, we have seen a marked shift toward alternative media, which includes the Internet, mobile and DOOH vehicles. Advertisers moving into these alternative channels do so with recognition that there are good reasons to be there.

Given their static or possibly shrinking budgets, media buyers must take a marketing Hippocratic oath when making their brand building investments, in effect “to do no harm” by shifting their allocations and making new buys. That is not always something that can be done with assurance when shifting from the established science of traditional media buys to the new world of digital media buys. Internet click-throughs and mobile opt-ins and SMS campaigns provide a way to measure interest and response, but advertisers have continued to struggle with the cost effectiveness and value of brand building via those types of campaigns. A typical DOOH campaign does not offer that built-in response meter analogous to click-throughs or text responses, putting a digital signage network buy behind the eight ball even when compared to the other primary digital media options. However, it may be that digital signage can emerge from the haze and claim an increasing share of brand dollars by demonstrating the best value to the advertisers.

The ongoing focus on cost, as measured by CPM or some proxy of CPM generated to placate nervous media buyers, is a red herring. It defies logic to think that 1,000 impressions on television, usually viewed in a home environment, have equal (or greater!) value than 1,000 impressions in an out-of-home environment that provides context for engagement. Perhaps an example would be illustrative. An imaginary CPG company has a new product, an analgesic pain reliever called “Bliss”. The product is great for headaches and muscle pain, but is primarily targeted toward arthritis sufferers and the 45+ demographic. The agency makes traditional buys for Bliss in magazines, newspaper FSIs, and television. Alternative media buys are focused on targeted web sites and a DOOH campaign in doctor offices, grocery stores and pharmacies. The media buyer struggles with the DOOH buy, because she feels the CPM as measured by a formula involving traffic, dwell time and loop length seems “high” to her. She makes the buy desite her hesitance, essentially taking what seems like a leap of faith. But is it a leap? Does a Bliss commercial during Grey’s Anatomy engage the target audience? How many are watching on a DVR, skipping ads? How many use the commercial breaks to do email, get food, or use the bathroom? What can engaged viewers DO if they are favorably impressed? On the other hand, if a Bliss advertisement (perhaps in 15-second short forms, repeated multiple times in an hour) is presented to a potential customer in a medical environment, there is context for engagement, and a halo effect from the environment itself. We know that a large majority of patients visit a pharmacy before going home from their medical appointment, presenting a scenario for multiple engaged impressions. When presented on screen in a pharmacy or grocery venue, the product is nearby and the opportunity to act upon an impression exists where it does not in the den or bedroom. The proper DOOH buy provides targeted viewers, context, credibility and opportunity. These add up to value.

Still, we must get past the leap of faith and provide a measure of that value in order to establish DOOH as a viable candidate for an increasing slice of the brand building spend. I am not sure that will come by measuring footfalls, dwell time or gender with more accuracy, although these measures will play a role in defining the reach of a network. It makes sense that measuring results will validate the value message. To do this, DOOH network owners might have to do a number of things to build their case, which could include the following and more:

• Provide collateral, such as traditional paper coupons, in the area of the digital display. These can easily be coded and measured when they are used.

• Incorporate electronic collateral and calls to action, such as SMS campaigns and web site couponing, into the ads themselves. This would also provide a measure of opt-in activities and potentially conversion.

• Offer samples where appropriate, perhaps including opportunities to receive discounts at retail (again a measurable event)

• Test product movement in stores and/or markets with ads running versus statistically similar stores and markets without the ads running. Calculate lift.

• Measure recall of brand messaging through opt-in email or web surveys after visits to medical or other non-retail venues.

DOOH provides an incredible medium for targeting and messaging consumers in a context conducive to real engagement. How networks, brands and agencies work together to create and place those messages, and then measure results rather than delivery, will dictate how the value of DOOH is perceived. Establishing value moves the conversation away from the traditional dichotomy of cost and gross impressions to one of contextual impressions and results. We need to move as an industry towards a results-centric focus, and in so doing differentiate DOOH from traditional media on value.

Research Backtalk

2009-03-12T08:49:00.002-05:00

This morning I found an interesting piece written by Fred J. Aun in Evan Schuman’s Storefront Backtalk retail technology newsletter. Mr. Aun provides a recap of findings in an ABI Research report on Digital Signage written by analyst Zippy Aima. Ms. Aima, formerly of Frost & Sullivan, has her roots in storage, DRM, digital asset management and security. Certainly not a stranger to digital media. The talking points that formed the basis for Aun’s review and Ms. Aima’s table of contents both are worthy of further discussion.

In the article, Aun leads with ABI’s assertion that retailer adoption of digital signage technology is being boosted by “reduction in prices for data storage and electronic goods in general”, and would ramp even faster if not for “data security concerns”. One can not argue that prices of electronics tend to decline over time, and indeed they have, especially on the big ticket digital displays critical to digital signage deployment. The concept of declining prices as a driver of adoption is hardly new (guilty!), but as the market has evolved, it seems clear that effectiveness of digital signage has become the biggest driver. I have to take issue with her case for storage costs being a driver of adoption however. Data storage is such a small component of the cost of operating a digital signage infrastructure that declines in costs of big disk (e.g. server level RAID arrays, NAS or even cloud storage) or small disk (media player hard drives) are not noticeable. The cost of data transport is far more relevant to adoption than data storage costs.

Aima goes on to forecast a 33% increase in the U.S. digital signage industry for 2009, although she appropriately hedges a bit based on the timing of the report (4Q 2008) and the subsequent implosion of the economy. Oddly enough, our own evidence here is that demand is amazingly strong despite the gloomy economy, so props to Ms. Aima on taking that stand.

An interesting tidbit follows in which Aima postulates that the abundance of technology vendors may actually be working against adoption, as it tends to confuse potential buyers. It is hard to argue the concept that the market is over-vendored. The economic cycle may do more to thin the herd than the long-predicted consolidation. I would make the case, however, that the source of confusion is really a lack of semantic resolution and general clarity regarding the various models of digital signage and how it is deployed. Hopefully, through the work of analysts like Ms. Aima, Nikki Baird, Janet Sherlock and others, a common understanding of the structure of the marketplace and the various technology models will emerge.

The next topic of discussion, security concerns, seems to have more to do with entering Ms. Aima’s personal comfort zone than any reality we have encountered in the marketplace. She points out that “connectivity is IP-based so networks become prone to being hacked when delivering content”. She asserts that encryption is essential. While we agree that security is always vital, our experience in the marketplace, especially with retail and health care venues, reveals that the security concerns do not center on the media players being hacked and bizarre or inappropriate messages being displayed. The security challenges arise when the digital signage network piggybacks on any element of the venue’s LAN/WAN backbone. The primary fear is that somehow the media players or other digital signage devices could be compromised to gain access to private data, especially credit card information at retailers, and patient records in medical venues. PCI compliance is an incredibly large issue for retailers today, as readers of Storefront Backtalk would attest. HIPAA regulations loom over all medical environments. So encryption is not necessarily the panacea; proper device management and network design may be more important to help assuage fears of the real estate owners.

Examination of the Table of Contents for Aima’s 69-page report reveals what appears to be a thorough examination of market drivers, potential restraints and trends, some of which are noted above. She includes a list of 16 “key players” towards the end of the report, and here she may have revealed a bit of naiveté with respect to the landscape. (Objectivity disclaimer: Aima did not include RDM on her list.) Of the sixteen “key players”, I count no less than eight that simply do not qualify for the adjective “key”, never mind the noun “player”. I see one that has already exited the space. I do not see the major turnkey providers who made their bones in retail, PRN and CBS Outernet, I do not see a couple of other worthy competitors who have claimed fairly major victories at significant venues, or one who’s largest retail install provides an instructive case study in failure. I do not see RDM. Since a research report is generally purchased, the contents of it are often regarded as beyond reproach. By deigning to identify a list of vendors, the writer implies that this is the relevant field for buyers to consider. Clear oversight of several important players in the space, as well as succumbing to hype, self-promotion or search engine results to include others dampens the impact of what appears to be some very good work. Give me a call, Zippy. We can discuss.