Power Signs 2006
By John Latta, WAVE
0628 11/20/06
San Diego, CA
September 25-26
, 2006
Power Signs is a small but effective conference produced
and managed by Intertech Pira. The WAVE has attended prior Intertech
events in OLED and found them excellent. The event is focused on prepared
presentations, panels and a small exhibit area. The quality of the presenters
and attendees was high.
Digital Signs Market Dynamics
Between the panel discussion, several speakers and the
introductory remarks the outline of the nascent digital signs market
unfolded. Summarized below are some of the key points.
The three top venues for digital signs are: outdoor,
retail and public space. The vast majority of today’s digital
display technology, LCD and Plasma, are in indoor spaces. An example
was cited of an outdoor display using a projector but overall the outdoor
environment is too harsh and there is a lack of enclosures to protect
the displays from direct sunlight.
When speaking of digital displays, the relevant term
is a network of displays, many dispersed widely across geography. In
fact, from an advertising perspective the larger the coverage, such
as the largest 100 cities in the US, the more likely ad space can be
sold. In this model, the ad space is more like that of radio or television.
In the ad context, this is called “place-based” advertising.
Just as an advertising client would have a radio or television advertising
plan it is implied that they should also have an “outdoor” or
a “place based plan.”
Digital signage fits between traditional broadcasting
and IT. The ways in which it is used today is as both a broadcast medium
with many of the characteristics of an IT infrastructure.
Although it is much too early to speak of digital signage
saturation it was cited that Times Square had 240 digital signs in
4 square blocks.
Terms such as “dynamic play lists” were used
and the potential migration to interactive displays which respond to
an individual were suggested. Considerable emphasis is being placed
on the quality of content to avoid boredom and content rejection. But
it was cited that in today’s market many consumers find the advertising
on signs useful. So much so, that digital signage content decreases
the apparent wait time in lines – the line appears to be shorter
while watching a sign.
There is much discussion on the effectiveness of these networks.
The three relevant terms used are: Visibility, Recall and Engagement.
Visibility is also awareness and represents if consumers notice the
signage. Engagement is the consumer response to the sign and Recall
is about memory of the display content and in advertising speak – the
brand awareness lift. But the effectiveness of the medium can only
be fully assessed if it influences buying behavior. Here the statements
at Power Signs were much less confident. For example, it was asked
- Where is the best place to put signage in a supermarket? If one wants
to influence buying it should be next to the product where the buying
decision is to be made. When it comes to check out, the case was made
that these items near check out, have the highest gross margins in
the store. If a display at this location only diverted attention from
this sales process, the signs could actually decrease sales.
The Frost and Sullivan market study on the digital signage
market showed the typical hockey stick market estimate. The advertising
market in 2006 was estimated to be $750m using about 15,000 signs.
By comparison the radio advertising market is $4B. In 2010 they estimate
the digital signage market will exceed $2.5B with 55,000 displays in
place.
In a typical network installation the cost of the displays
is approximately 40% to 60% of the unique location spend. When asked
how elastic the market is based on the cost of the displays, the expectation
is that the display component will continue to decline. That is, digital
signage, if it uses LCD or Plasma panels, will benefit from the continuing
declines in the prices of these components. Thus, the current digital
signage market is not seen as particularly price elastic.
When it came to the types of displays used it was stated
that if the content is computer generated, that LCD panels work best,
and if the content is video based, the Plasma panels have this market.
Yet, in all cases the discussion is about digital signs which have
some type of dynamic content.
The expectation that these networks have a life span
of 2 – 3 years and in some cases as long as 5+ years. An interesting
perspective is that it is best to decommission a network when it can
still be sold used and useful. Many states how have electronics disposal
laws and the cost of discarding the electronics can be substantial.
Thus, it is far more cost effective to sell it and avoid these costs.
On the content side, it was suggested that there could
be a synergy between digital signage content and web content. That
is, if one sees content on a sign it these is value to be able to return
home to the web and finish the content or the buying experience.
When asked about the potential for non-advertising forms
of digital signage, such a corporate networks, this was characterized
as a “trace” market. Yet, the conference discussion is
that there can be many useful functions for these systems such as off-store
hours training.
Cisco – Media Drives Router Usage
Cisco Manager, Janice Lee Litvinoff, introduced the Cisco
digital media systems, which were announced on that day. The themes of
the strategy are:
The network is the platform for media;
This platform supports anywhere, anytime communications; and
The platform allows access and use of media with ease and flexibility.
It is their view that Digital Signage is a “network
of centrally managed digital displays.” Media includes video, images,
animation, context, text and tickers. It can be applied to the following
vertical markets: retail, banking, healthcare, transportation, education,
sports and entertainment.
The value of the Cisco approach is that it is integrated,
simple, flexible and thus strategic to the organizations that use it.
In response to a question it was stated that Cisco will
have an announcement in support of the digital signs market by Q1 2007.
The presentation was very enterprise focused. But Cisco stated that they
are in more markets and they would also support the disparate digital
signs market.
Outdoor Signs – They are not the same as indoor
Bob Klausmeier, Yesco Electronics, gave a presentation
on outdoor signage. This is also being impacted by technology. Points
included.
Most outdoor digital signs use LEDs. In spite of the
fact that many of the outdoor digital signs can show video there are
many laws which prohibit video. The general assumption that one should
not show video outdoors.
Most outdoors signs are seen by drivers and the intent
is to get them to stop and come in the store.
The massive 40’ wide billboards are going digital.
The typical payback is 11 months for signs that can cost up to $1m.
One of the major advantages of these signs is day-parting. This is
the segmentation of the sign content by time of day. This allows for
sales to more advertising agencies and to make the ads more targeted
to the audience interest. A typical large sign will have 6 – 8
advertiser messages in a loop and these loops can change by time of
day. These large signs have been very successful with long periods
of advance sales – as stated they are “fully booked.”
Described as the “Ultimate Digital Media Scenario” is
one where there would be a large digital billboard which draws attention
to drivers and then a digital pylon sign near a shopping center which
then led to signs in the center. The messaging would be consistent
for this scenario to work.
Top 9 Secrets of Digital Signage
Gregory Shandel, Scala, provided an overview of some of
the major issues in digital signage.
A typical transaction based network cannot cope with
the demands of video.
There are few tools to create playlists for digital signs.
Some at the conference disputed this. The response
was that Flash and web technologies are quite adequate for content
creation. One of the arguments against PC based content is that Flash
is compute intensive and this implies a computer which generates
heat and prone to failure.
Most Digital Signage implementations are composite video
with no ability for HD or local content.
This is more like broadcasting that the network of
digital signs Cisco spoke of.
Passive and interactive modes are typically supported
independently implying two infrastructures.
Put in another way there is an analog feed to the display
and IP network for control and interactivity.
ROI is complex and could well cross many organizational
lines in a company.
Objectives of the digital sign network should be geared
towards driving revenue in stores.
MPEG, Flash and AVI files cannot be dynamic without some
type of layering technology.
Many display technologies can support digital signs,
not just PDP.
Just because one can gain “free” access to
a location for digital signs the actual cost will not necessarily be
free.
An interesting tidbit – in the new Heathrow Terminal
5 they are planning on using 82” LCD screens throughout.
Display Technology Applied to Digital Signs
Chris Connery, VP Research, DisplaySearch provide an overview
of how digital displays support the digital sign market. Key figures
presented included.
The public display market is estimated to be:
2007 – 1.3m units
2009 – 2.8m units
2010 – 3.2m units
The revenues from the shipment of displays is estimated
at:
2007 - $2.5B
2009 - $3.3B
2010 - $3.4B
The market has share by technology as
Q2 06 – 20% LCD; 80% PDP
Q1 08 – 53% LCD, 47% PDP
LCD and PDP, in the 40”/42” space are price
converging.
Q3 06 – LCD $2,273; PDP $1,624
Q1 09 – LCD $1,544,, PDP $1,222
WAVE Comments
There is a black cloud that no one wanted to talk about – advertising
saturation. Already there is commercial avoidance with TiVO boxes and
even the Quiet Car of the Heathrow Express allows individuals in a public
venue to escape advertising. Thus, as the industry grows careful attention
needs to be paid on the level of turn off by consumers.
There is one common theme from the advertising context – these
displays seek to take more money from the consumer pocket book or purse.
Indoor displays are in product areas, thus, there is the desire to turn
presence into higher spending.
It was interesting to hear the response of some individuals
who work near these display products. If there is audio, which can become
distraction, the retail employees will go to great lengths to turn it
off even to the point of destruction.
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