The WAVE Report
Issue #0628------------------11/20/06

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0628.1 Power Signs 2006

0628.1 Power Signs 2006
By John Latta

San Diego, CA
9/25 – 26/06

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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