CEO of Wirespring digital signage Bill Gerba is never at a loss for words when it comes to discussing the ins and outs of the industry. His company's blog is one of the most read resources on the net, but not everyone agrees with his opinions. Here's a dissenting view from the founder of ipSigns that outlines the real current costs of installing a single-location digital signage system. As he addresses at the conclusion of the article, the one thing not included in this budget is content creation. Getting customizable screen content that can be reworked and repurposed can save you a lot in the long run.

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The True Cost Of Retail Digital Signage:
Where Bill Gerba Gets It Wrong

by Terry Scannell, founder, ipSigns

November 7th, 2006

I am a big fan of Bill Gerba and his blog. There is no question that he has added to education, understanding and debate in the networked-digital-signage (NDS) industry. His 3 November update of his earlier blog of 2004 in which he describes a comprehensive budget for a single-site digital-sign system over three years is no exception. (There's a link to the blog at the end of this article.)

On my first read of the blog I agreed with it. But after I was able to really analyze it I found myself in disagreement with not only the budget it proposes, but also how it was calculated. I conclude that the 2006 budget understates costs by at least $1800 and possibly as much as $2600 over the three years.

Here are the numbers from the 2004 article and the 2006 article, followed in each case by my comments in bold. All figures refer to a three-year, one-location installation.

• 2004: 42-inch plasma screen $2500
  
• 2006: 40-inch LCD $2500
  
• I agree: $2500
  
• 2004: player hardware $1500
  
• 2006: player hardware $1500
  
• PC or Apple $1000
  
• 2004: ceiling mount $500
  
• 2006: ceiling mount $250
  
• I agree: $250
  
• 2004: player software $500
  
• 2006: player software $500
  
• Budget is too low: $900
  
• 2004: management software (three years) $1800 ($50 per month)
  
• 2006: the same: $1800
  
• Included in tech support: $0
  
• 2004: 24/7/365 tech support (three years) $3600 ($100 per month)
  
• 2006: not included this time – moved to client so $0
  
• Not realistic to push on to client: $3600
  
• 2004: installation $1400
  
• 2006: installation $1400
  
• Too high: $1000
  
• 2004: project management $300
  
• 2006: project management $300
  
• Too low: $800
  
• 2004: total $12,100
  
• 2006: total $8250
  
• My total: $10,850

Let's take a look at each item.

Display hardware
I agree that today the price of a 42-inch LCD ($2500) is about the same as that of a 42-inch plasma screen two years ago. And the use of large-format LCD screens in NDS installations is in most cases the best practice today.

The main reason for this is that plasma screens start to degrade and lose brightness as they are used. This has led some installations to look good when they are new but then look tired and worn out after two years or less. LCD screens, on the other hand, either work or they do not. The backlight burns out like a lightbulb.

The only exception to this general rule is where the NDS system owner or operator wants to run full-motion, full-HD content. There is nothing better than this type of content played on a new plasma screen. The image is brighter and the motion more fluid than on an LCD screen. You can also buy a plasma screen for $1200.

Media-player hardware
Next the article discusses the price of the media player. This is where I start to quibble. Bill states: "Media player and software costs have remained relatively static over the past few years (though the quality and capabilities of both have gone up), but the cost of ancillary equipment like mounts and stands has dropped sharply."

The fact is that the price of player hardware has dropped significantly if you are using a standard PC or Apple player as opposed to a dedicated player like WireSpring's. In addition, the power, functionality and small form factor you can get for this price are truly amazing. For that reason, I would reduce the budget allocation for player hardware to $1000 as opposed to $1500. So I have a saving here of $500.

Installation hardware
We are in agreement about the $250 allocation for wall or ceiling mounts. This is a supposedly small detail that some operators or owners have forgotten. When this small item is multiplied by a thousand or more locations it can add up to real money.

Player licence
Again, this is an area where I have a different perspective. The article places the price of one software player licence at $500. While some technology companies are reducing their prices for a single licence to $500 this is not the norm. A one-off player licence can run from a low of $450 to a high of $2000 (e.g. CoolSign), which frankly is too high. Keep in mind that some companies do not want to sell just one software licence and price their products accordingly.

When discussing price, one important question to ask is: "for what?". There can be a vast difference in the functionality of software platforms. Some are simple digital-sign systems that do a great job of playing content and controlling it. Others provide full interactive functionality and full back-end integration with your CRM, inventory and other systems.

I am going to call this price $900 for a single-player licence. Obviously if you order in larger quantities suppliers are more than happy to discount. Now I have given back $400 of the savings I showed above. I am still ahead by $100.

Network operations and support
Bill goes on to state that many companies are deciding to take network management and monitoring in-house. To some degree this is true. But I always want to ask a company that does this what business they are in – the retail business or the digital-signage business?

What I have found is that many clients say they want to do this until they start to understand the work required to actually do it.

This area is where I really start to have a fundamental disagreement with Bill's budgeting. What he is saying is that the clients can pick up first-line network support. This of course saves money - in this case, $3600 over the three years.

Remember, though, that when talking price the next question should always be, "for what?". I have not talked to a lot of CTOs in recent years who feel their staffs do not have enough to do; few of them feel that what their IT organization needs is to run a private broadcast network in their copious free time.

So to me this is really not a reduction in price at all. It is simply moving a rather large budget item from the NDS provider's scope of work to the client's. So I adjust Bill's budget upward by $3600.

Next, Bill places management software and technical support at $1800, installation at $1400 and one-time project management at $300. This brings these three items to $3500, 42 percent of the total budget.

Let's take a look at each one. In my mind, 'management software and tech support' is just another way of saying 'network operations'. We already paid for that above. I take that out and save $1800.

Installation costs
As for installation, I have talked to one rollout specialist which says a budget for the physical installation of the hardware and hooking it up to an Internet cable should be as little as $500. Maybe Bill is thinking about a different scope of work where it is necessary to install broadband and configure it on-site.

Again, this is an area where numbers can change fast depending on scope and site conditions. So maybe Bill is being conservative. I have decided to be a little less conservative, reducing the budget to $1000 and picking up a saving of $400.

Project management
I really disagree with this one. The 2004 and 2006 blogs budget the costs for a one-location project management fee at $300. In fairness, if it is only one location $300 may be right. We also know that clients hate to see a line item for this.

But this is one of the areas where many projects go wrong – way wrong. Let's face it: it is as disruptive having the installers come to your store a day early as it is having them come a day late. Oh, and did we mention the fact that we need to get written landlord approval to put that satellite dish on your roof? And on and on it goes.

I raise the one-time project management budget by $500 to $800. I think that's realistic. Obviously, there are many exceptions, and just because it costs $800 to do one site does not mean you can take $800 and multiply it by 1000 locations.

There are some economies of scale but fewer than you might think. Someone still has to make sure that the installers have communicated with the store managers and that the schedule is locked. A large part of this industry is service.

The elephant in the room
The one item that is not budgeted for is content. Bill's 2006 blog talks about this, but there is no way to have a low number for this, especially if you are not spreading the content costs over multiple locations.

Article originally appeared on aka.tv

Signage and professional display market to reach US$13billion by 2010
By Sanju Khatri, iSuppli [Friday, October 20, 2006]

Despite expected rapid price declines for displays in the next four years, the digital signage and professional display market will grow to US$13 billion by 2010, a 3.6% compound annual growth rate (CAGR) from US$10.9 billion in 2005, iSuppli predicts.

As hardware improves and the technology matures, display manufacturing costs will decline from their presently high levels, leading to steep price declines across the board for flat-panel display (FPD) manufacturers. However, the shipment opportunity in the digital-signage market is substantially higher than the moderate revenue growth forecast. Digital signage and professional display unit shipments will rise at a CAGR of 24.1% between 2005 and 2010.

Following the typical seasonal pattern, the worldwide market for signage and professional displays reached US$2.6 billion in the second quarter of this year, a 5% increase from the first quarter. This is consistent with the digital signage market's predicted revenue CAGR of 3.6% between 2005 and 2010.

Moving indoors

However, revenue growth will not be driven by increased unit shipments alone, as new opportunities have emerged for display manufacturers to sell their products for higher margins in less-crowded markets, iSuppli believes.

These new opportunities are centered in the indoor venue segment, which consists of restaurants, museums, hotels, casinos, movie theaters, auditoriums, trade shows and banks. iSuppli forecasts the indoor-venue application market will garner about US$4 billion in revenue by 2010, up from US$2.9 billion in 2006.

During the second quarter of 2006, the indoor venue segment generated US$659 million in revenue, driven mainly by installations across the hospitality display market. iSuppli believes hospitality will displace the conference room market from the top spot in the indoor venue segment in the third quarter of this year. In preparation for the holiday season in the fourth quarter, there also will be increased installations at lodging, retail and recreation facilities.

Computer Dealer News, September 8, 2006, Vol. 22, No. 12

	In three years more than 900,000 displays will be sold in North America
	9/28/2006 1:42:00 PM
	by Paolo Del Nibletto

The digital signage market is showing signs of entering the hockey stick phase. According to a recent Frost & Sullivan report, by 2011 the North American market for large flat panel displays for signs will be worth more than US$3.5 billion. Today, the market is a respectable US$800 million. Or as research firm Display Search reports, 433,000 displays were sold just for signage as of last year. That report also notes solution providers are selling between one to 50 displays per location with an average of four per site. The top manufacturers are NEC Display Solutions, Samsung Electronics, LG Electronics, Mitsubishi, Sony, Sharp and the 50 plus other vendors who have seriously overcrowded this space. The challenge for solution providers in this burgeoning market is that digital signage is not a transactional sale: it is a solution sale. That means a successful VAR needs to have expertise, some smarts and installation know-how. Retailers over VARs Currently the market is being served by retailers. According to a Gartner Group study, 28 per cent of IT retailers in North America are providing flat panel displays for digital signage this year. Gartner expects that number to increase to 33 per cent next year. Solution providers "are graduating beyond the display," said Doug Albregts, vice-president of sales and marketing for NEC Display Solutions, based in Itasca, Ill. Albregts said solution providers are realizing that they need to talk beyond the panel itself and provide wireless cable, mounts and software to deliver a whole solution rather than a product. "Customers have a keen interest in digital signage and public information display solutions," Albregts said. However, NEC is only dealing with 40 partners, which it helps to facilitate customer solutions. Albregts said the company could easily do more because the market is growing. Display Search estimates that the digital signage market will have a need for more than 900,000 displays by 2009. Digital signage applications work, according to a recent InfoTrends study that polled consumers. The study found that digital signs have a 47.7 per cent effectiveness on brand awareness, increase the average purchase amount by 29.5 per cent, create a 31.8 per cent upswing in overall sales volumes, generate a 32.8 per cent growth in repeat buyers and pull in 32.8 per cent more store traffic.

Here are some highlights from The Arbitron Retail Media Study-
Volume II: Consumer Interest and Acceptance of Video Displays in Retail Environments. ____________________________________________________________________

Overview

New forms of broadcast media have emerged over the past decade. One of the most exciting innovations has arrived in the form of retail-based video programming. Video screens are popping up in places such as supermarkets, department stores and larger retailers. The video content is designed to inform and entertain shoppers, as well as promote merchandise.

Retail video harnesses the power of recency media planning. It is the idea that advertising media "sell" those consumers who are ready to buy the product. It is as if there is a window of opportunity preceding each purchase where the consumer is most susceptible to a brand message. Advertising's job is to influence the purchase; media's job is to put that message in the window. Retail video takes the proven impact of broadcast-style ads and places i directly at the point of purchase.

Definition of Terms

Throughout this summary we will refer to the following terms:

   Retail video: Video programming (entertainment, information, or commercials) played on screens--other than sets in the TV department--in a retail store.

   Retail video advertising: Spots or promotional content that is proadcast on retail video displays.

Significant Highlights

One-third of Americans have watched in-store video. Thirty-three percent of consumers recall seeing video screens in a store--not counting sets for sale in the television department.

One in 10 shoppers make a habit out of watching retail video. Ten percent of consumers who have seen video screens in a store say they either always or frequently stop to watch. Another 32% sometimes stop to view video screens they pass in a store.

Most video programming viewed featured products sold in the store. Eighty-one percent of shoppers who have seen retail video say the programming focused on merchandise available in the store. Almost half (47%) recall learning about specials or sales from the video displays.

Over half of retail video viewers think more stores should install displays. Fifty-two percent of the cnsumers who have watched in-store video feel that more stores should run video programming.

More than three-quarters of retail video viewers find the screens helpful. Sixteen percent of the consumers who have seen video in a store feel the displays that feature product or sale information are very helpful, and another 62% find them somewhat helpful.

Close to 30% of retail video viewers have made an unplanned purchase. Twenty-nine percent of the consumers who have seen video in a store say they bought a product they were not planning on buying after seeing the product featured on the in-store video display.

If given a choice, 42% of retail video viewers would prefer to shop in a store that has video displays. Over 40% of consumers who have seen video in a store say that in the future they would choose to shop in a store with video screens versus one without.

Consumers are most insterested in video that focuses on store sales, product information, and special events. Eighty-one percent of all consumers, regardless whether they have already experienced in-store video, are most interested in seeing video programming for the store they are in--including sales and specials (81%), product information (72%) and special events (68%).

Young adults are interested in watching music videos while they shop. Seventy-two percent of consumers age 18-34 are interested in watching music videos on video screens in the stores where they shop.

Almost half og male shoppers are interested in sports news and scores. Forty-six percent of men are interested in getting sports updates from video screens while shopping.

Comments and Recommendations

Shoppers are extremely receptive to retail video. Consumers like in-store video displays and want to see more of them. This benevolent attitude toward the medium can reflect well on the advertisers.

Retail video stems the tide of commercial avoidance. New technologies such as the DVR, video downloading, and cable/satellite Video on Demand are giving consumers unprecedented control over programming and the commercials normally associated with them. Retail video delivers a broadcast style message that cannot be circumvented.

With so many new and exciting ways to advertise being developed recently, it's tough to decide which methods are the most effective, both in terms of cost and overall customer outreach. The most popular emerging blend of technology and marketing is digital signage, video displays located in retail environments or other public places. The content on these screens can reenforce brand identity, create a unique and entertaining customer experience, and show eye-catching advertisements. As the cost of the necessary equipment gradually decreases, digital signage systems have become more common in a broader range of environments. But exactly how effective is this new technology and how can you measure your return on investment?

This blog is dedicated to reporting the latest information, studies, and statistics about dynamic media, narrowcasting, out-of-home advertising, and the other specialized factions that make up the industry of digital signage.