Understanding the value of digital signage starts with thinking of it in a new way.
Since the inception of digital signage, businesses have struggled to develop a successful argument for return on investment (ROI). A big problem has been a narrow definition of what digital signage is and how it is applied. The name “digital signage” tends to convey an image of electronically updating signs or billboards conveying a specific message to a general audience. Visual communications is a better description of what this technology application provides, and this re-definition helps frame the debate around a two-way exchange of information within an overall communication strategy. ROI provides a measurement of project success, but makes the assumption that the costs and returns can be isolated from the rest of the business. When visual communications is viewed as an integral part of your communication network and facilitates an exchange between your intellectual assets (information) and your audience (customers, employees or visitors), you have the opportunity to make those assets work harder for you — although it will be difficult to measure the ROI.
Calculating a return on investment is always a nebulous task. There are some hard numbers that you can define based on your current tasks, but it is difficult to make a 1:1 comparison when you change a process. Some have tried to calculate the cost of hardware, bandwidth, software, and installation against the cost of printing, distribution and disposal for printed posters, but that assumes that one is a direct replacement of the other. A poster is a single unidirectional message (information push) to a broad audience that relies on a labor (and time) intensive update process. The frequency of updates has a direct correlation to the cost of posters versus digital displays and the impact of a campaign. Digital displays can instantly deliver targeted content so lead times for a digital campaign is significantly shorter than a paper campaign.
When a digital billboard can display 3,600 different 15-second ads in a 15-minute loop as opposed to a single paper ad running continuously, is it hard to understand why so many billboards have gone digital? Due to local restrictions, many of these large displays (especially those next to highways) cannot allow motion, so the ads are static. This is one of the few examples where the electronic poster analogy works. But billboards are a small part of a much larger industry and the comparison falls short when you consider a full digital signage solution.
CAPTIVATE WITH INTERACTIVITY
There is no such thing as a captive audience; with cellphones, iPods, GPS, and other portable electronics, we have a lot to keep us occupied and distracted. Communication is an exchange, and if you want people to look at your screen, you need to engage them. Your content must resonate with the viewer, which is why interactivity is such a fast growing part of digital signage installations. Giving the viewer an opportunity to interact with your content allows them to frame the context under which you can deliver your message. Without that interaction, you have to make assumptions about who the viewer is and what information is applicable to them. Influencing viewers is an imperfect science and the results are largely intangible, unless the viewer can provide information back to the seller.
In retail applications, digital signage pundits often cite statistics about sales lift (typically 16 to 27 percent) as proof of ROI, but the evidence can be misleading. We really don’t know how much of a sales increase we can attribute to the digital signage versus other factors; we just know that sales increased, digital signage was a component, and the increase was significant (if not quantifiable).
The real irony in this scenario is that sales uplift is only the tip of the iceberg. Most retail installations ignore the real potential returns available because they only attempt to push information to consumers. If a feedback mechanism such as a vision tracking system, RFID tags, or product lift mechanism is utilized, the message can be adjusted to suit the viewer based on their input. This will likely improve the potential for a sale since the viewer is now a participant and the system is facilitating their decision. But don’t underestimate the value of the data generated by the interaction. By interacting with your digital signage system, a live customer has just provided you a wealth of information about their preferences that would otherwise be very difficult and expensive to obtain.
As an example, if you were selling digital cameras, you would likely have several models available for customers to pick up and sample. By incorporating the lift mechanism into your display, as a customer picked up a camera, the digital signage system would show information about that camera based on a dynamic query of the POS system. If the customer picked up a second camera, the digital signage would show a comparison between the two devices. The store could incorporate touchscreens so customers could access additional information such as purchase options, pricing plans, etc. if they desired.
Since technology changes rapidly, and competitive pressure forces retailers to update display models often, managing inventories across multiple stores in a large geographic area is a very expensive proposition. In some cases, you might have to pay transportation costs to move product between stores so that you could purge inventory to get ready for new products and promotions. What if you not only knew what people purchased (through your POS data), but what they sampled and compared in the weeks leading up to the actual purchase? And you knew this information up to the second at each location and time of day? That would allow you to turn inventory faster (substantially reducing your inventory costs), reduce your transportation or handling costs, and better plan product promotions. The potential savings could be significantly greater than the profit from a 16-27 percent increase in sales.
In the retail world, the people involved in digital signage decisions are often on the marketing and sales side of the business, but the biggest benefit might reside with the operations group. Wal-Mart became the world’s largest retailer because they understood how to combine aggressive sales with efficient logistics. When you stop thinking of digital signage as a mechanism to push messages and start thinking of it as a conversation with your audience (visual communication), you dramatically expand the return on that investment.
CORPORATE COMMUNICATIONS
Digital signage is not just a medium for advertising — communication challenges exist everywhere. Digital signage is widely used in corporations, schools, healthcare facilities, and manufacturing plants. Placing information on large displays where it is clearly visible has several advantages. Placing common information on large screens gets it in the open and reflects the values, policies, and philosophy of the organization. Information should go to people wherever they are and when they need it; they shouldn’t have to go looking for it. Providing real-time information about operations to staff that have the most impact on results empowers employees, increases efficiencies and creates consensus towards common goals.
You can usually find static charts of last week or last month’s results against key performance indicators on the bulletin boards around most companies. These graphics provide feedback to employees, but the information takes time to assemble, is prone to keying errors, and is outdated the minute it is posted. Forward-thinking companies extract information directly from their databases and display it in real time on their digital signage system to the employees who can directly effect change. Poor internal communications is the hallmark of underperforming companies; digital signage is a potential solution, but only when integrated with a business’s overall communication strategy.
It is a common practice to tie employee compensation to performance goals. Does better (more timely and accurate) reporting produce better results? Based on the customers who have done it, the answer is a resounding yes. But the results will vary depending on your industry, corporate culture, and compensation plans. Again, people don’t live in a vacuum, and the return on a digital signage investment depends on multiple factors — you cannot isolate one portion of the investment and measure the impact on the overall system. ROI is always diminished when digital signage is approached as an independent activity. Integrating it into an overall communication strategy allows you to maximize your return, although accurate measurement becomes difficult if not impossible. Results will vary by installation and depend on the extent of integration with other aspects of the orgnization, as well as the capabilities of the system selected.
Jeff Collard is president of Omnivex Corporation. He can be reached at info@omnivex.com.