Frost and Sullivan estimates $1.1 billion business in five years
December 6, 2007 by Dave Haynes
A new report by consultancy Frost and Sullivan estimates the digital signage systems market will reach $1.1 billion in revenue worldwide by 2012, and the 2006 revenue for the market hit $313 million.
“The ability of digital signage to enhance brand image and display promotional messages using targeted full-motion video messages at the point of purchase makes it an opportune medium for advertisers,” said Frost & Sullivan analyst Aravindh V. in a news release.
“The effectiveness of traditional mass media as an advertising medium has been steadily on the wane over the years,” added Aravindh V. “Dwindling attention spans and lack of sensitivity toward mass advertisements has meant that advertisers now need to deliver engaging content that is relevant to the specific target audience through emerging marketing tools such as digital signage.”
The ability of digital signage to enhance brand image and display promotional messages using targeted full motion video messages at the point of purchase makes it an opportune medium for advertisers. This dynamic medium that allows marketers to reach and engage their audience with relevant content and is also a part of a variety of environments such as: retail, hospitality, government and transport.
However, the lack of universally accepted standards for measuring the impact of digital signage on sales has meant that the medium is deemed risky compared to traditional marketing tools such as TV and radio. A further challenge is the low level of consumer awareness about the industry as a whole.
“Until October 2006, there were discrepancies even in standards such as terminology,” explains V. “For instance, the phrase digital signage is prevalent in the U.S., while Europeans address their systems under the name ‘narrowcast networks.’ Other names used by market participants include digital media networks, in-store TV networks, captive audience networks and so on.”
The industry has been boosted by the announcements of two parallel projects by the point-of-purchase advertising institute (POPAI) and the in-store marketing institute (ISMI) to standardize measurement and analysis of in-store media. The success of these studies should facilitate the alignment of digital signage with traditionally measured advertising channels such as TV or radio. Further, the recommendations by POPAI in 2006 have, to some extent, dispelled the confusion that surrounded the terminology employed in the industry.
I tried getting the actual report from Frost and Sullivan, but they apparently insists on running a business and didn’t want to give it to a highly influential (and cheap) industry blogger.
What they do have online and free is an overview and tantalizing summary of all you are missing if you don’t buy this report, which doesn’t seem to have a list price but likely has a few zeros.
Here’s the overview, the basis for a lot of the press release:
With dwindling attention spans and declining sensitivity toward mass advertisements, the effectiveness of traditional mass media as an advertising medium has been steadily on the wane over the years. Customers today look for increased interactivity and personalized communication channels and recognizing this, marketers are increasingly directing their advertising dollars toward mediums such as the Internet, e-mail, and digital signage, wherein groups are more easily targeted.
Irrespective of the media employed, consumers can mentally block out promotional messages sent through e-mail, television, radio, billboards, and others when they are not interested in making a purchase. On the other hand, when they are in a shopping mall or a c-store, making purchasing decisions, digital signage helps reach customers at the opportune moment and is consequently becoming an integral part of brand-building strategies.
However, the lack of established media buying standards and measurement systems is a significant restraint for the fledgling digital signage industry. A further challenge has been the low level of consumer awareness about the industry as a whole. Digital signage is a complex undertaking and the value chain includes a variety of participants ranging from display providers to A/V distributors.
Until October 2006, there were discrepancies even in non-technical standards such as terminology. “For instance, the phrase digital signage is prevalent in the United States, while Europeans address their systems under the name ‘narrowcast networks’,” notes the analyst of this research service. “Other names used by market participants include digital media networks, in-store TV networks, captive audience networks, and so on.”
Asia Pacific Promises Considerable Opportunities
The Asia Pacific region holds significant potential for digital signage, as countries in the region are making rapid strides in their digital signage deployments. For instance, governments in China, Singapore, Malaysia, and Thailand have already made major investments in adopting digital signage, or are in the process of finalizing deals. The key applications include public notices, real-time weather and forecasts, public television while waiting in government agency premises, propaganda through documentary films, and so on.
The retail sector is also emerging as a major driver for growth in Asia and key markets include Hong Kong, Malaysia, China, and India. In Malaysia and Hong Kong, most upcoming shopping malls are actively considering digital signage at the design stage itself.
Overall, the world digital signage systems market grew at a rate of 21.3 percent in revenues terms in 2006. The merchandising model is expected to drive growth in terms of deployments worldwide compared to the advertising model. Since the impact on ROI is measured in terms of increased brand awareness, the sales cycle tends to be much shorter. This is especially true for big-box retailers and major consumer brands.
“Frost & Sullivan expects network operators to embark on several pilot projects that will eventually evolve into full-blown rollouts providing the momentum for advertising revenue growth,” says the analyst. “The success of these projects will help develop better pricing models and in-store media measurement standards.”
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