Look-ahead: The Industry Point Of View

September 8, 2011 by Dave Haynes

At the start of 2011, I asked a pile of people who run companies in this sector to provide their own points of view on what will happen.

I focused on execs and influencers who, for a variety of reasons, don’t tend to write all that much in blogs or trade pubs, and therefore don’t have as many opportunities to share their ideas. I’m very appreciative of the 10 execs who found time to respond (and understand how holidays kept others from doing the same.)

In no real order …

Chris Riegel, CEO, Stratacache

Three really important things to watch for 2011:

1 – The emergence of interactive – virtual reality via Kinect. Digital out of home will be significantly changed by the ability to interact with displays via gestural and motion-based sensors/cameras located on/in digital displays. Leveraging the hundreds of millions Microsoft spent on developing the technology that is now broadly available via the open source world is a game-changer.

2 – The fall of (two) major players in DOOH today. With the imminent demise of the largest European OOH network days or weeks away, and the potential for a surprisingly quick fall of one of the larger, well-funded, rising U.S. DOOH networks, advertisers and media companies alike will yet again question the maturity of the space.

3 – Evolution of the display. Forget the standard ’16×9′ format (pun intended) … the compelling new types and sizes of displays (as teased by Christie in 2010 with Microtiles) will turn into a flood of new sizes and types … the ‘one size fits all’ display of today is history… creative destruction and cool chaos on the way.

Lou Giacalone, Jr., Founder, CoolSign (Haivision)

The market is still “waiting” as opposed to “making it happen”. What I mean by that is that manufacturers are still not making digital signs – they make screens and computer and software, and count on expensive labor and consulting to put it together. This keeps the ROI threshold too high for most applications.

One exception is the souped-up picture frame market – I think we’ll see a lot of movement in the small screen segment this year.

While folks talk about what would make signage cool – like mobile and other add-on technologies – to me just getting “plain ol’ vanilla” signage deployed properly and with great content would be an achievement enough. What use is adding frills to a weak support structure??

The fact that there are two associations for DS and MORE shows than ever is a *disaster*. This needs to be reconciled this year, or customer confusion will climb to ever higher heights and slow things down even more.

The fact that more entrants continue coming into the software space is RIDICULOUS. Anyone will tell you that ANY market always distills down to having a dominant #1 player, with a strong #2 and 3 behind, and after that it’s very hard to survive. So what is everyone thinking? That DS has some special market dynamic and “the rules” of business don’t apply to us? Crazy.

Consolidation will have to happen in order to eliminate confusion in the market. If we all worked together we could accomplish amazing things, as opposed to everyone wasting their time reinventing the wheel and torturing customers in the process with incomplete feature sets, systems that can’t scale, and closed architectures that don’t enable a market ecosystem to develop.

Charles Ansley, President/CEO, Symon Communications

My thoughts on the overall DS industry in 2011:

Overall, an increasing amount of consolidation in all sectors. More of the weaker players will drop away. The stronger will increasingly focus on their respective vertical (e.g. hospitality, gaming, education, etc.) and/or horizontal (e.g. menu boards, employee communications, etc.) niches, and acquire companies that strengthen their position within those niches.

DOOH (ad-based) will increasingly be dominated by the few companies with the financial strength to assemble a network large enough to be of interest to advertisers. The aggregators will keep on plugging at building their networks and hanging on from a financial perspective. No major change in fortune for the aggregators. DOOH will start to get less of the limelight in 2011, as more people adopt the lessons of the past couple of years, meaning ad-based DOOH is a tough game to play and one that is meant for the big companies.

Those companies that can provide an end-to-end solution (hardware, software, design, content creation, installation, and on-going support) will continue to do well within their respective niches. Those that provide DS software for sale through indirect channels will continue to grow, but it will be at the expense of decent margins. Channel management will continue to be a costly burden for them. They will have a hard time adapting to a growing trend towards specialization and application specific knowledge.

The industry will continue to mature with respect to the combination of traditional digital signage, transactional kiosks, and mobile interaction with overall DS. Mobile will increasingly capture more money and more mindshare in most vertical industry segments. Most verticals will pay an increasing amount of attention to mobile and less so to traditional DS and kiosks, unless these solutions can be used to facilitate and interact smoothly with the mobile experience. The challenge will be for those companies that struggle to articulate the value of DS to now begin articulating the value of a combined DS/kiosk/mobile solution. Those companies that can do that will start to win and win big.

Overall, 2011 will mark the year in which there will be a growing affinity by the DS solution providers to gravitate towards clear market segmentations. Rather than seeing all players lumped in one big pool of digital signage providers, we’ll start to see the ad-guys coalesce, the enterprise guys coalesce (particularly around specific niches) and the horizontal guys will coalesce (particularly around their areas of expertise). We’ll see less and less of this “I can do all and serve all” mentality. Thus, I believe 2011 will be the year of specialization.

Brian Ardinger, SVP & Chief Marketing Officer, Nanonation

Perhaps the biggest trend driving the need for better Digital Retail Experiences is the social media, word-of-mouth, buzz-worthy nature of today’s market. Every single interaction, every single experience now has the opportunity (both good and bad) to resonate and affect not one, but hundreds/thousands of people. The conversation is now amplified with technologies and tools in both the consumers’ and marketers’ hands

It used to be a customer experience could be shared with 10 or so people in an immediate circle. Now with the tools from cell phone cameras to Twitter posts, an experience can be shared and virally disseminated to untold number of individuals to live on as an unforgotten digital archive. Tools from Facebook to Twitter to Yelp and a myriad of other virtual connection tools offer consumers a voice and an opportunity for a two-way communication that brands and retailers cannot ignore.

These same tools that enable consumers to share and brands to connect are also enabling everyone to become a content contributor to the messaging and brand story. Whether its uploading a customer service rant video to YouTube or posting a great experience story to a review site like Yelp, User Generated Content is making it impossible for a brand to be the sole story teller and controller of the message and conversation.

In part this amplified buzz has allowed the in-store experience to become more than just a place to buy, but a means to interact and share – to experience new connections. Shopping, whether buying high-end handbags or toilet paper, has become a venue about lifestyle, connection, and relevance. When done well these consumer/brand interactions get noticed – talked about – and spur action. Digital technologies can help tell better stories, get noticed, solve problems, and connect with customers in ways never before possible. So in 2011, be prepared to take part in the conversation.

Jason Cremins, CEO, Remote Media Group (SignageLive)

Thanks for the opportunity to download thoughts on where we are and where we are heading as an industry, in no particular order:

1 – Convergence – we are now seeing strategy for major rollouts that are for ‘digital media networks’ not just ‘digital signage networks’, these combine Digital Signage, Screensavers, Interactive (touch, sensor, RFID) and Mobile apps. No longer is managing a network of ‘screens on a wall’ in isolation to the many other channels of media going win you the big deals.

2 – Social Media – integration with viewers through social media and sharing is key to brands and this is being extended through to digital signage. Whether it be mobile image uploads that appear on screen or twitterfalls we will see more and more customers integrating social media into their screen strategy.

3 – Call to action – in particular in retail and DOOH we are seeing more and more demand for QR codes on content to enable viewers to continue and extend the brand interaction beyond the screen and onto their mobile devices.

4 – The Clouds are clearing – the acceptance of using the Cloud (SaaS) for managing digital media networks over on-premise solutions is being met with less and less resistance. With applications such as Salesforce, Google and Windows Live now finding their way into the corporate world and being accepted by CIO’s the decision to add digital media to the mix is far easier.

5 – Open Standards – Media RSS and SMIL have opened up the market for hardware, software and syndicated content companies to collaborate and provide scalable interoperable digital media solutions. This openness offer true multi-vendor choice for customers eliminating the requirement to purchase a ‘cradle to grave’ proprietary solution from one vendor.

6 – Reseller uptake – digital signage is now being embraced by AV and IT resellers that would never have consider it as core to their strategy 12 months ago.

Byron Darlison, Founder of Rise Holdings (RiseVision)

I believe there is a difference between guessing what the future may hold and inevitable trends.

A guess is just that – “I think that these three things will come together and this massive social change will happen, etc. etc. and because of all of that this will happen.” Personally, I think that is like predicting what the weather will be eight  months from now. It can’t be done reliably, so why bother.

BUT, I do think there are inevitable trends, the things that are happening all around us that we choose to ignore because they don’t fit our world view, where we want to go, or worse yet, where we banked a massive investment. Regardless, they are usually right there in front of us, if we choose to open our eyes and see them.

These trends are usually subtle because they haven’t hit the mainstream just yet, they are gaining momentum quietly on the side, but meanwhile the mainstream is screaming at you and you think you must drop everything to solve what they want right here, right now. The problem with focusing on “right here, right now” is you spend all of your time trying to catch up, and as a result you miss the new trend that leaps into the mainstream, and you are right back to playing catch up.

To me this whole dilemma is like surfing. You can fight like crazy to catch up to the wave and try to ride it but you’re  doomed to fail, the energy expended is not self-perpetuating. You eventually run out of steam and fall off the back of the wave. On the other hand, you can predict where the wave will break, be there, and let its force and energy drive you home – basically getting a free ride for being in the right place at the right time. That to me is picking inevitable trends and ignoring all of the rest of the “right here, right now” mainstream noise.

So … What are the inevitable trends for 2011 from my viewpoint:

It’s a mobile world, and it will become even more important when your smart phone becomes your wallet and keys. With near field communications, and a host of other technologies, it will be the only item you pick up when you leave your house.

That phone will continue to evolve as your portal to all of your communication needs, business and social network, and you will rely upon it almost exclusively to tell you what’s happening around you and what your friends and influencers have to say about it.

All displays from phones to large format TVs will become more interactive and we will progress beyond the mouse and keyboard using voice, touch and gesture. And gesture will win over touch in the end because we are all disease paranoid and nobody wants to touch what everyone else has.

The common technology underlying and gluing everything together is the network, the Internet. The browser and HTML (specifically HTML5) make that all happen. For this reason the operating system (OS) will become irrelevant and developers will avoid having to choose which OS to support. They will instead use HTML5 to build apps that are OS independent, and native OS dependent apps will wane in time. And for all of these reasons, Flash will become less and less relevant.

Web services will be just as important as physical building blocks when it comes to creating your business infrastructure. These web services will be standardized, just like bricks are, and they will allow us to pick and choose and “mash” them together to create whatever business solutions we want in record time, and for less money. Successful service providers will deliver fully featured API’s and open source code – to make their bricks more desirable than the next guy.

The cost of technology is continuously decreasing and it has reached the point where it is no longer a barrier to entry. Anyone can acquire and use technology to build what they want for very little money.

The above are the inevitable technology trends, the indisputable facts from my perspective. So what does all of this mean to our little universe – digital signage?

The best way to use a large format display is as a sign post to direct the viewer to their mobile phone to continue the dialogue – get them to follow through on whatever action you asked them to take by helping them take the message with them.

The sign post, the user, and their mobile, are all geo-location and social network-aware. A good communication provider will try to make what happens relevant to who you are and where you are, and they will further try to engage your social network in that interaction.

Proof of interaction – pay for clicks – are a heck of a lot easier to prove on your personal mobile device rather than trying to count how many people looked at your display. The sign post funded by advertising, will be most successful if mobile is used to do it.

Sign post interaction will be gesture based rather than touch, multi-touch, or whatever we want to call it. None of us are going to want to touch the surface that everyone else slobbered on.

Everything is converging. PERIOD. And those that think that digital signage is an industry onto itself will miss the boat. It’s time for us to drop the “we do digital signage” and merge ourselves in with everyone else and let’s just say “we provide communication technology.”

Steve Nesbit, independent consultant

1 – Greater brand involvement and brand funding of in-store media initiatives.  Logic: brands feel the most pain of traditional media erosion.  Brands know why people buy product.  Retailers know how people shop the store.  Brands are getting more and more frustrated with traditional media eroding and retailers doing the “same old, same old” in the store.  So (like Labatts in Canada) the brands will become more active because they HAVE TO in order to get their messages out to the consumer, in a world where what they have done in the past is no longer working well.

2 – Shelf edge is gaining more attention.  Even to the point of an iPad at the shelf, the cost of entry is much lower than big screens and interactive touch endcaps. The message is right at the point of purchase on the shelf, they can be moved around fairly easily to match the in-store promotion category/product plans, and many merchandising budgets can pay for these things without including IT approval internally.  I think we will see activity in this area that includes measurement and results. Problem, there are not many really good offerings in the space yet, but that can fairly quickly be fixed by the manufacturers … if they see opportunity.

3 – Content portals will start to come into visibility. As mid-tier retailers look to adopt in-store digital, the big missing hole is where to find content.  A portal hooked into a large content reservoir of pre-created content (like an agency or a large media company) that is accessible via the cloud, that with minimal effort can be custom fit to a user’s content need, will fill a gap.  There’s no reason that large retailers who need “fill-in” clips and segments can’t use a portal,  as well.

4 – In-store digital will be part of the overall “path to purchase” initiative, which includes traditional media, the internet, social media and in-store. It will continue to grow as a logical way to reach mobile consumers, will succeed in getting more agencies to participate in the in-store digital media space.

Arlene Zeichner, Principal, Zeichgeist and Consultant, PumpTop TV

Hollywood is abuzz about “transmedia” – basically slice and dice your IP to maximize its impact and profitability on multiple platforms. The new movie Tron is a good example of a film that’s also a video game, and has web videos and mobile apps and so on.

Out of home will become part of this mix, expanding from its current dominant ad-network format to a new role as a free-standing, branded entertainment and advertising channel.  We need to experiment to find the right mix of content and apps (zebra stripes?  AR?  mobile?), as well as find slam-dunk partnerships with big entertainment brands that do things like build pre-show awareness via broadcast auditions, or offer free downloads for DOOH viewers? DOOH becomes their partner in branded and sponsored content.

Ian Gadsby, CTO, Onestop Media

The digital advertising industry seems to be quickly approaching, if not reaching, the tipping point in the acceptance of the medium as a ‘real’ media and not a fringe ‘novelty’ media.

Does this mean the gold rush is on? No. Quality products, audiences and metrics are still the products that advertisers will gravitate towards – but those DOOH networks that have been established as quality media options may finally be added to the regular plan, along with ‘comfort’ medias like TV and billboards. The work of CODACAN, in building the legitimacy of the space, will continue to pay dividends.

2011 will also see traditional players continue their investment in products with proven revenue models. The independent innovators have done the trailblazing, and those 800-pound gorillas are now jumping into the space. A look at the Gardiner Expressway in Toronto – with millions of dollars worth of digital boards popping up with great frequency – is a case study in the fact that the investments are being made by those with the means.

It sounds intimidating, but we look at that as a sign of the strength of the business model. These companies wouldn’t be spending money if the ad dollars weren’t there to support the investment.

Andrew Hoffman, Vice-President, Noventri

With the momentum that 2010 provided the industry, it is going to make 2011 a very interesting year.

I saw an improvement by way of education in 2010, and the coming year will only build on that education – steadily improving the knowledge base of the clients.

I’m perplexed by the many associations that are popping up. Some are competing and some just don’t make any sense, which results in a lack of credibility and promotes ambiguity in the industry.

Even though the digital signage industry has grown up a little, there is still some maturing that needs to take place.

Andrew Wood, CEO, Al Barq Digital (Abu Dhabi Media DOOH)

A blank piece of paper and a great opportunity to take all the learnings, experiences and challenges that the Digital Out of Home (DOOH) sector has faced in more mature markets that have gone before, is the best way to describe how the landscape in the Middle East and North Africa (MENA) Region is looking for the year ahead.

Some of things we’re already witnessing and that we’re likely to see more of in 2011 are as follows:

• Regulation, standardisation and best practice guidance are coming. Planning is already underway to launch a regulatory body for the MENA region similar to those in operation in Europe and North America and we hear that a formal announcement is expected in January. This will bring standardisation and guidelines to the newly emerging sector and will help drive much needed credibility. We’re also hoping it will bring some new high quality events, conferences and workshops to the region, that will have appeal to people working in the sector internationally, and which will put MENA firmly on the DOOH map.

• Measurement and accountability is a hot topic, as it is globally. Vendors are already testing new measurement and counting tools in digital signage solutions, to provide a a standard trading currency for advertisers. Leading research firms such as IPSOS and Nielsen are also actively innovating and launching new research projects in this area. Our region faces additional challenges, with more complex “counting” algorithms required to accurately measure women dressed in Abayas and Jilbabs (the traditional dress in the region), which increases lead times for implementation, but we’re seeing good developments in this area.

• Impressive and innovative large digital formats are popping up across the region. From digital billboards along the busiest highways in Dubai, to architectural billboards in Riyadh, Saudi Arabia; innovative and eye catching formats will continue to dominate in 2011 as confidence in the medium and its ability to impact consumers continues to rise.

• Sector research at long last. When launching our own business, we found that there was no research on the DOOH landscape in the MENA region at all. With the launch of a regulatory body, and partnerships between DOOH businesses and research companies, 2011 looks set to see the first industry research and insights published.

• JC Decaux continue to strengthen their position in the region, as well as globally, as the leader of DOOH solutions in airports. With recent announcements seeing them win 26 airports in Saudi Arabia and those to the new Dubai International airport, the company are already testing out new digital formats and as they roll out and go live in the new airports, we expect to see more new solutions and opportunities for advertisers.

• The high penetration of mobile phones in the region (the average consumer has 3), is driving location based marketing and a higher degree of interactivity in DOOH solutions. Agencies are actively approaching us with briefs that request this higher degree of interactivity between brands and consumers, so there is real demand, which we think will continue to grow, as they see the benefits in driving a deeper engagement and conversation with consumers, whilst also actively measuring and learning from it.

• New entrants to the market – we’re not the only ones to see the opportunity in this region for a DOOH business, so we expect to see international players making their entrance into the region and some new start ups emerge.

Christian Vaglio-Giors, CEO, NEO Media Group

DOOH is entering into a new era in 2011 – The DOOH 2.0 era, in which the following main characteristics are prevailing:

1. Strong market growth: DOOH will grow by a solid double digit figure. The bulk of market growth will come from mature advertising environments including a) Digitalized OOH locations, b) DOOH in transportation and c) DOOH in shopping malls. Non mature advertising environments including specialty retail and nightlife will only be able to grow by tackling local advertising market.

2. Stiffer competition & pressure on margin: OOH giants and pure-DOOH players will now directly compete to be awarded the major concessions in mature verticals (i.e. airport, shopping malls). As a consequence cost of such concessions will increase and lower DOOH operators margin.

3. New formats: DOOH will shift from standard formats (i.e. 16:9, 6-sheet) to original formats that fits the environment where they are rolled out. Banner displays, giant displays, column displays, branding zones combining screens and large static formats are some of the expressions that will gain momentum with DOOH 2.0.

4. Improved advertising impact and ROI: DOOH 2.0 will improve advertising impact. Shorter loop programs, improved content experience (e.g. High Definition, instant local feeds …) and higher share of voice (i.e. between 10% to 50%) will deliver better impact and ROI to advertisers.

5. More skills and experience: As DOOH matures, a flow of skilled and media experienced executives is moving from traditional media to DOOH, helping the establishment of the media at institutional media buyers and the development of a strong international DOOH representative organization (i.e. IAB).

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