Go Vertical, Or Go Home

July 20, 2016 by Dave Haynes

A few conversations in recent weeks have reinforced a conclusion I made some time ago about software and solutions companies in the digital signage business: they need to get vertical.

Many companies, particularly the smaller ones, badly need to find a vertical market and make it their own. Being a generalist, in a field crowded with generalists, could be deadly.

What I see are a lot of companies hopping on whatever seems to be the opportune vertical of the moment – like QSRs was and arguably still is. But it can be really hard to “own” a vertical like fast food when dozens or scores of companies are trying to do the same thing.

The vertical has to be untapped, or underserved, to be opportune.

I’ve wondered, often, why companies pack much of their annual marketing budget into one big trade show – when it’s a trade show like DSE that has a floor full of people offering pretty much the same things, to a diverse, unspecific crowd that can range from small businesses to Fortune 500s.

I’m impressed by companies that, instead, put the marketing effort into finding trade shows and vertical markets that are largely untapped by the digital signage vendor crowd. I know a handful of companies from the signage ecosystem – like Four Winds, Omnivex, Diversified and Ping HD – were in Las Vegas this week at something called SEAT.

It’s a tech conference for the sports and entertainment industry, so there were IT and AV people from dozens of stadiums, arenas and event centers that host pro or near-pro college sports. A target-rich, well-defined audience all interested in steadily adding more sizzle and engagement at their digs.

Smart place to be, even when the Nevada blast furnace is at full mid-summer roar.

I know other companies that show up at health management, and mass transport and higher ed and regional bank events through the year that are entirely unknown to most people in this industry. these vendors tend to have the crowd to themselves for 2-3 days, or are maybe being measured against one other competitor, not 20 or 30.

I’ll look at Twitter and see some company saying “Its day 1” of some hashtag, and wonder, what the heck is that? I look it up, and think, “Oh, that’s clever.”

The thing about going after a vertical and making it yours is how you can tune your products and services to a particular need, and get to know the industry well enough that you become a part of it. You not only know how it works, but its concerns and plans. I know one company that goes after banks, but not the big ones. The small savings and loans and other varieties that maybe only have a handful, or dozens of sites, not the 100s or 1,000s that get larger software companies excited. Smaller opportunities, sure, but there’s a lot of them.

I know another company that just services the marijuana industry, with menu boards and messaging. There’s another one that just does QSR menus. Not the displays. Not the integration. Just the menu design.

I spoke yesterday with a company called 787 Networks that does managed services for a set of complementary verticals that includes family bowling alleys and family entertainment centers. There are people in this business who would chuckle at the quaint, altogether-beneath-them notion of doing digital signage software and services for bowling lanes. Their smug-o-meter would break once they understood that rolls up into 1,000s of sites, and that they also do restaurants and bars. including the Dave and Busters chain. The company is seeing 30% year on year growth servicing that business and nothing else.

They don’t do anything overly sophisticated. There are other software platforms that could deliver a lot more. But they own a vertical. They’re the guys. They tune their product to the specific needs of those similar environments.

By contrast, generalist companies – that effectively just hang out a shingle saying they do digital signage – are invariably twisting and turning software development and product messaging to suit whatever opportunities come in the door. What a hospital needs, and what a sports retailer needs, can be very different.

There are way too many software companies in this business. The very large ones, with premium products, will be OK because they have somewhat defined verticals, and have established a position and mindshare out there.

There are some smaller ones that will do fine because they have either laid down clearly how their product differentiates itself in the crowded marketplace, or found one or maybe two verticals they steadily mine or, ideally, own.

It’s the small guys – pitching on how their platform is easy, friendly and affordable – who concern me. They’re often pitching to everyone, anyone. And pitching against a lot of competitors. All they’ve got to work with is price, and that’s a race to the bottom.

The smart guys, I think, look around, look at macro-trends like aging, telecommuting. the sharing economy and so on, or at business sectors that have been largely ignored by the signage business (like manufacturing), and then find their vertical.

There’s way too much supply, and not enough demand, to be just another signage software and solutions company.

Go vertical. Or go home.

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