Dynamic Digital Signage Opportunities for Sign Companies

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1 Dynamic Digital Signage Opportunities for Sign Companies White Paper Overview Created through a partnership between the International Sign Association (ISA) and Roland DGA, this white paper was developed to inform the signage industry and sign shops in particular about the fast-growing business opportunity made possible by today s digital signage technologies. To help professionals industrywide make important decisions regarding this opportunity, the white paper will closely examine the size of the market opportunity, what types of businesses are implementing digital signage, and important considerations for print providers expanding into the market. The document as a whole presents a compelling case for sign shops to enter the lucrative digital signage market as a means for achieving both business growth and customer loyalty.

2 Introduction Sign shops the world over are grappling with many trends that continue to impact their businesses. Perhaps the most significant trend is that the traditional sign industry has seen relatively slow growth over the last few years. This trend is making it harder for individual sign businesses to grow as well, and is creating an increasingly competitive marketplace. To help boost revenue growth and differentiate their businesses from others, many sign shops today are expanding into new applications that take advantage of the skills they already have while leveraging their existing customer base. For these businesses, the introduction of dynamic digital signage into the product mix can yield many benefits. What is Dynamic Digital Signage? Dynamic digital signage, by definition, is a specialized form of video broadcast aimed at a very narrow niche audience in which video or multimedia content is displayed for informational or advertising purposes. A digital sign usually consists of a computer or playback device connected to a large, bright digital screen such as a commercial-grade LCD or plasma display. Dynamic digital signage is used in department stores, schools, libraries, office buildings, medical facilities, airports, train and bus stations, banks, auto dealerships and other public venues. It is also commonly used in corporate, employee-facing environments. If the display is connected to a computer, the data on the screen can be updated in real time by means of an Internet or proprietary network connection. The system can employ multiple screens if an extra-large display is required. There are advantages that dynamic digital signs offer over printed or other types of static signs. The biggest advantage is that digital signs can be updated by remote control when content needs to be changed (which makes them dynamic ), while static signs require individual replacement and physical travel to sign sites by personnel. Digital signs can also be enhanced with visuals, video and multimedia for more compelling presentations. Dynamic digital signage can play an integral role in a business signage strategy. While most signage applications will continue to involve printed graphics, the addition of a digital display into an environment can drive home important marketing messages, complement visual themes, and serve as a source of entertainment and information. Market Overview The global dynamic digital signage market is growing anywhere from the single digits to more than 40 percent per year, according to research published in December 2013 by InfoTrends. IHS, Inc. projects that the market for dynamic digital signage will reach $17.1 billion in worldwide sales by 2017, with the U.S. market accounting for over one third of this figure. Page 2 of 9

3 Considering that the digital signage market as we know it today is only ten years old, these numbers are impressive. What makes the data even more compelling is that it only reflects sales of dynamic digital signage systems, including the hardware and software components required. Over time, content creation is the most lucrative aspect of the sale and is not factored into these figures. Dynamic Digital Signage Adoption Source: IHS, Inc. The Digital Signage Experts Group (DSEG) notes that the average dynamic digital signage system sale contains between one and five displays. This type of installation makes up the vast majority of the multi-billion dollar market. This means that digital signage is in high demand among small- and medium-sized businesses, the same types of businesses already served by the majority of sign shops. There are two types of applications for digital signage: advertising-based applications such as retail and restaurant implementations and information-based applications such as the installations you might find in corporate, medical and educational settings. Page 3 of 9

4 Source: Digital Signage Experts Group As reflected in this chart, the largest sector of the dynamic digital signage market is the retail sector. When most people think of retail, they think of large retailers like Walmart, Target and Macys. However, the majority of the retailers are small- and medium-sized businesses. As reported by the U.S. Economic Census, 95 percent of the retail industry is populated by companies having a single location, and 77 percent of retail companies have fewer than ten employees. A typical sign business is very well positioned to serve this market Page 4 of 9

5 Digital signage is relatively easy to sell to these businesses because of the dramatic impression it makes on the viewer and its proven effectiveness as a sales and marketing vehicle. A Nielsen study where digital signage advertising was tracked in 120 grocery stores over a period of time reflected that four out of five brands experienced sales increases of up to 33 percent compared to those outlets using printed signage alone. The second largest sector of dynamic digital signage applications is quick serve restaurants and convenience stores. One well-known company in this space is Dunkin' Donuts, whose initial pilot program across 100 locations has been expanded into a full system-wide dynamic digital menu board deployment for some 3,000 locations to be completed by the end of According to an interview with Jason Stuehmer, IT product manager for Dunkin' Brands, In addition to increased sales lift and soft ROI targets like getting ready for impending menu labeling regulations, the move to digital also was just about staying brand relevant in the competitive and ever-evolving restaurant space. It's keeping up with the Joneses." While Dunkin Donuts is a very large player in its core market, local bakeries, coffee shops and other types of specialty retailers can reap similar benefits. In a recent editorial featured by DigitalSignageToday.com, David Clanahan, COO of Canadian restaurant chain Tim Horton s, gave digital signage technology rave reviews. "It's about taking these menu boards and driving them like the Ferrari they are, he said. These give us the ability to take new product introductions to a new level. He reports that the company s restaurants are implementing campaigns that are not intrusive or distracting, but that focus on driving home the quality of their products. According to Clanahan, they very effectively send the message Buy me now. He said, They can also influence promotions. They are literally talking to our guests while they're in our restaurants. Across the chain, new menu boards have also simplified the ordering process for both customers and staff. The gift of time is one of the most valued commodities today, he added. Guiding Consumer Behavior Research shows that, in increasing numbers, signage customers are looking for new and exciting ways to attract consumer attention, entertain, educate and inform viewers. And they are actually willing to pay for these new services. Companies that have adopted dynamic digital signage report many advantages, including influencing viewer behavior. The areas in which dynamic outshines static signage include getting customers into a store in the first place, directing them to different areas, and increasing their time spent in the store. Because messages can be changed on demand, there is enormous potential to speak directly to that consumer with just the right message in the right place and at the right time. Page 5 of 9

6 A great example of the power of dynamic signage is the ability to change up menu items according to the time of day and meal being served. But, it can also be used to showcase products and not just a single product, but multiple products in a slide show format. Dynamic digital signs also enhance the customer experience by reducing perceived wait times while in queue. They can also be used for interior decoration and programmed to showcase dynamic artwork. A recent article in the New York Times reports that nearly 70 percent of Americans are confronted with dynamic digital signage each day, and that we spend on average eight hours a day in front of one screen type of another. So, as a society, we expect digital, respond to digital, and gravitate toward it. Welcome to the digital age. Why Dynamic Digital Belongs in Your Shop There are many compelling reasons for sign shops to offer dynamic digital solutions. First, sign professionals come to the market with the tools required to be successful, including an understanding of graphic design, color management and the elements of an effective sign. This expertise applies to both printed and digital signage. Given that signage customers, in general, are prime candidates to embrace dynamic digital, it only makes sense for sign shops to offer it. It goes without saying that, as a sign shop owner, you want your customers to buy any and all signs from you. If you require them to go elsewhere to purchase dynamic digital signage you are potentially giving a business competitor a foot in the door. Adding dynamic digital signage into your product portfolio will both increase your revenue potential and protect the customer relationships you have cultivated. For the past few years, we hesitantly stood by and only observed our industry s dynamic digital signage sector continue to both mature and experience significant growth. Having now recognized the ease in blending this relatively new technology with our own traditional signage products, it quickly became the most logical way for us to grow our business as it brought our existing valued customer the modern advertising options they had, until now, been seeking elsewhere. Page 6 of 9

7 Bob Mattatall, President - Mattatall Signs Limited Launching Your New Product Line Successfully So, how does a shop get into the market? The first step is to build a business plan. Here are some words to the wise as you venture into this marketplace: Just as in the traditional sign industry, there are several vertical markets to explore, and each one has its own unique applications and challenges. Talk to your customers across different market segments and gain an understanding of their goals, requirements and budgetary expectations related to the technology. Invest in versatile technology that is easy to use and delivers exceptional quality results. Purchase this equipment from a reputable manufacturer with extensive training, service and support resources. Remember that your role is not just installer, but also creative director. While your customers could likely deploy a digital signage system in-house, as a skilled sign professional and designer you bring valuable knowledge and artistry to the ongoing task of content creation. Consider moving into the market gradually, initially partnering with another business that can assist with deploying and/or servicing dynamic digital signage. Talk to other sign shops, distributors and suppliers to determine what support services are available in your area. From a business development perspective, market this new service offering. Invest in positioning and promoting your company inside the vertical markets you have chosen. Your existing customers should not be overlooked. Avoid a one-size-fits-all approach. Offer customized solutions designed specifically for selected vertical markets. Propose integrated campaigns featuring both dynamic digital and printed signage. There is a role for both mediums in the majority of businesses. Work with customers to increase their understanding of tangible value with proof of measureable ROI (Return on Investment) and ROO (Return on Opportunity). By approaching this business opportunity with these strategies in mind, you can build a successful new product offering and revenue stream for your business. Page 7 of 9

8 Digital Signage Project Joins Two Old School Companies Combining printed and dynamic digital signage can deliver impressive results, and in this instance, also resulted in a unique partnership between two successful firms with roots from the middle of the past century. Tyson & Van Outdoor Advertising began in 1947 as an offpremise billboard agency. In 2006, what was now Tyson Sign Company moved into a 50,000 square-foot sign manufacturing facility, offering solutions for exterior, interior and digital signage systems throughout the U.S. HTC began in 1952 when it was known as Horry Telephone Cooperative, Inc. Over time, they grew into the nation s largest telecommunications cooperative and the 18 th largest telephone company. In addition to telephone, HTC eventually expanded into wireless, cable, internet, home security and fiber optics. When HTC was in need of a sign company to create a stateof-the-art retail experience, they chose Tyson Signs, known for a full spectrum of signage services and, like HTC, also committed to advanced communications technologies. In the process of exploring HTC, their mission, dedication to customers and community, the project s objectives came clearly into focus for Ebbie Phillips, the current owner of Tyson Signs. Their objective was to not only highlight the equipment and products that they sell, but present them in a fun, informative and creative fashion. From the needs analysis, it became obvious that the final design had to be high tech to match the products and services offered, as well as be easily accessible and understandable to visitors of the HTC offices. We felt the combination of digital signage and bright, colorful graphics was the best means to accomplish their objectives, said Phillips. The interesting thing to me about this project is that it combines a variety of products, from traditional signage, interior signs and graphics and digitally printed graphics to individual digital screens and a full video wall. The centerpiece of the project is a 4 x 4 video wall composed of 16 flat panel displays mounted above the counter when you enter the store and which dominates and maintains your attention. Areas of the store are separated in to specific zones where flat panel displays provide information about particular products and services. The Tyson team worked with interior designers to ensure that dynamic digital signage was not overdone, but was blended with traditional signage and contour-cut logos that worked in harmony. The outcome is an attractive installation, a pleased customer, and signage that delivers the results it s intended for. Page 8 of 9

9 Conclusion With the high growth rate projected for dynamic digital signage, it only makes sense for sign businesses to explore the opportunity. For many signage customers, the business case is compelling. And as an experienced sign professional, you can easily monetize your role as content creator. Remember, just as a static sign will wear out or become obsolete, so it is with dynamic content. The good news is that creating new content for your customer brings a recurring revenue stream to your business and is a great opportunity for profits well beyond what the replacement of a static sign delivers. And in the end, serving your customers well, and profitably, is your primary business objective Roland DGA Page 9 of 9

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