Friday, August 27, 2004

Digital Signage Return On Investment

Digital Signage ROI - in general - is not an easy mathematical equation. This is due to the cross vertical nature of Digital Signage applications and the intangibles that are hard to measure and often misunderstood. Digital Signage is typically sold into various applications such as:

  1. large venues (e.g. sports arena's, entertainment hubs)
  2. retail stores
  3. government/corporate campuses
  4. transportation hubs (e.g. subways, airports)
A great article in Signs of the Times magazine (subscription only) by Steven Keith Platt discusses the ROI for digital signage in Retail. ROI can be determined using R/I where R is the "return" and I is the net "investment".

Webpavement's interest in the article is the fact that digital signage - no matter the vertical or application - has intangibles that must be accounted for when selling or considering digital signage. Digital Signage ROI analysis must consider how intangibles impact consumer buying behavior and perceptions.

Traditional advertising intangibles are mature and accepted by advertisers.
Proof of this theory can be depicted using a toothbrush coupon example. A customer clips a toothbrush coupon from the newspaper and goes to the store to purchase the toothbrush. Hopefully the customer also purchases toothpaste, toilet paper, allergy medicince etc. The return on advertising the toothbrush coupon is very hard to measure because of these cross sell intangibles. However, advertisers understand the intangibles because newspaper advertising has been around for a long time.

Digital Signage Intangibles include Customer Experience, Hi-Tech Feel, Branding and Sales Transactions.
Digital Signage has many intangibles that many of you readers can probably cite for numerous applications. Whether it's product / company branding or customer experience - Webpavement believes that digital signage will eventually catch up with traditional advertising programs.

The digital signage industry (VAR's, End User Organizations, Integrators etc.) must become more effective in communicating and understanding the intangibles received from implementing digital signage systems. Get in touch with one of our representatives to discuss the intangibles of your business initiatives.

Monday, August 23, 2004

Digital Signage Restroom Concept

From time to time I have digital signage concepts that I feel are good concepts for digital signage businesses. For now I'll just talk about one. It's called RESTROOM.TV. Let's face it, restrooms are everywhere. Casinos, bars, hotels, public facilities, retail, churches, and everywhere else you can possibly think of.

One particular application that peaks my interest is office buildings. Buildings have tons of restrooms where business people use them multiple times a day. These people are in the middle of doing business and in a position to act on your promotion. Let's walk through a potential sales scenario. You have RESTROOM.TV installed in a office building where 500 business people work. You approach the nearby deli to advertise on your network. Your value proposition is that you can deliver lunch promotions to hungry people that will be going out to lunch soon. These same people go out to lunch several times a week. This is just one example of a good sales prospect for your network.

This application puts a neat twist on b2b advertising. Say your network is in a building where the people that work there make health insurance purchasing decisions for fortune 500 companies. Health insurance providers would pay premium prices to advertise their services in a place where the audience is made up of people that are making the big buys.

This concept on a larger scale has even more characteristics of a powerhouse application.

Webpavement makes RESTROOM.TV and applications like it come to life.

Friday, August 20, 2004

Subliminal Advertising and Digital Signage

This topic entered our thoughts recently as a result of the political advertising controversy between the presidential candidates. Subliminal advertising has been used for a long time according to experts.

Historically, subliminal advertising was used at movie theatres to include a frame of video that flashed, for example an attractive and desirable bucket of popcorn. This resulted in increased sales of popcorn while consumers didn't realize the frame had impacted their decision to buy popcorn.

In the presidential campaign of 2000, the republicans slid the word democrats across a television advertisement. When it slid across the screen, the word "RATS" was subliminally inserted into viewers mindsets. The objective - arguably - was to associate democrats with rodents.

More recently, John Kerry aired a commercial that included the word "GOD" in the background. Republicans argue that Kerry was attempting to subliminally appeal to the religous demographic. The goal would be to depict Kerry as a man of faith.

Can subliminal advertising effect consumers? We believe it can.

Is this an ethical advertising strategy? This is questionable.

Can Webpavement digital signage solutions display subliminal advertising? Absolutely.

Tuesday, August 17, 2004

Blog Requests?

Have a digital signage or related topic you would like Webpavement employees to blog?

Contact us regarding your topic. If it's interesting - we'll get started!

Thursday, August 12, 2004

NGN E*billboards - What went wrong?

The following is a story that is not meant to bash a pioneer in our industry, but to offer a lesson on what organizations go through when implementing a digital signage network. Webpavement prides itself in learning and gaining knowledge from now defunct networks such as NGN.

Next Generation Networks (a.k.a. ebillboards or NGN) was a company that was the most hyped digital signage company around the years 1999 through late 2001. NGN was a well-funded company. NGN had raised and burned through $96 million – all this by the time they were poised to trigger the IPO. NGN also received about $30 million cash in exchange for a 30% equity position in the company. With plans to go public and UTX as a partner - who happens to own Otis elevators - the future looked bright. NGN also had excellent content partner relationships that captured the main requirements for digital signage for displaying news, weather, sports and entertainment. NGN even capitalized on coveted political advertising budgets.

We are not sure exactly how many screens they had in the field, but the number was realistically between 7,000 - 8,000 flat screen LCD's and CRT's. Many VAR's, Digital Signage Vendors and Analysts in our industry ponder and reference NGN when talking about the importance of being careful and diligent when rolling out digital signage in convenience stores (c-stores) and other retail locations.

So what went wrong? The root of the problem was (1) the high capital expenditures and operational costs and (2) the 7-Eleven digital signage network deal. We'll comment on each of these items briefly so you can get a high-level overview of the importance to work with a knowledgeable digital signage vendor with products that can save you money on operations and total cost of ownership.

High capital expenditures and operational costs: you can run the math yourself, but let us give you an idea on a couple of the components. NGN utilized various sized LCD and CRT displays. Assuming there were 5000 displays @ $500/display = $2.5 million. Assume 5000 computers @ $1000/computer = $5 million. Assume 5000 phone lines - yes they utilized phone lines with direct dialing because VPN technology was not mature and DSL and cable broadband was not available. The telephone expenditures varied from location to location, but they basically dialed out from the Minneapolis datacenter to each location to deliver new content in a push model. Some phone bills were in the thousands per month (no joke) as a result of phone line abuse. We'll assume 5000 phone lines @ 100/month = $6 million/year. NGN had approximately 150 employees. Assume 100 employees @ $4000/month = $4.8 million a year. As you can see, the expense for running a network of this nature was an expensive proposition from 1999 - 2001.

7-Eleven Deal: NGN was desperate to get into the convenience store business and rushed into a contract with 7-Eleven. 7-Eleven is a leader in the c-store space and NGN wanted a big client to attract advertisers with a broad reach that 7-Eleven encompassed. The deal was for NGN to install displays in every store within 3-4 years. A penalty clause was included in the contract where NGN would pay 7-Eleven millions if it didn’t meet the rollout schedule. An un-named source tells Webpavement that NGN was behind schedule and DID pay millions in penalties to 7-Eleven.

Next we move into the content strategy. The network basis was completely 3rd party advertiser funded and all advertising revenue would go to NGN. 7-Eleven was entitled to 2 insertions in the ad loop and advertised slurpies and other items on the screens, but NGN received no compensation for this. In hindsite, NGN realized they needed to include 7-Eleven in the revenue model. 7-Eleven was not interested in simply re-directing co-op advertising dollars. This is still a current issue in today's in-store digital media network environment, but we believe there are strategies that can be employed to bypass this issue.

Securing displays from vandalism and theft is important in the c-store environment. NGN experienced theft and vandalism. It is unknown the number of displays that were stolen or vandalized, but the number was significant. An example of this resulted in NGN displays taking gunfire from robbers because they thought the displays were watching them. We could plug a Minority report metaphor here, but think it's over used.

NGN ran into other issues with their ad sales model. You see, NGN sold advertisements themselves and didn't succeed in developing other channels for 3rd party commissioned media buying agencies. The main source for interested advertisers were local mom and pop shops that were in a nearby location of the 7-Eleven. NGN sold to these advertisers in the beginning from their 12 regional sales offices, but were losing money on these tiny media buys. Hungry for greater revenue for the sales labor expended, it was determined by executives at NGN that they would just go after the big advertisers. NGN decided they would not support mom and pop advertisers and the sales team was chartered to secure a few contracts with national advertisers (i.e. Coke, Pepsi etc) at a fee that would build the ROI needed to maintain NGN. We believe you can have a mix of local and national advertisers with the proper planning and partnerships.

Fast forward to November 2000. The roaring 90's were over and the IPO was withdrawn due to incredibly bad stock market timing and the poor overall health of the technology sector. The much hoped for $115 million IPO was nothing more than a fast fading dream. Without the IPO dollars, NGN was forced to seek out other sources of funding. Eventually, an additional $30 million in private financing was promised from Caisse du Depot (CDP). If CDP had followed through with all the promised installments, the total funding committed to NGN would have hit $126 million. Instead, CDP pulled the plug in October 2001, rather than following through with the full amount.

NGN could not maintain their business model and the company liquidated. Regal Cinemedia purchased all of the assets and the proprietary technology from NGN. This is the end of the story. FYI - NGN had proprietary technology that was ahead of its time for the late 90's. The technology met the requirements back then, but probably couldn't compete with the likes of Webpavement and other digital signage vendors that survived the market and are still around today.

We are interested in receiving a copy of Jeff Porter of Scala's workshop on the Top 10 Best (and Worst) Digital Signage Deployments. Jeff will be talking about these at the digital retailing expo.

Wednesday, August 11, 2004

Sony & Activelight Webex Conference Call

Just got off the Networked Display Webex presentation conference call from Sony Business Solutions. They discussed their new plasma displays (no LCD's yet), Digital Signage players and display control cards in conjuction with Activelight. Activelight is a great value added distributor who is supporting and help develop the digital signage industry. We owe them a debt of gratitude.

The biggest news - from our point of view - was the second slide. The slide stated that Sony's new strategy for digital signage is to not be a BOX seller. Sony's business solutions group desires to offer total solutions including products (hardware,software), services and network management. This is a move that differentiates themselves from the likes of their display manufacturer competition. We believe this is a wise move, but can argue their ability to offer total solutions in the ever changing landscape of digital signage. What's more curious here is that they have a partnership with Convergent. What will become of this partnership? If Convergent is a part of this new strategy, we're sorry for the above comments. However, Convergent was not mentioned on the conference call when they explained Sony is a total solutions provider.

Sony also introduced networking cards for controlling displays. Sony's new networking cards seem very familiar to what Philips Business Solutions Group have had for a couple of years. Webpavement partnered with Philips to create NetLink - which is basically what Sony is launching. Here you will see a Sony technician examining and taking notes at the Philips booth (networking cards section) at Infocomm 2003. We have to hand it to Sony - they can really bring products to market quickly.

Back to the WebEx conference call notes. Sony's digital signage products include the NSP-100 and the NSP-1. The NSP-1 is expected to be available in September. What we found interesting is the fact that the NSP-1 cannot be remotely operated. See for yourself here from Sony's presentation slide. This means that the NSP-1 can only be locally operated - not a good idea for distributed digital signage.

Don't get us wrong, Sony makes quality plasma's and great consumer electronic products. However, if you would want to partner with a company that is purely focused on Digital Signage - we urge you to get in touch with Webpavement to discuss your needs.

Monday, August 09, 2004

Digital Signage and Homeland Security

Webpavement is receiving a lot of telephone inquiries asking if digital signage can display terrorism status alerts in support of the Department of Homeland Security. The answer is YES. What's more, Webpavement can send alerts to thousands of screens within 1 hour.

To most callers this appears to be magic and great news. We have had this functionality for years for retailers, but knew these features could be leveraged for outdoor LED threat alert information displays and indoor LCD threat alert information displays.

It's only logical we are receiving these inquiries. With a $40 Billion budget in place, first movers that aggressively target homeland security digital signage systems will reap the most benefits. Companies can profit off the back of this budget.

We encourage companies to let Webpavement technology and your ideas target department of homeland security by pitching threat alert information displays.

Webpavement software is ready for Homeland Security alerts. Webpavement supports:
  1. Real Time Emergency Alerting Functionality
  2. Scheduled Threat Advisory Level Graphics can be sent to thousands of screens within 1 hour
  3. Department of Homeland Security news and current threat advisory levels can be dynamically displayed in a crawling ticker

Friday, August 06, 2004

Looking for a Digital Signage Single Solution Provider?

Why are companies considering deploying digital signage networks looking for a single solution provider for all their digital signage needs? There are some benefits to contracting with a single source provider to meet your digital signage project needs. For instance, you typically will have a single point of contact for consulting/engineering, product acquisition, installation, operations, support and billing. Resource strapped companies are increasingly looking for a 'one stop' shop to meet all their small digital signage project needs. This approach works well for simple digital signage projects with clear requirements; and this is why we launched DSN Direct. DSN Direct is an online digital signage superstore where potential digital signage customers can learn about various components from many different manufacturers in a digital signage implementation and order the right products for their needs.

In more complex digital signage implementations, this approach doesn't work so well. The truth is - execution of a larger digital signage implementation requires diligent requirements definition, planning, and research in compiling best of breed technologies that ensure a scalable, robust, open and reliable platform. Selecting a single source provider to meet all your digital signage needs will likely not bring success as 'digital signage' firms must have core competencies in the digital signage value proposition. Otherwise they dilute their value by trying to be all things to all people. For instance, should display manufacturers be condiered a viable source for content management and distribution solutions? Should content management solutions include content creation tools? Careful, don't box yourself into a proprietary and unopen solution.

Instead, let Webpavement consultants work for you to fully define your requirements and look for best of breed solutions to meet those needs. Webpavement has experience and competencies in information technology, networking, systems integration, pro av, media creation and other skills needed to offer a total solution for digital signage.

Contact us to schedule a callback from one of our knowledgeable personnel.

Monday, August 02, 2004

Sony Digital Signage Flip Floppers

Sony surprised many in the digital signage space when they announced at Infocomm 2004 Atlanta they would be stopping R&D on the NSP-100 player and going with a new player called the NSP-1.

Sony marketed the NSP-100 as a non-pc appliance and spent a lot of money claiming that a PC is not the way to go for digital signage networks. Do any of you readers remember the Marketing Glossies they distributed at Infocomm last year? The handout was titled "A play by play comparison" and it attempted to show their player was superior to the PC. Then Sony flip-flopped and introduced the NSP-1 at this year's Infocomm, which is a PC and is based on Linux.

By the way - they don't even make this product. Here is the true manufacturer for their new invention:

Good thing Sony's digital signage marketers aren't running a political campaign or they'd be labeled a flip flopper. Webpavement is a refreshing alternative to Sony's undecisive products in the digital signage market.

New Companies will Cash in on Linux Deployments

Webpavement was founded in 1999 and internally debated whether to design our digital signage player software for the Linux OS or Windows OS. We talked about our future plans and the risk for our customers and investors. Linux came up as a discussion point because it's free and would lower the end user cost. Many industry analysts can argue that the total cost of ownership for Linux may be higher than Microsoft operating systems.

We chose to develop on the Microsoft platform using Microsoft development tools for the following reason. We believe it is risky for software manufacturers to utilize Open Source Software (OSS). SCO Group (NASD: SCOX) is litigating against Software/Hardware manufacturers and end-user customers that utilize Linux. Webpavement does not utilize any OSS operating systems or components. Further, should an organization want to acquire Webpavement - they would surely go through our intellectual property and source code to identify open source components. In other words, acquirers see OSS components as a risky investment.

Today's news regarding Linux is further evidence that we made the right decision. Linux may appear to be free, but is it really? Today's news story indicates a trend for Linux that companies will try to cash in on Linux end customers. The Forbes article - in our opinion - depicts the trend has started.