Potential digital signage network operators frequently query Webpavement on how to price ad space on their digital signage network. Our retort usually varies based on the application and the network operator's business plan.
Traditional Out-of-Home advertising products (i.e. outdoor billboards, airport posters) use the CPM method. CPM is basically the cost per thousand impressions. Television advertising also uses the CPM methodology. The number of travelers for an airport and the number of viewers for a CATV show has the research to show the thousands of likely eyeballs.
CPM measurement assumes that each passer-by views a billboard within sight. Or a television set tuned to a particular station -- these commercials assume captive humans are watching them and not getting a snack from the fridge. However, as of January 2005 - Digital Signage can't measure eyeballs either.
Breaking away from the CPM pricing methods is Internet advertising. With Internet advertising such as Google's adwords or Yahoo's overture services - impressions are counted - but they come free. Internet advertising charges advertisers based on cost-per-click (aka. clickthru). This model is apparantly effective based on the success of Yahoo and Google's revenues.
Webpavement remembers exhibiting at @adtech - an internet advertising conference - in year 2000. Numerous pricing models were debated on the show floor and since that conference - the Internet advertising industry seems to be maturing and standardizing on click-thru's. Internet advertising pricing model debates started in the late 1990's and are all pretty standard now. We would venture to say that it took a good 5 years til the right advertising model emerged.
What will the Digital Signage advertising pricing model become?
First we must say that digital signage must be assessed differently than the above advertising products. A digital sign has more advertising inventory than most of the above advertising businesses. Further, ads can be placed nearly instantaneously. Many other factors differentiate a digital sign from other advertising offerings.
Advertising pricing for digital signage is a good question that can be debated. Webpavement is leaning on a pricing model that employs dynamic rate cards based on supply and demand. Our software package for digital signage supports this pricing model. Policies and procedures are recommended by Webpavement where you utilize dynamic rate cards based on your supply. Further, we assist our customers in building a model that maximizes their initial return on investment while leaving their network open for dynamic pricing.
More details to come on this topic.