February 05, 2012

The digital signage industry is poised for sustained growth (the economy notwithstanding), in verticals such as education, place-based advertising, and hospitality. Retail adoption, on the other hand, is slower than many had anticipated for a variety of reasons. We address some of those reasons here, as well as discuss how integrating digital signage into other emerging technologies will be critical to the industry’s future.

Notwithstanding varying forecasts of the size of the industry, estimates of retail adoption of digital signage have been widely overstated. One firm projected that between 2004 and 2011, retail adoption would grow by 49 percent annually. The same firm went further and predicted, “… 90 percent (of retailers) will have installed digital signage networks in their outlets by 2011.” A simple hand tally of the leading North American retail networks illustrates that these projections are not realistic.

Retail implementation of digital signage lags behind that of many other industry segments for various reasons. Cost is a major impediment of course. But beyond the financial considerations, more fundamental issues continue to challenge retailers. These include a lack of understanding of how to leverage the medium, how to operate it within their stores, and how to integrate digital signs into other emerging in-store technologies. More specifically, these include:

Lack of strategy: Few retailers understand what is and is not achievable with a digital signage network.

Undefined management responsibilities: Running a network requires resources. Consideration as to who will run the network, provide content oversight, as well as oversee scheduling, in-store placement, and technology are among the issues confronting a management team.

Inability to integrate into other retail areas: Coordination among various activities in a retail setting is necessary to the success of a network. This includes visual merchandising, as well as marketing across platforms such as the Internet, mobile, and catalog, merchandising and IT.

Lack of content planning: A common mistake among retailers is failing to develop a content plan and budget.

Inconsistent Ad Metrics: Measuring the effectiveness of retail digital signage advertising does not only fall into the familiar analyses of reach and frequency. In addition to traditional metrics like reach, frequency, and awareness, one needs to use a new set of tools specific to digital signage.

Despite the general trend, some retailers are embracing the technology either out of recognition of its vast capabilities, or for simply pragmatic reasons. Despite the impact of economic issues, some retailers are moving forward with digital signage networks as part of their overall marketing strategy.

For more information at http://www.nrf.com

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