Seven Hurdles to Success (One, Two, Three)

Guest Contributor Nurlan Urazbaev

In the first of a two part series, Digital Signage Media Analyst Nurlan Urazbaev
editor, writes here on the Seven Hurdles to Success: 
What Will It Take for Digital Signage To Break Into the Mainstream Media? .

He (Nurlan) writes .. in the past few years the digital signage/DOOH industry has achieved several critical milestones and overcome many of the barriers on its way to becoming part of mainstream media.

  • Some initial guidelines and best practices have been introduced by trade organizations. Newcomers can now easily find educational materials and events. Trade publications are becoming more mature. Trade events proliferate
  • Hundreds of digital signage networks are in operation, many with regional and national reach. New networks emerge every day. Most advertisers and media buyers are now aware of digital signage and include it in their media plans
  • Technology is more affordable and versatile, and it is abundant enough to accommodate almost any business model
  • The industry now attracts several billion dollars in revenue every year and grows at an impressive rate compared to most other media
  • There is no doubt in my mind that digital signage/DOOH will eventually become an indispensable segment of the advertising spend: a media budget line item in its own right

But we’re not there yet. And how soon we get there depends on when the remaining obstacles to growth can be cleared. I believe that there are seven major stumbling blocks to be turned into stepping stones and today I look at hurdles one, two and three…

  1. Selecting software: a quiet nightmare.

    ‘Digital signage software’ is a popular online search term, because network operators believe that software is the key component of network management.

    Six to seven hundred software providers bombard networks with largely similar proposals. In the end, the shortlist boils down to two to three leading software companies and by the time the winner is chosen 10-18 months have often gone by!

    Thus the RFP process is exceedingly long, expensive and it delays deployment. In some cases, networks decide to build the software in-house or choose ‘free software’ which complicates matters even further.

    Another piece of the software puzzle is that even the biggest providers, combined, do not represent a significant market share.

    The market is highly fragmented. While this may seem good for promoting competition, the differences in workflows, reporting formats, lack of standard media currencies, and the sheer number of platforms add complexity to the already cumbersome media buying process.

    It is a well-known fact that even though traditional media are in decline and are not really accountable for ROI by modern standards, buyers tend to favor legacy CPM-based media, because it’s easier to buy and therefore easier to get a commission from. To win the buyers over, digital signage advertising has to comply with much higher standards than those of traditional media.

    There is nonetheless light at the end of the tunnel. Digital signage has the natural potential of becoming as measurable, accountable and as easy to buy as pay-per-click (PPC) advertising – arguably the most effective medium today.

    PPC ads can be tracked from impressions to click-throughs to the actual product purchase (where e-commerce is enabled). So can digital signage advertising. And it will, as soon as the software market is consolidated and campaign targeting and reporting data are standardized.

  2. Software price compression reality.

    The presence of so many software companies is a sign of market immaturity AND because of this oversaturation, the software license (or per-player subscription) pricing is steadily gravitating towards lower single digits and eventually will hover over ‘zero’.

    This accelerating price compression will compel software companies to be more creative and aggressive in the face of imminent elimination by market forces.

    Only a few will remain – most probably it will end up being a two or three horse race for each industry vertical (or ‘network type’).

    The software provider who has enough cash and vision to ‘grab the ad space real estate’ by offering a high-quality ad-sales-enabled network management platform to networks for free and charge for some other services or products (for example, ad transaction fees) might reap the benefits of market dominance in the long run.

    In the meantime, networks can reduce the RFP research period by considering only established software vendors with a proven track record of running successful networks in their specific industry segment. Wrong choice of software is likely to be an expensive mistake due to the high costs of converting to another platform in the future.

  3. Lack of comprehensive, reliable media buying tools.

    A media buyer instructed to research and propose DOOH ad space for a campaign faces severe challenges at every stage of the job:

    – consumer media behavior research and audience research (studies are scarce);
    – selecting the right networks (information is insufficient and incomplete);
    – getting quotes (pricing criteria and media currencies are not standardized);
    – placing a purchase/insertion order (workflows are not standardized across networks);
    – monitoring campaigns (reporting systems are deficient and not standardized)
    – and finally, judging the success of the campaign (post-buy analysis tools are non-existent or poor).

    The real mainstream ad dollars will not flow into digital signage/DOOH until the above challenges are resolved on an industry-wide scale and of course, agency-endorsed digital-signage-specific media buying tools need to be developed.

Later in the week (in part two) I look at the; ‘Aggravation of aggregation’, ‘Audience and ROI measurement: no industry-wide solution yet’, ‘Media currencies: advertisers will pay-per-what?’ and ‘Is content really King or is it the Emperor who has no clothes?’

3 Responses to “Seven Hurdles to Success (One, Two, Three)”

  1. Chuck Billups Says:

    Great post – my one point of contention is the goal to be comparable to PPC. No one in digital wants to be compared to PPC. Even Facebook wants to be measured on impressions. An impression is not a click. And DOOH will fail horribly at a direct ROI (or click attribution). It works great as an audience roll up that can be segmented actionably. Audience quantification (impressions) is where you are going next. Looking forward to it.

  2. Dave Haynes Says:

    I know the big thing now is to talk about the many, many hundreds of digital signage software options that are supposedly out there, but let’s be serious. There are probably 100, at most, companies that are genuinely in the game and active, and maybe 50-60 companies that are doing any real business. And then only a percentage of those get a genuine look when an RFP is involved.

    Most of my time now is spent guiding RFPs. The biggest filter that gets applied is invariably the actual status, experience and user base of the bidding company. That means most of the hundreds of teeny companies out there – most I’ve never heard of – are not even considered. Realistically, we’re probably talking 10-20 companies who might get a look, and then a selection of specialists who focus on things like financial, auto, corporate or QSR.

    I agree, only sort of, with the race to zero state of software pricing. Yes, that’s definitely one, but for the most part, the companies that are doing really well right now are winning deals despite their prices being at or well above sector averages.

    That said, good piece and a pleasure to see your byline (though you know there are other forums to Guest Post) ;-]

  3. Nurlan Urazbaev Says:

    Dave, great comment from the front line… Let’s not forget that you spent a considerable number of years working for some leading digital signage software companies and before that – on the network operator side. So, what may be obvious to you is not so obvious to the vast majority of people facing pitches from software vendors. Not every network is lucky to have a consultant like you to guide their RFPs. I agree that by the RFP stage the list must get much shorter, especially with the help of a hard-core adviser. The mere fact that an expert is needed to cut through the software market confusion is noteworthy. Even the numbers of eligible software providers you are quoting still sound overly excessive for a relatively new industry. A consolidation is imminent, I am convinced.

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