Every year, I like to use the start of the NFL football season to kick off the digital signage prediction season. Peering into the future is a tricky business. Like the political polls that are published ad nauseum, they reflect a snapshot of sentiment at a particular point in time. It is a hit-or-miss business that is really more food for thought and fodder for discussion than anything else. If I thought I had any special gifts, I’d either move to Vegas or bend spoons with my mind on late night television. But this is a fun exercise for me, as I hope it is for you.
Looking back, last year’s predictions actually worked out pretty well. Here is my assessment of the seven points:
Direct hits: Industry association confusion will continue… The movement of people will accelerate… Mobile will matter more, but networks will struggle with the best ways to use it.
Partial hits: Network consolidation continues, while new launches are corporately-focused… Agencies will engage and clarify the ad sales environment… DOOH shows true signs of maturity.
Miss: Attrition rears its ugly head in the solution space.
Not bad overall, but maybe I didn’t push the envelope enough. Here is a touchdown and and extra point worth of prognostications for the coming year:
Dramatic changes in the playing field
Over the course of the next twelve months, expect both the unexpected and the long overdue. At long last, the overcrowded software space will be boiled down through market forces, mergers and acquisitions and flight to niches. Display vendor efforts to be in the software business will prove to be costly diversions, and will be curtailed in favor of closer relationships with solution providers. Eyebrows will be raised by strange bedfellows on the M&A side and surprise failures. As larger, well capitalized entities emerge to form a clear top tier, survivors will work hard to establish niches in which they can prosper. There will be changes on the network side as well. Here, it will be more along the lines of management changes, rationalization of network properties, and the emergence of managed services operators. And don’t bet against a realignment of the digital signage conference space. The current schedule, cadence and politics are unsustainable. That is not a secret. Change is inevitable: embrace it. I’m not sure if an industry can experience a renaissance while there is still an argument over whether it is actually an industry (it is), but 2012 may well be the start of a new era in DOOH.
Ad dollars flow, but retail networks focus on branding and experience
Ad dollars will flow into DOOH networks as never before. The clear engagement of agencies, the emergence and evolution of buying platforms, the continuing quest for measurement standards and closely held but positive results of campaigns will all contribute to legitimizing the channel. At the same time, retailers will begin to understand that digital signage can provide ROI without significant (and in some cases, any) ad revenue. Engaging content that builds brand, enhances the shopping experience and syncs with online and physical marketing strategies will win attention and awards. Ironically, the success of this approach will make the in-store networks even more appealing to advertisers over time.
Mobile strategies coalesce around the practical
Convergence has achieved near-buzzword status in DOOH, and now it is joined by mobile, having been the topic of endless blog posts and mantra-like tweets. No one doubts the value and power of those smartphones in so many pockets. No one ignores the flow of venture capital to half-baked mobile concepts. I am openly a huge fan of NFC, but next year will not be the year of NFC. I think it will be the year that simpler, more pervasive mobile technologies find their way into more digital signage content. Technologies like Twitter streams, QR codes, SMS and to a lesser extent, Bluetooth will see much more exposure. Other techniques that leverage widely distributed features on smartphones may as well. NFC will have it’s day, and it will be an enduring technology. But it isn’t NFC’s day yet for a variety of reasons.
Camera-based measurement will meet resistance
The clamor for better audience metrics drove the investment in camera-based solutions to deliver exactly that. Despite some highly visible and costly marketing of these solutions, I have not detected a clear and consistent demand from advertisers and agencies that such techniques be used, even as overall dollar spend has increased. Without that demand, networks will be loathe to invest. I think there are a few reasons. The cam-based solutions require an expensive retrofit of already deployed networks; some require more powerful and expensive media players in an era where player costs are being driven downward; privacy concerns are not going away, and will soon become visible at the Federal level in the U.S.; and finally, advertisers are finding ways to measure results as an alternative to measuring audience. There goes another cocktail reception invite.
Endpoints take on a varied look
If you want to bet on what is hot, the fastest growing segment of digital signage will encompass endpoints that veer from the traditional hang-and-bang network model. Look for increased interest in small displays; multi-screen matrices; shaped displays and configurations; screens on glass, film and floors; screens riding piggyback on kiosks and vending machines; screens on tablets; Outdoor screens and billboards; and large format LEDs. All of these will extend the reach of DOOH for the good. To be sure, traditional displays in the 32″ to 50″ sweet spot are not going away, and will continue their strong growth. But we will witness a more strategic matching of objective and content to available display technologies. Multi-display network locations will see a mixing of screen formats and types as never before.
The cloud becomes understood for what it is… and what it isn’t
Like convergence, the cloud has been bandied about with disregard for its actual meaning and relevance. In fact, the cloud refers to infrastructure, and not function. The ability to stand up virtual servers with elastic capacity on an as-needed basis is powerful indeed. So is the ability to deploy quickly with minimal capital investment. Look for DOOH providers to use the cloud not to create new function, but to create a new way to offer, deploy and charge for software and services. Those who get it right may change the way networks buy and utilize software. At the same time, look for cloud-based advertising solutions to increase efficiencies in that part of the ecosystem. Near real time, targeted, streaming content for networks equipped to receive it: coming to you soon, courtesy of the cloud.
Institutional capital remains on the sidelines, waiting for the smoke to clear
Most of the VC and PE capital deployed in the DOOH space in the past year has been either follow-on activity or portfolio shuffling and risk mitigation related to existing investments. The biggest capital investment on a network launch may have come from a solution provider! In the coming year, new capital will be more likely to come from corporate entities than traditional institutional investors. The corporate investors may have more insight into the space and the various players, as well as the motivation to get in at recessionary prices. The institutional folks, who are definitely making their usual calls and ramping up their understanding of the space, seem content to pay up later — once winners and losers are more evident. Any new businesses they do fund are more likely to be hybrid players in the DOOH ecosystem rather than pure play solutions or networks. If there is an indicator for this prediction in combination with the first prediction above, it would be the clear shift in the activity ratio of investment bankers to institutional investors in favor of the former.
Well, that’s seven to kickoff the 2012 prediction season. Without doubt, I missed some easy ones. Feel free to sound off or toss out your own predictions in the comment section. Will it be an interesting year?
[…] in September, I took a shot at some annual predictions for the digital signage industry. I like the combination of getting the jump on tiresome year-end […]