What are the business opportunities and industry trends in Digital Signage and Retail Media Networks? New Business Opportunity SIG, Meeting March 10, 2005 As reported by Chad Caines ccaines@candassoc.com

Kevin Massy, Correspondent, AKA.TV Kevin Massy is the San Francisco-based North America correspondent for AKA.TV, a leading source of intelligence in the digital media network sector. AKA.TV covers developments in the rapidly expanding medium of out-of-home media and digital signage around the world, with a strong focus on retail applications. Kevin has also worked as a consultant for How and Why LTD, a UK-based retail media strategist which helps retailers and other public-facing businesses to develop digital signage networks. Before becoming a professional journalist, Kevin Massy worked for the Co-operative Group, a national UK retail chain, where he gained a valuable grounding in point-of-purchase and merchandising mechanisms. Kevin Massy has written for several national UK titles including the Guardian and the Independent, as well as for publications in Japan where he spent two years working for the Japanese Government.

The highlights of Kevin’s presentation. Digital media in the retail marketplace is still in the infant stages of industry development. We are confident that there will be a lot of activity in this industry in the next few years. This is an industry with many names. We call [our publication] AKA, as in "also known as", because all the people [involved] in this industry have decided to call their [business] approach something different. It’s a problem for us and it’s a problem for me trying to document this industry because every time I start an article or interview somebody they are talking about retail media networks, digital signage, narrowcasting [or something else]. If you are interested in keeping abreast of how this industry develops, you will see that it goes by all of these names. Industry definition by Kevin Massy It’s a screen medium network outside the home with a commercial imperative. It’s a dynamic video based medium usually controlled remotely by the Internet or satellite technology. This sector has come about recently through the convergence of technology.

Where do they operate? The primary application for digital signage is large retail stores and shopping malls. Supermarkets (Safeway, Albertsons) Large merchandise stores (Wal Mart, Kmart, Target, Cosco) Electronic Retailers (Circuit City, Best Buy, Future Shop) Smaller stores service outlets (clothing stores) Transportation settings (bus stations, train stations) Health and Wellness (waiting rooms) Malls (City Center Mall in downtown San Francisco) Leisure ad Entertainment venues (Casino, Theme Parks) Kiosks

Here is a promotional example of digital signage from a retail networks operator. [DAN in Canada] This is a good example of how [digital signage] works and how [the concept] is sold to store owners and shopping mall managers. Hear the audio portion of this presentation (MP3 Audio, 2.2mb) Other networks Digital signage and retail networks in elevators are common in East Asia. A Tai company (Point of View Television) has installed LED displays in 100 high-end business locations in Bangkok. This brings a high demographic, high earning audience to their advertisers. If you go through McCarren Airport in Las Vegas, you will not miss their retail media network. They have a massive audio system that compliments their massive screens. You can’t get away from it. It’s like going to a rock concert. MacDonalds is testing a holographic display. This is a company called Opticality just [introduced] this 3D display. People are working very hard to find ways to reach you with more [compelling] advertising content. Why is this industry important? The digital signage market in North America was worth 600 million dollars in revenue last year (from a graph published by AKA.tv). The black sections of the graph represent revenue from third party advertising. [These figures are] a barometer of how successful [this market] is or perceived to be by industry analysts, media buyers and people who will eventually pay you a salary. By 2009 there will be nearly one billion dollars of advertising revenue spent in North America and three billion dollars spent in the global market (according to the study done by Cap Ventures and Infotrends). There is definitely a [widespread belief] in the media industry that this is going to be a big area for growth and opportunity.

Carat is a subsidiary of Aegis Group, one of the largest media buying companies in the world. Carat has just published their 2005 market analysis [and reports that] their biggest competition next year will be in-store retail networks and digital signage. Research by Coolsign and Adspace, the operators of the Westfield Mall network, have found that specialty retailers can plan to have a 156% increase in ad recall rates if they install a coolsign network [in their common mall areas] and a 40% increase in purchase intent. This is very encouraging to anyone [working] in an advertising and media buying capacity. The New York Times reports that the Wal Mart network reaches 130 million viewers every four weeks making it the fifth largest television network in the U.S. (behind CBS, NBC, ABC and Fox). This shows the reach of in store media networks.

Interesting trends are driving the digital signage and media networks revolution. Advertising through traditional media suffers from [audience] fragmentation, [due to the popularity of alternative media choices such as] Tivo, On-demand, and hundreds of cable channels. The fragmentation makes it increasingly difficult for advertisers to get their message across and they are forced to work harder to guarantee an audience. Cable TV and network TV [ad rates] are dwindling and newspaper subscription rates are going down. New and cost effective technologies are also driving the revolution. The cost of digital display technology is going down and the quality is getting better. People are more receptive to video in the digital age. Industry models [An example of] a direct revenue model is when a store [installs] a display in their store and sells [product] advertising. Often, the advertiser will pay for ads [displayed] in the store and have [the same] products in the store [available for purchase]. Of course, the store has a vested interest in running the ads [because] they profit from the airtime [and the sale of the product]. The indirect revenue model is a different and more subtle use of digital signage and retail media networks. It’s more of an experiential application where the audience is made to feel more comfortable. The purpose is to increase the shopping experience, dwell time, repeat visits and, hopefully, increase sales at the cash register. The successful elements of a retail network. The essence of an article written by John Kirkpatrick, a guest journalist of AKA, was this; it’s all about the content. You can have the best displays, the most fantastic distribution methods, the most aggressive media sales house in the world but without decent content, the [network marketing strategy] will not work. Make sure that the network playback system is capable of using all industry standard files such as: Vector based Flash files MPEG 1, 2 and 4 HTML Quicktime Powerpoint JPEG John Kirkpatrick also points out that the content provider should never become restricted by a network system that requires unique or proprietary production. This is the pitfall for network operators that will triple the cost of production and limit the choice of content providers. John’s last point of wisdom was to check what creative resources your media production department is already using. Retail media networks are typically fed with repurposed content for up to 70% of their creative applications. Kevin’s Q&A session. Question: Is there any room for interactivity. Answer: Yes. Retail stores are particularly interested in interactivity because it can provide them with detailed metrics of how many people are viewing them and how many people are being engage by them. They can use that information to sell advertising. Question: Why does this technology increase retention? Answer: I think it’s because it’s more dynamic. Often the displays are accompanied by audio with gives far more of a lasting impression than a static display.

continue with more of our NBO SIG web edition. Guest Speakers Kevin Massy | Dylan Jones | Steve Davis

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