Planning Your Digital Signage Network
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Planning Your Digital Signage Network

A digital signage project follows a structure similar to other application systems projects. The focus on revenue and other stakeholder benefits however, add additional important dimensions to a typical system development life cycle, signage project or merchandising initiative.

By Lyle Bunn

A digital signage project follows a structure similar to other application systems projects. The focus on revenue and other stakeholder benefits however, add additional important dimensions to a typical system development life cycle, signage project or merchandising initiative.

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  • This article describes the digital signage project approach emphasizing the project initiation and development phases:

    1. Project Initiation
    2. Project Development
    3. Deployment to Pilot
    4. Assessment to Network Expansion

    1. Project Assessment
    Project Initiation is the project planning and feasibility study phase during which the Digital Signage initiative is initially framed, assessed, described and contemplated. At a high level it considers objectives, scenario, content sources and critical success factors. A pro-forma budget and project plan will be completed during this initial stage.

    The objectives to be achieved by the displays will be articulated in order to project how Return on Investment (ROI) could be anticipated. These could include for example:

    a) New Revenues from:

    • Sales lift
    • Cross-selling
    • Enquiries related to new product or service sales
    • Rental of display locations
    • Ad display Sales
    • Commissions on sales generated by Digital Signage Display

    b) Branding through improved perceptions or experiences

    c) Reducing perceived waiting times

    d) Increasing awareness of products or services

    e) Increased throughput or speed of interaction

    f) Cost Reduction through;

    • Providing information more efficiently
    • Reducing the cost per communications per outcome
    • Improving communications reliability (i.e. post ads getting posted)
    • Leveraging investment in creative development
    • Reducing costs and time in message creation and distribution
    • Reduced staff training cost by leveraging the Digital Signage Infrastructure
    • Reducing printed materials inventorying, packaging, distribution, waste and after use disposal.

    The scenario for the digital signage will outline in varying degrees of detail, how the digital signage display will fit into the operating environment, which types of content will be displayed, the sourcing of the turnkey system or individual elements, how the signage will be operated and paid for, etc. It will describe the digital signage deployment over time from pilot into expansion.

    Sources of Content will be identified. This could include internal departments, suppliers, various databases or external information providers.

    Critical Success Factors will be noted. While these may reflect the assumptions in the proforma budget, importantly, they describe key milestones of performance that can reduce risk and modulate both investment and pace. Critical success factors might relate to location agreements, partnerships, participation by suppliers or other advertisers, achievement of investment/funding, interface with databases, effectiveness of certain technologies, etc.

    A Pro-Forma Budget will project costs, revenues and cash flow noting the assumptions associated with these projections. In addition to network hardware, software, installations and operations, expense items could include legal, ad sales collaterals and commissions, profit sharing with location providers, viewer audits, branding of the network itself, etc.

    A Project Plan will describe key activities, timeframes and resources.

    2. Project Development
    Structures for Accomplishment will be created based on clear indicators of the value, validity and viability of the contemplated Digital Signage network. During this project development stage, operational aspects of the network are created and documented. Key items include:

    • Display Layout
    • Display Rotation
    • Inventory List
    • Viewer Demographic
    • Rate Card
    • Ad Sales Collaterals
    • Content Acquisition
    • Network Branding
    • Agreements
    • Detailed Business Plan
    • Financial Plan

    Display Layout defines how much space is provided for different kinds of content including paid advertising, information such as news, weather, sports, financial, etc., network branding information, etc. The manner in which each field moves (such as scrolling, rolling, swiping, etc) and is refreshed between individual segments will be identified.

    The display layout may differ at various points during a day depending on viewer traffic, and individual display many differ at various locations on the network. There are many samples of display layouts available including those at www.infocaster.tv.

    Display Rotation defines the duration of each playout "slot" and how many of these slots are included in a rotation for each region of the layout. Rotation wheels are typically 90 seconds to 30 minutes in duration depending on average viewing time. Slots are typically 15 and 30 second in duration in the wheel. Examples of display rotation and slot durations are available at www.thedigitalsignageagency.com.

    An Inventory List is derived from the Display Rotation and slot times for each area of the display. The expected viewing time and Viewer Demographic inter-relate with the inventory list. For example, displays in a pedestrian mall will have shorter slots and a shorter rotation to reach commuter traffic than during casual shopping hours.

    Viewer Demographic summarizes the characteristics of people who will see the display. Criteria such as age range, gender, ethnicity, income levels, typical spending and other factors help to target ads to viewers.

    Rate Cards are specific to each signage network, because each has a different viewer demographic and display layout, rotation wheel and slot length. Rates often reflect display costs of other medium such as TV ads at about $20 cost per thousand (CPM) viewers, or much lower at $3-8 CPM. CPM rates range to $60 CPM based on demographic targeting. The Point-of-Purchasing Advertising International (POPAI) figures released 2 years ago continue to inspire digital signage as a merchandising tool; 98% of customers buy in stores (rather than by telephone or internet), 91% of customers shop without a list, 70%+ of purchase decisions are made in-store and in-store marketing vehicles are proven to lift up to 65% sales.

    Tower Records has a unique 600 square foot LED on their Sunset Strip store rooftop. The display enjoys estimated traffic of 13.8 million West Hollywood area viewers annually. 50% of its high visibility, 6-minute content rotation is paid ads, with viewer appeal content interspersed in the other 3 minutes. The rate card offers segments ranging from 15 seconds to 1 minute durations offer 210 displays per day at a publish rate ranging from 4.29$ per min to $1.27 for 15 seconds. In another rate card example, $300 per month buys 30 seconds on a 30 minute rotation, 18 hours per day, on all 8 displays of a public retail area. That translates to 2 displays per hour or 36 in total per day per display - 288 impressions on all (of 8) displays per 18 hour day. At 8640 total impressions per month (8 displays x 18 hour day x 30 days), a rate of 3 $.0347 per 30 second display applies. The total revenue for all 8 displays per month based on 120 total ad potential per hour @ $300/ad is $36,000 or $4500 per display.

    In a third scenario, pricing of $280 per 15 second ad applied in a 90 second loop, with the loop being expanded to accommodate more than six 15 second ads. 280 plays are guaranteed per day. An $84,000 contract minimum is expected based on $280 per display (i.e. locations) X 100 store locations for a 3 month minimum insert.

    Financial planning aspect of Phase 2 will include all revenue and cost items:

    Revenues for indoor digital signage ad display typically ranges between $2-10,000 per month per display. While some networks seek to maximize revenues, others seek to just cover costs while enhancing a visit experience or branding the organization, products, services, location or personnel. Other networks generate no revenues but increase branding or reduce costs. Other sources of revenue, beyond display advertising include:

    • Bonuses for sales lift. A "pay for performance" model can be blended with a base display fee to maximize display revenues while encouraging advertiser participation.

    • Live training, product introductions and demonstrations that use the digital signage infrastructure can provide significant non-ad revenues and advertiser value. Satellite connectivity, (which is the most effective for networks of 50 locations or more), ideally enables these revenues since high quality live broadcast can be reliably distributed to all locations at very low cost.

    • Marketing data can be provided to a merchandiser. An example of this is in RFID (radio frequency identification) triggered display. Consumer interaction data can be provided related to how often and for how long a consumer examines a product or service information. While check-out data is useful, interaction data can improve point-of purchase merchandising.

    • Commissions for coupon redemption. Placing a coupon number on an in-store ad can encourage product selection. Presentation of this code provides proof of purchase while can trigger a redemption payment for the display.

    • Content creation or formatting offers revenues for network operators and a convenient service to advertisers. The content authoring tools included in digital signage system software enables creation, animation or formatting of ads and messages.

    Costs fall into major categories including Administration, Ad/Content Acquisition, Network Deployment and Operations

    • Administration includes a) Strategic direction and tactical planning, b) Business Management b) Sourcing and contracting with advertisers, location providers, partners, investors, funding providers and suppliers, c) Financial forecasting and reporting.

    • Ad/Content Acquisition costs are typically 10-25% of total revenues for the sale of ads, sponsorships and "airtime" (an ad spot is often called a "flight"). Obtaining non-paid content such as news, weather, sports, financial, corporate, community, location or event content as applicable is also required. It could also include sponsorship sales or coordination with internal providers of live content such as training, demonstrations, product instructions or special events on a satellite-enabled signage network.

    • Network Deployment includes all hardware, software and installation. Hardware and software includes display (LCD, plasma, projection, LED, TV, CRT, etc), mounts, audio, connectivity, content management, playout and compliance reporting. Installation is required for displays and audio as well as connectivity to each location and to each playout device within each location. A turnkey system offers numerous economies, ease of acquisition, speed to deployment, lower cost of supply administration and the operation value of having one supplier's "throat to choke".

    • Operations of the digital signage network include
      • display layout and playlist management,
      • connectivity,
      • Help Desk and
      • maintenance.
      • Depending on display complexity and dynamic (i.e. the amount of change) and the amount of operator created content, a single person (full-time equivalent) can manage playlists for between 30 and hundreds of displays once the display layouts have been established. Investment in robust, functional, intuitive content management software and training in its use will minimize operating costs.

    • Connectivity to each location is typically at 500Kbps. Satellite connectivity provides the levels of reliability, security, ease of deployment and cost effectiveness suited to digital signage.

      A DSL or internal IP network can provide this level of connectivity although the time and cost required to gain connectivity, connection speeds, network outages or interruptions, file size limitations, traffic priority and security measures can detract from network operations.

    • Help Desk is typically described as having 3 levels. Level 1 is telephone assistance. Level 2 involves remote diagnostics and corrective action and Level 3 involves corrective action at the display location. While level 1, 2 and 3 are often contracted to the turnkey system provider, Level 1 is sometimes undertaken by the network owner as a way of reducing costs while sustaining a direct contact with display locations. Maintenance on hardware and software upgrades is required. While these may be covered for 1-2 years in hardware warranties and software licensing, a maintenance agreement for extended warranty or upgrade adds to the operational life of the system.

    3. Deployment
    Deployment is the installation and activation of the digital signage network as planned in the project development phase and contracted with suppliers, location and content providers. Previous sections of this article describe the elements of the digital signage network required in deployment, and for successful operation of the network. While deployment does not include installation alone, installation is a key element of deployment.

    4. Pilot and Assessment
    A pilot program of 2 to 6 locations is typically undertaken for a period of 30-60 days. It operates with the same hardware, software and connectivity to be used in the post-pilot network and its purpose is to orient signage network participants and position the network for growth. During the pilot, viewer impact is assessed related to product lift, ad impact and recall. Viewer impressions will be captured on paper and even by video for future promotional use with advertisers, location providers and investors.

    Display layout, the proportion of paid and non-paid content, the rotation wheel and slot lengths will be modified to optimize the display approach.

    5. Network Expansion
    Network Expansion offers higher viewership and therefore greater realization of the network objectives. Leverage of network infrastructure.

    Lyle Bunn is BTV+ Director, Digital Display & Rich Media, and serves as Chair, Education Committee of POPAI North America Digital Signage Group. lbunn@canbtv.com

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