Dynamic Digital Signage: Unlocking the Profit Secrets
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Dynamic Digital Signage: Unlocking the Profit Secrets

Whether you are a small sign shop with a single roll printer, or a large sign shop making electrical signs, the profit secrets regarding dynamic digital signage (DDS) are the same.

By Dennis Wells, COO, Glantz Dynamic Solutions

There is no doubt in my mind that DDS displays are, in fact, signs, and if we (as an industry) don't stake our rightful claim, we will miss this exciting opportunity.

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  • To make it clear, when I use the term "dynamic digital signage," I am talking about indoor digital displays, the ones you see in airports, banks, restaurants, malls, bars, gas stations… You name it. They are going up everywhere, and are being used where a printed sign or poster would have been.

    Two years ago, opinions on DDS carried skepticism:

    • I am not sure if a TV is a sign.
    • I am not sure that we can handle this; it is too complicated.
    • Why are they showing TVs at our trade show?
    • What is an AV Integrator, and why should I care?
    • Too much geek talk for me!

    Some of these comments originated from a fear of the technology, or a lack of understanding. Words and phrases like fiber optics, composite video, audio bandwidth, unshielded twisted pair, 1920 by 1200 pixels, HDMI signal, HDTV compatible, etc. can be intimidating, and might sound like a foreign language to even the most advanced sign maker.

    Last year, the tone became more inquisitive:

    • How do we get started?
    • Where do we get the training we need?
    • Who are the key suppliers?
    • How do I pull together a complete system?

    It has taken time for the tide to shift, and certainly not all sign shops have said "YES" to the DDS question, but many have now begun the journey. The necessary training is now easily accessible. Distributors have pulled together the various system pieces, and made the process much simpler. Manufacturers have merged various components into the display, reducing complexity.

    Looking Forward
    This year, I expect the question I will hear most often is, "How do we make money? Where is the profit?" Looking back at recent product shifts in our industry, it is easy to see where the profits lie. One of the elements of profit in the shift from Neon to LED was the reduction in labor and equipment costs to make a set of channel letters. Glass blowing was expensive, but anyone could pull the tape off the back of an LED module. The shift from cut vinyl letters to digital print reduced the labor required to manually produce a banner. It is very easy to look backwards and see the trends; it is much more difficult to look forward.

    Many sign shops have already made it through DDS training, picked a distributor, purchased a demo unit, and made a beta installation. Some have already completed their first real "invoice-able" DDS project, and have completed a post-mortem on the profits, with gross margins somewhere between five and 45 percent.

    Those sign shops that came in at five percent (or less) are saying, "What's the big deal with DDS? There's not enough profit to make it worthwhile." Those at 45 percent (and above) are out there quietly trying to find their next project.

    Although the most visible part of the sign is the display, it is not the most profitable. Even with the commercial digital signage units that include embedded software and media players, the margins are very tight. These are electronic devices, and the competition for market share by Samsung, NEC, LG and others is fierce. Single-digit margin is the norm rather than the exception. Make sure to ask your distributor to submit a special pricing allowance (SPA) to the manufacturer for projects with any volume, and you might pick up a couple of margin points. Don't forget to add the extended warranty; there are good margins in warranty.

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    The Right Technology
    If the end customer wants a TV, send them to the discount electronics store. Run, don't walk from a project if you cannot convince the end customer on the benefits of a commercial digital signage unit. You cannot compete with the big retailers selling TVs - just read the Best Buy ads in your Sunday paper.

    The mounts, cables and connection boxes are a different story. I am not talking about a simple wall mount, but about creating a beautiful sign using DDS embedded in a custom kiosk, surrounded by print media in a corporate lobby. This is what we do, right? We are not the geek squad that comes in and sticks a TV on the wall. We are creating signage that blends into, and complements the environment. There is good margin here for those who can upsell and create the right signage solution for the end user.

    Installation is also an excellent source of margin. Whether you do it yourself, or outsource it to a partner, don't give this part of the project away. Many sign shops install and repair signs on a daily basis, and will have no problem taking on this part of the project. Some sign shops focus only on printed signs, and will need to outsource the installation. Talk to your distributor, and make sure you find an installation partner who will allow you to participate in the revenue stream, rather than working directly with the customer.

    Software is another area where good margins can be found. Many of the display manufacturers include basic software, but only for applications like full-screen playback or basic template designs. Most end users will get bored with this quickly, so you need to upsell higher-end software that allows for split screens, live Internet feeds, multiple messages, etc. There are so many software options out there that it is quite confusing. Focus on one or two products that your distributor supports, and become knowledgeable of its features.

    Content is the most misunderstood and confusing part of the project. It is also the most profitable. Many sign shops have a graphics department that can easily learn how to make dynamic content (videos, slide shows, streaming info, etc.) for the end customer. Those leading the pack are offering not only the initial content at installation, but also a monthly or bi-monthly refresh for a fee. If you don't have the ability to create dynamic content, check with your distributor and identify a partner that can do it for you. Many will let you participate in the revenue stream. Remember, you own the relationship with the end customer. What a great way to get recurring revenue (and profits) from a sign!

    The DDS business is truly a project or system type of sell. When sold and managed as a project, it can be quite profitable, especially when you add content creation and refresh along with installation into the bundle. Each piece adds its own portion of the profit. Learn how to pull all of the pieces together. Check total system margin at the end of your first project, and adjust for the next one. I think you will be surprised.

    If you have not made your first DDS sale, now is the time. Like LED, DDS is not going away. Start now, and learn the ropes. DDS is ours for the taking. As an industry, I believe we need to acknowledge this, and take what is rightfully ours. If we don't, there are plenty of others who will. Best of luck.

    Dennis Wells has been active with signage, lighting, and building automation markets for over 30 years. His career has included positions with corporate giants Schneider Electric and Acuity Brands Lighting. He is now the COO for Glantz Dynamic Solutions (a division of N. Glantz & Son) and leads their efforts with dynamic digital signage. His product expertise includes lighting & building control systems, smart signs, energy efficient electrical systems, and dynamic digital signage. He has three US patents and several published white papers to his name. dwells@nglantz.com

    This article appeared in the SGIA Journal, July / August 2014 Issue and is reprinted with permission. Copyright 2015 Specialty Graphic Imaging Association (www.sgia.org). All Rights Reserved.

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