A new iSuppli report finds two significant obstacles remain before digital signage advertising can takes its place among other bona fide media buys by advertisers and ad agencies: a lack of variable audience measurement techniques, and a quandary on the part of ad agencies about how to get paid for placing digital signage ads.
The report, "Digital Signage Ecosystem Report," bySanju Khatri, principal analyst for signage and professional displays for iSuppli, outlines the opportunities for digital signage networks as well as the challenges that must be transcended before they realize their potential.
In a press release promoting the study, iSuppli identifies the problems and how they are related.
According to the research company, "advertising agencies are very comfortable in the traditional arena of mass media and print advertising, and are not compelled enough to insert digital signage into the plans of their clients.
More importantly, these agencies don't necessarily know what their commission will be with digital signage.
" iSuppli goes on to explain that without an effective way to determine the number of consumers being reached by digital signage networks there is "no effective means" to show advertisers that the dollars they are spending on the medium are reaping a quantifiable reward.
In other words, determining the return an advertiser can expect from an investment in advertising via digital signage networks is currently impossible.
This lack of a way to measure ROI impedes the growth of the medium.
According to iSuppli, those participating in the market have begun partnering with organizations like Nielson, Arbitron and POPAI to develop metrics to make determining ROI doable.
However, there seems to be little agreement about what exactly must be measured.
While the lack of audience metrics and the difficulty ad agencies have in determining how to get paid shouldn't be underestimated, there seems to be an overarching issue at play here -one that if addressed could reshape the conversation.
Specifically, the entire notion of jamming the digital signage ad network medium into the box used to define and sell other media -in particular television- seems a bit misguided and stifling.
Granted, there is an incredible temptation to lump TV and digital signage together.
After all, on the face of it -literally- they look identical.
But the differences quickly become apparent when you get past their physicality and begin to consider much less superficial issues, such as how an audience consumes messages each conveys, the types of information, entertainment and commercials each display, where each physically resides and how much time viewers spend with each.
Simply attempting to count noses in an effort to support an ROI model built on the 60-plus year history of commercial television, seems to miss the point.
Digital signage advertising networks are a new, different medium.
They deserve their own unique formulas for determining ROI.
One component of that equation has to be propensity of a digital signage ad network "viewer" to actually buy something.
Isn't a smaller audience with dollars in its hands and a desire to buy something in the very near term more valuable to advertisers than home after home of passive TV viewers who increasingly are skipping through their commercials with a remote control and a DVR? In terms of the comfort level of ad agencies when it comes digital signage ad networks, who cares? Look at what Google has done in a matter of a few short years to ad buys.
Single-handedly Google may have done more to call into question advertising business as usual than anything that's happened in recent memory.
Perhaps decisions about ads on digital signage networks would be better left to corporate marketing folks with expertise in point-of-purchase promotional displays.
Certainly, that business resource has vast experience in determining the ROI of promotional messaging at the point of purchase when compared to an agency concerned about television.
To a certain degree, digital signage ad networks may have themselves to blame for these hurdles.
Selling something new is often difficult, so it's understandable that there's a powerful temptation to draw analogies with the familiar when making their pitch to agencies.
When it comes to digital signage and advertising agencies, the familiar is naturally television.
To extract itself from that limiting, stifling box will require digital signage advertising networks to do much more than address metrics and commissions.
It will require taking control of defining the medium as it's own, distinct entity and value.