This is the first in a multi-part series of RetailWire discussion articles on the growth and deployment of digital signage and kiosks at retail.
Walking the floor at Digital Signage Expo East in Philadelphia last month, we were taken with the high degree of optimism expressed by exhibitors and show attendees alike. Most were willing to share that 2008 had been a challenging year but there are clear indications that this is an industry on the verge of exponential growth.
The business, we were repeatedly told, had matured to the point of no longer having to justify that it "worked." Instead, the industry's issues centered on consolidation, content, business models, retailer investment, measurement tools and network expansion.
Consolidation was on the top of many minds.
Chris Riegel, chief executive officer of STRATACACHE, predicted, "About half the companies in this sector will not be in existence in the next six to 12 months... not because the marketplace is invalid but because companies were either venture capital backed or poorly managed."
Mr. Riegel added, "The key point I would say is (retailer) customers should take out of this is that it's going to be kind of a bumpy ride. Make sure that you're doing the proper due diligence on whatever companies you pick to partner with. There's a lot of small guys in this emerging sector that are just going to implode."
Mike Abbott, president of ADFLOW Networks, said his company and others have learned lessons from the mistakes of others.
"There was a period of time when promises were being made," said Mr. Abbott. "(Digital signage) suppliers would say we're going to put it in, it's not going to cost you (the retailer) a nickel and we're going to share the revenue. Guess what? It didn't prove to be that good. Many of those companies that made those promises are not in business anymore."
Messrs. Riegel, Abbott and others believe in-store digital media is poised for big things even as the industry goes through a shakeout.
"We're getting to an inflection point where there is going to be a huge spike in adoption of digital media. That's the good news," said Mr. Abbott. "The bad news is that no one knows when that is going to happen and some folks that have made fairly aggressive bets may see their window closing. The tough reality is that when you take VC (venture capital) money that needs to be realized in three to five years and you're at year six or seven, you've either burned through that money or may find that the VC investor has goals that are different than yours."
Linda Hofflander, chief marketing officer at Wireless Ronin Technologies, is among those excited about the prospects of digital media at retail. She said adoption will pick up steam as merchants, brand marketers and agencies go through the normal learning curve associated with the deployment of the technology in retail stores.
"When you're looking at digital signage measuring, for example, you really have to take a step back and determine your motivation," Ms. Hofflander told RetailWire. "What is it you're trying to measure? Are you looking at it because it's an advertising model? Are you looking at it for sales conversions? Are you testing your ad messaging?"
Coming next: Digital Signage: This Year's (Business) Model
Discussion Question: What do retailers interested in pursuing the upside opportunity of in-store marketing need to know about digital signage networks and vendors before jumping in with both feet?