in October 2008
Surveying The Digital Signage Landscape
By Chuck Wilson
NSCA’s Q3 MIB captures industry direction.
Within the electronics systems industry, digital signage has become something of a buzzword…and with good reason. A recent report by the National Systems Contractors Association (NSCA) showed that a majority of industry members use the technology. In fact, 67% of systems contractors/integrators and 80% of independent technical/design consultants surveyed said they’d had at least some involvement with digital signage projects in 2007.
NSCA’s Q3 MIB
The 2008 Q3 Market Intelligence Briefing (MIB), titled “Digital Signage Trends in the Commercial Electronic Systems Industry,” provides detailed background information about this uniquely convergent technology, as well as present and predicted future involvement. Specifically, the MIB examines market demand, dynamics, obstacles, prime functions/applications, targeted venues and technologies.
As part of the measurement, surveys were screened to ensure respondents were either systems contractors/integrators or independent technical/design consultants. Those who didn’t fall within these two specific groups were removed from the survey results.
Further, within each of the two subsets, the research separates those who have never been involved in digital signage and those who have already entered the market. For the purposes of this analysis, the focus is on those who are already involved in digital signage. The results paint an informative picture from a unique channel perspective.
Because it’s still a growing industry, respondents said digital signage did not constitute a large revenue stream for their companies in 2007. Systems contractors/integrators said digital signage accounted for 11.2% of their 2007 revenue; independent technical/design consultants reported 10.7% last year.
Growth In 2009
Next year is expected to be one of growth in the digital signage market. In fact, systems contractors/integrators expect growth of 45%, whereas independent technical/design consultants anticipate 22% growth in digital signage projects.
Indeed, according to the report, the market is poised to expand, and many new companies plan to enter the market next year. Although those companies don’t anticipate an immediate demand, they are interested enough to enter the market. Comparing current and future participants side-by-side provides a broader picture of future trends: See “Future Involvement with Digital Signage.”
As in any industry, market growth brings its own unique set of challenges and obstacles. Digital signage is no different. Systems integrators/contractors cite four major areas of concern they face as they enter the digital signage arena: difficulty coordinating clients’ internal departments, lack of experience structuring the selling of digital signage systems, difficulty getting the necessary IT components involved, and a lack of ROI benefit as perceived by clients.
The outlook is quite similar for independent technical/design consultants. They report they have clients who have not embraced the market, difficulty coordinating internal departments and customers who do not see a clear return on their investment.
To overcome those hurdles, respondents admit they need additional knowledge, particularly when it comes to software information. They say software programs make it easier to schedule, build playlists, and provide full media control and AV media players with ample memory.
Need Additional Resources
In addition to pure technology needs, industry members need additional resources before they can achieve success. For example, both groups report they need more experience on how to sell digital signage, and how to quantify and explain the benefits and costs involved in digital signage.
They may have new things to learn first, but those involved in the application have gained experience in certain markets and look forward to future expansion in system functionality, content production, partnerships and venues.
Industry members employ digital signage in their businesses for a myriad of reasons. Schedule posting was the most common response from systems contractors/integrators. However, independent technical/design consultants used digital signage to boost advertising and revenues.
For a wider perspective, it’s informative to examine the top ways each group uses this technology. Education topped the list for systems integrators; wayfinding/directional signage was #1 for consultants.
Systems contractors/integrators participate in a wide and diverse variety of markets. Their three primary business venues include:
• corporate and industrial, including financial institutions
• universities and colleges
• houses of worship
The results were similar for independent technical/design consultants; however, their top client is the hospitality industry. For this constituency, the top three vertical markets are:
• hotels/convention centers
• universities and colleges
“Venues for Digital Signage” breaks down participation into all self-reported markets.
As more companies enter the digital signage market, a closer examination of product components is critical. For example, the number of screens is an important part of the market equation. The systems contractors/integrators tend to provide smaller digital signage systems (fewer than six screens) than those designed and specified by the independent technical/design consultants in this study. Nearly 26% of the consultants reported that their typical system had more than 25 screens.
Screens are one thing, but streams are another consideration in the digital signage arena. In comparing the quantity of content streams across industry specialties, a large majority of systems integrators/contractors reported systems with two or less streams. Conversely, most independent technical/design consultants had systems with three or more streams.
Given the learning curve ahead, what is the future of digital signage in the industry? Over the next several years, systems contractors/integrators are very certain they will:
• increase their overall involvement with digital signage.
• increase the number of systems that are networked and IP addressable.
• increase their use of high-definition video in their digital signage systems.
• rely more on multiple content streams.
• serve multiple functions with each digital signage system.
For their part, trends reported by independent technical/design consultants can be seen in “Future Trends: Independent Technical/Design Consultants.”
The world of digital signage is diverse and expanding. As the application grows, more functions will emerge to create new opportunities for many stakeholders. A wide variety of industries can take part in this emerging market, including low-voltage systems contracting, AV integration, IT networking, software development, content design, merchandising and advertising.
The full report is free to NSCA corporate contractor members. For more information about NSCA, visit www.nsca.org, or call (800) 446-6722.
Chuck Wilson is executive director of NSCA, the leading not-for-profit association representing the commercial electronic systems industry. NSCA is dedicated to serving contractor members and all channel stakeholders through education, member tools and services, and advocacy and industry outreach.