Gail Chiasson, North American Editor
The future looks good for the digital signage industry, MarK Boidman, managing director, Peter J Solomon Company, told the audience in his State of the Industry address this morning at the #dse2016 Digital Out-of-Home Strategy Summit, presented by the Digital Place-based Advertising Association, in Las Vegas.
“The digital signage industry is forecast to go from a current $7 billion industry to one of $12 billion by 2019,” he said.
“And I see the Out-of-Home industry – the only traditional media that’s growing – moving from a current $7.3 billion to $8.4 billion. Digital Out-of-Home will grow from $3 billion to $4.5 billion. Retail technology should go from a current $12 billion to between $20 and $25 billion by 2019.”
Of course, there is overlapping of all these sectors, and DOOH is at the centre of it all. We asked Boidman for examples of each of these sectors, though, to clarify just what kind of companies he was talking about in each. For OOH, It would be companies such as Clear Channel Outdoor and OUTFRONT Media. A DOOH example would be Adspace. Digital Signage would be companies such as Daktronics and Watchfire, while Retail Technology would be companies such as Scala and STRATACACHE.
The OOH and DOOH are doing better than online because people are more and more outside and on the path to purchase, Boidman said. But the industry is undervalued, trading much lower than it should be.
Boidman foresees more consolidation in the industry, in the way that, eg. Zoom practically owns the health club category, as does Adspace in the mall category. “There are too many companies responding to the same RFPs,” he said.
Between now and 2019, he expects that the US advertising spending will see the largest increase it has had since 2004. The total digital five year compound growth rate between 2014 and 2019 for the total digital sector is expected to be 11.8%, to be outdone only by video, mobile and social.
He said that the increase in the availability of 4K media players and the decreased cost of entry into the digital signage sector will continue to drive growth this year. Worldwide digital signage revenue expected to grow to $22B by 2019. That includes a mix of digital signage equipment, software, services and media revenue.
Leading digital signage revenue growth among industry verticals through 2019, he sees the transportation sector as the leading vertical with 25% growth. Retail runs at 17%. Universities are a good growth possibility, as well.
“The cost of implementing and operating a digital signage network has decreased by more than half since 2004,” Boidman said. “Retailers are more and more using in-store and POS digital signage advertising to increase brand awareness, drive sales and engage customers.”
Some of the trends he’s seeing are 4K displays, experiential shopping environments and interactive displays.
“Consumer adoption of 4K displays is expected to drive demand for 4K signage,” he said. “Higher-end digital signage users such as luxury brand marketing and high-end retail have been the first users of 4K displays. However, a challenge facing the introduction of 4K signage is the need for content at 4K resolutions (especially video content). And now 4K has moved from a luxury feature to a component in all major display applications.
“In terms of experiential shopping environments, digital signage can help facilitate an omni-channel shopping experience. And Interactive digital signage can enhance the shopping experience in many ways, including with customizable advertising, the opportunity to further research products before buying, and with mobile payments.
“Retail and Wayfinding are the primary drivers when it comes to interactive displays,” he said. “Advances in multitouch technology enable multiple users to use the same display. Also driving this trend are Smartphone services such as mobile payments or social networking which facilitate interaction.
“If you can target DOOH and do it well, more dollars should flow into that sector.”
He pointed out four drivers of industry growth: Modernizing, relevance, cost reduction and centralized, localized message control. On the other hand, four big inhibitors to growth are lack of ownership,, lack of research,lack of ad revenue and lack of ROI.
“The Smart Cities opportunity For Digital Signage/DOOH is huge,” Boidman said.
Smart cities represent a $1.5 trillion market opportunity in energy, transportation, infrastructure and governance. There are currently 28 ‘smart cities’ spread throughout Europe, North America and Asia Pacific. An additional 102 are planned and in-progress smart cities, with 88 expected to be successfully completed by 2025.They offer opportunities for product vendors, integrators, network service providers and managed service providers alike.
“As there are more cities, ad dollars should flow in, especially if it can help solve urban problems,” Boidman said.
He also said that mobile technologies should drive digital signage growth. The market for proximity engagement is ‘exploding’, showing 10 times the growth rate between 2015 and 2016. US in-store retail sales are being influenced by beacon-triggered messages. It is estimated that between 60 million and 300 million beacons will be deployed worldwide by 2018.
Boidman ended his speech with recommendations to the industry: consolidation, and education to prove the return on investment.
“There’s buckets on money out there,” he said. “With surveys showing that people think billboard ads stand out more for them than online, you should be able to get some of the dollars now going to online, and maybe some of the TV dollars available, too.
“DOOH should roll out technologies to blur the lines between mobile and OOH, and must show proof of performance so that it will be easier to buy.”
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