The ad-supported revenue model: Does it work?

In the months and years after the ATM was deregulated — in essence, making it possible for businesses and individuals to own and operate their own ATMs for profit — there was a sense, often put forth by the people selling them, that such machines were like licenses to print money. Just buy the machine, deploy it and watch the profits roll in — what could be easier?

Something analogous happened in the early days of digital signage, as a number of companies touted the promise of high advertising revenue as a means of paying for the machine. “Give us your wall space and we’ll make you rich,” many of them implied (or said outright).

That was easier said than done, and although advertising is a key component of a digital signage deployment, it is important to understand its role in the overall process.

“Retailers need to ask themselves what business they are in — retail or ad sales,” said Mike Abbot, vice president of ADFLOW Networks. “For most retailers, we feel that the benefits of in-store digital signage networks are still found in controlling the message and using the network as a marketing tool to help achieve fundamental retail objectives.”

One of the biggest flaws of the “pay for your screens with advertising” model is that it ignores the tightly integrated nature of the screens in the retail environment. Not just any advertising will do, and most retailers would be better served building their core business than chasing that small percentage of available ads that would fit in their environment.

“Most retailers looking at digital signage networks have invested millions in building up their brands and loyal customers,” said Jason Cremins, chief executive of U.K.-based digital signage firm remotemedia. “The thought of spot-selling advertisements on their screens that do not compliment or have any relevance to their business is unacceptable.”

Another approach, which has been more successful than the pure advertising play, is to offer ad partnerships with suppliers. In theory, any manufacturer wanting its product to sell well within a given retail environment will be open to spending advertising dollars to push those products within the store.

This works in theory, and in practice sometimes, but “cannibalization” is often an issue.

Wal-Mart, which has experienced success with in-store advertising, recently expanded its digital signage initiative in Latin America.

“This is a tricky one, as many retailers already tap into the marketing budgets of their suppliers,” Cremins said. “While budgets may be moved over to digital signage, is the income incremental? In most cases, I would say that it is not.”

Wayne Ruttle, ADFLOW’s vice president of sales, said cannibalization of marketing funds is a serious impediment – but so are lack of ad-sales skills and confusion about who within the organization is tasked with keeping the ad inventory sold. “At best, we are seeing this as a small subsidy of the retailer’s digital signage network investment,” he said.

While some large retailers — chiefly Wal-Mart, with its very successful in-store TV network — have made the advertising model work, smaller companies will have a tougher time and might be better off spending their efforts elsewhere.

“It comes down to scale and focus,” said Brian Nutt, principal of Captive Indoor Media. “Major advertisers are looking for mass-market reach and not small-target markets. So if a retailer is looking to move cost to a third-party, they will either need scale or the ability to sell ad space. Advertising is a difficult and competitive industry. I think the (digital signage) ad model has merit, but needs a couple more years to mature.”

“Be leery of the promises of ad-paid, in-store media networks,” Ruttle said. “This industry is still in its early stages. Watch out for the hype.”

ESSEX, England — Samsung and Remote Media have collaborated to provide a signagelive USBCard automatic update to the Samsung DXN range of 40-inch to 82-inch LCD/PC screens equipped with Remote Media’s Software as a Service (SaaS) digital signage solution.

“This is a tremendous partnership and the coming together of two established pioneers of digital signage,” said Jason Cremins, chief executive of Remote Media, the company behind signagelive. “The collaboration combines the new Samsung DXN series of network enabled LCD Displays complete with Samsung’s three years replacement warranty and the cost-effective scalability of the signagelive to create an all-in-one digital signage solution that can be managed from a Web browser and will operate anywhere in the world over a standard broadband or mobile data connection.”

The upgrade is supplied on a USB Card and when inserted into any DXN it will automatically uninstall the Samsung MagicNet software, install signagelive and present a registration page where the user can add their unique signagelive network code and site details.

Once details are entered the device will connect to the signagelive servers over the Internet, confirm validity of the network code and availability of a license and then issue a unique signagelive serial number to the device. For larger projects this process is automated so that devices are pre-configured with a network code so that the device automatically attaches to signagelive once it is connected to the Internet.

Once successfully attached to signagelive the device will automatically update any preloaded playlists, media, log-files and signagelive software/codecs and start running the required media. The upgrade will be available in the UK and Ireland through RGB Communications, plus all Samsung UK Distributors and will be available from Samsung Distributors throughout the world. In addition, Remote Media’s Global Strategic Partners will be able to purchase the combined Samsung DXN and signagelive bundle directly from Remote Media.

Remote Media, the UK digital signage solutions provider have launched a new 780p player based on the VIA C7 1.5Ghz processor with embedded XP and plug&play compatibility with their signagelive online content management system.

Remote Media have recently promoted a 3GB wireless content distribution package over GPRS/3G from $2 (£1) per day.

The signagelive player SD - is described as an ‘entry level’ box - is a cost-effective solution for Video, Flash, RSS & Web based content in both full scren and multi-zone layout. It has VGA, S-Video & Composite outputs for connection to any Plasma, LCD or Projector - and offers connectivity to ADSL (wired/wireless), GRPS and 3G.