By Chris Connery,

The world’s biggest retailer Walmart is on the minds of many in the FPD industry as it continues to grow as a major outlet for FPD TVs as well as other consumer electronics products. Equally important is how it goes about merchandising these products. In an announcement (finally) made earlier last week, Walmart announced a refresh to its in-store digital signage network now dubbed Walmart Smart Network. Walmart is often stated by many to be the US’s fifth largest TV network (behind NBC, ABC, CBS and FOX) due to the foot traffic of Walmart with “120-130 million viewers a month” often mentioned. This upgrade to the existing Walmart TV requires new Digital Signage displays, which is great news for the industry.

The roll-out was publicly stated to include 27,000 Public Display/Digital Signage solutions over a two-year period. The integrator is the US’s largest provider of Digital Signage, Thompson’s PRN (Premier Retail Networks http://www.prn.com/) which has recently struck a deal with display provider Planar.

Figure 1 Examples of PRN’s Current Solutions for Walmart: 15”, 42” and 57” LCD Displays

The world’s largest retailer’s a major initiative to roll-out a significant number of Digital Signage displays is excellent news for the Public Display market (as the FPD market continues to look for that “next big market” beyond FPD TVs). However, the details of the roll-out from the supply-chain side may cause many of the top brands and panel vendors to re-evaluate either their pricing or their product strategy.

Indications from Taiwan reveal that Planar’s back-end partners for this roll-out will be Taiwan’s Chi Lin Technology, providing OEM support and integrating LCD panels from CMO. For smaller sizes like end-cap displays, Planar may rely on one of its typical OEM partners for its monitor/public display business, Coretronic, but this will only be for 15” XGA sizes, which are slated to use “typical monitor panels,” some with touch panels.

Of greater interest to the FPD producers within the Digital Signage industry is the fact that the larger size LCD displays—42” and 57” panels—will come from CMO. Since Chi Lin is a CMO subsidiary, then the vertical integration was seemingly selected to help keep costs down. What may come as a shock to many in the FPD industry is that CMO (one of the leading Taiwanese large-area LCD panel producers) does not offer a line of commercial-grade LCD panels, so the 42” and 57” LCD panels used in the solution will be TV-grade panels.
Might a decision like this from Walmart/PRN/Planar cause a shift in Large Format LCD panel roadmaps? Or closer price-parity from LCD producers to their brand and integration partners between commercial-grade panels and TV-grade panels? Either way, the good news for the industry is that Digital Signage continues to gain momentum, and it can now focus more on supply-chain concerns rather than on true end-market demand, which seems to grow every day.

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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.”

Latin America’s Top Retailer Teams with the Region’s Largest Media Company to Reach Shoppers at the First-Moment-of-Truth

FORT LAUDERDALE, Fla. & MEXICO CITY–(BUSINESS WIRE)–In a partnership that unites two of Latin America’s most dominant companies, Grupo Televisa (“Televisa”) and Wal-Mart de Mexico (“Wal-Mex”) have launched an in-store media network covering 292 Wal-Mex stores across Mexico. Consisting of over 5,000 digital signage displays and touchscreen kiosks, the network is centrally managed using FireCast software and media player hardware from WireSpring Technologies.

Televisa creates original, retail-specific programming for the Wal-Mex network, combining informational segments and advertising spots. For shoppers, the content enhances the store experience and helps them make smart purchasing decisions. For advertisers, the network provides an additional opportunity to highlight key selling points, complementing traditional point-of-purchase advertising. Content is delivered through large-screen LCD displays in key store locations, as well as touchscreen kiosks in the pharmacy and other areas.

For Televisa, already Latin America’s largest media company, the Wal-Mex network provides new out-of-home ad inventory that can be sold to Wal-Mex product suppliers and other advertising clients. By outsourcing the content delivery technology and in-store playback software to WireSpring, Televisa retains focus on its core competencies of content production and advertising sales.

Key facts about the network:

* 292 stores under the Wal-Mart Supercenter and Bodega Aurrera brands.
* 21-28 large-screen LCDs per store (over 5,000 total), plus touchscreen kiosks.
* Content is customized by store type, with multiple channels per store – including a dedicated channel for the pharmacy in Supercenter locations.
* Products used include WireSpring’s FireCast OS, FireCast ClientCenter, and FireCast Media Appliance, as well as IBM’s Anyplace Kiosk.

“After working with Televisa and Wal-Mart for the past two years, it’s great to see the Wal-Mex network go live,” said WireSpring CEO Bill Gerba. “In an industry that’s often more hype than substance, Televisa has taken a bold position in the world of retail media, combining digital signs and interactive kiosks to create a tightly-integrated media environment at the store level.”

The Wal-Mex network rollout began in July 2006 and will be completed by early November, in preparation for the holiday shopping season.

For photos of the network, please visit http://flickr.com/photos/wirespring/

About WireSpring

WireSpring helps retail organizations streamline their sales process and communicate more effectively with customers at the point-of-decision. The company’s FireCast product line is used to power new merchandising initiatives, including instant credit kiosks and in-store TV networks, for retailers worldwide. For more information, please visit http://www.wirespring.com

It looks like Wal-Mart is going to join the digital signage revolution. It’s about time. We have all seen those big monitor boxes hanging from the ceiling like giant weights waiting to drop. Not only do you have to look up at an awkward angle the old technology is just plain hard to see. (maybe we have all become spoiled by high def).

Taking into account the old saying “out of sight out of mind” the revamp of Wal-Mart’s audio-visual display system should be a huge improvement with the following factors being taken into consideration:

1. Bring screens down to eye level
2. Build screens into endcaps, fixtures and shelving
3. Abandon the 2001-2002 “hang and bang” model where flat screens are hung nilly-willy around the store, mostly in locations that are difficult for shoppers to see
4. Control audio so that the soundtrack of these networks is welcomed by shoppers and store employees alike
5. Pack merchandise around the screens and speakers, so that the sound-and-motion media serves a useful purpose for both marketing and merchandising just as conventional Point-of-Purchase displays do

It will be interesting to see how the changes will boost sales. Will they make those changes public? Let’s hope so.

BATAVIA, Ohio (AdAge.com) — Despite growing talk about and investment in shopper marketing in recent years, relatively little money has flowed into in-store media. Now, Wal-Mart Stores is looking to change that as it readies a second-generation in-store digital TV and signage network.

Screeners: In-store media is under increasing pressure to show effectiveness.

Wal-Mart is preparing to unveil more details of its next-generation network, dubbed the Wal-Mart Smart Network, to marketers and advertising and media agencies at dual presentations in New York and Northwest Arkansas on Sept. 3, said a sales executive for one of its partners in the project, the analytics and technology firm DS-IQ. He said he was otherwise sworn to secrecy on the plans.

Another executive recently briefed on plans for the network said the concept involves moving TV screens–or digital signage–much closer to eye level, incorporating them into product displays, and creating interactive “virtual assistants” from which shoppers can get product information or refine choices in key categories such as health and beauty aids. The idea resembles a project Wal-Mart began testing earlier this year in which it adapted Procter & Gamble Co.’s Olay for You online recommendation engine for use in stores.

Executives of Wal-Mart didn’t return calls or e-mail for comment.

The payoff is potentially huge for Wal-Mart and an in-store-media industry that faces new pressure — and opportunities — to show effectiveness. Nielsen Co. last month began full rollout of its Prism system to measure in-store audiences and sales impact from in-store promotions and media. Wal-Mart has been a charter backer of the system, allowing Nielsen limited access to scanner data it otherwise withholds from syndicators.

Budgeting
One stated goal of Prism’s backers, including Wal-Mart, P&G and their joint media agency Starcom MediaVest Group, is to provide data on in-store marketing and media comparable to that for other media, so that it’s easier to tap media rather than sales promotion budgets to pay for it.

For years, Wal-Mart executives have compared growing foot traffic in their stores, now north of 130 million weekly, to declining network TV audiences. Yet the Wal-Mart Television Network has never become a big media player. It’s operated by PRN, a unit of the French company Thomson, which owns Technicolor and sells a variety of products and services for the movie and TV industries.

Advertising revenue for Wal-Mart TV totaled about $61 million in 2003, according to documents PRN released as part of an aborted initial public offering in 2004. Thomson hasn’t broken out PRN revenue separately since acquiring the company in 2005, but the unit of which it’s part has been shrinking in the past year, and financial reports suggest the entire PRN business (including other networks for such retailers as Best Buy and Costco) couldn’t have grown much more than $250 million, with Wal-Mart TV ad revenue not much higher than $100 million to $150 million.

Any way you cut it, Wal-Mart TV’s mega-reach has delivered revenue only on par with thinly rated cable networks rather than anything approaching the $64 billion advertisers spent last year on TV in the U.S., per TNS Media Intelligence.

Still, Wal-Mart TV hasn’t been a bad deal for Wal-Mart. PRN’s 2004 IPO papers show Wal-Mart made up a combined 89% of PRN’s $112 million in business in 2003, including around $39 million paid by Wal-Mart to PRN to operate the network, which the retailer also uses to hold virtual meetings with more than 1 million U.S. store employees. Based on a thin 8% operating margin for PRN, Wal-Mart appears to have been getting back more money from ad revenue than it paid PRN to operate the network. Essentially, it gets a corporate video network fully financed by suppliers, with some additional ad revenue to boot.

But it could be getting much more if it can tap dollars earmarked for other media. Wal-Mart and others are banking interest in its new system will be so intense that people will pay to attend a sales presentation. Besides the Sept. 3 presentations, a session on the new network — open only to agency and marketer executives at a price of $275 a head — is set for the In-Store Marketing Institute’s expo in Las Vegas in November.

Walmart is getting ready to roll out its second-generation in-store digital signage and television network. While details are understandably scarce, the new Walmart Smart Network is expected to make use of moving digital signage, and “virtual assistants.” What new developments in digital signage and in-store media do you expect we’ll see from the Walmart Smart Network and other 2.0 efforts at retail?

Obviously, Walmart has a lot to gain with their in-store media effectiveness, so it is no wonder they will roll out next generation, more creative in-store programs. Suppliers want to move as close to the consumer purchase decision as they possibly can, so moving general advertising dollars to in-store media with Walmart helps them and also ingratiates them with their largest retailer.

Buyers at Walmart have goals to attain, and the amount of in-store media support their suppliers purchase could well be one of their success measurements, so buyers will encourage and endorse this in-store activity.

Finally, suppliers can use these Walmart spends to help validate the specific level of investment support they provide to Walmart, so suppliers who are challenged to validate their support dollars to Walmart will have this support as an advantage when discussing P&Ls, which have always been a hot topic of discussion in planning meetings with Walmart.
Dan Nelson, CEO, Leadership Resources

It’s a smart move for Walmart to find ways to make in-store media more accountable and interactive. As marketers are moving away from TV spend (albeit slowly) there’s a great opportunity for retailers to pick up some of those above the line media dollars–if they can prove effectiveness.

The first couple of iterations of Walmart TV didn’t do a lot to distinguish in store advertising from general advertising but the promise of more interactivity and accountability make in-store media much more compelling. If there’s revenue to be captured, I think we can expect more retailers to move this way.
Lisa Bradner, senior analyst, Forrester Research

Of course, any retailer-operated advertising medium “fully financed by suppliers” is laughable on its face and questionable in its delivery. We’re all familiar with how it works. Suppliers don’t support efforts of this type willingly, but are strong-armed into paying the freight. This is followed by pricing adjustments that are eventually passed along to consumers, and a dearth of success reports for the medium in question.

On the other side of the equation, retailers have been numbingly unable for decades to convince product manufacturers that their stores are, in many ways, advertising tools superior to broadcast and print media. Retailers are chronically clumsy and ham-handed in their attempts to make this very credible case, including trying to tap into the more than $7 billion spent annually on distributing printed coupons. And brand broadcast expenditures are much, much larger. What is the best place to distribute coupons, the Sunday newspaper or a supermarket? No-brainer, right? If 70% of purchase decisions are made at the shelf, stores are the best places to communicate brand messages, right? And yet retailers haven’t made these cases because they always return to their tactic of choice: brute force.
M. Jericho Banks, Ph.D., Partner-Owner, Select Marketing LLC

It is hopeful that Wal-Mart’s in-store network would be really helpful to the customer. Let’s look at some facts about shopping at Walmart. The store is big! Some departments are easy to spot, others are obscured. How about using digital signage and interactive video to help the customer find their way to desired products…and first of all, finding out where they are in the store to start. That brings up another idea; how about a lost parents or Dad finder, similar to what theme parks do. Somewhere to sign-in if you get separated from your shopping companions.

Secondly, customers shop Walmart to save money. How about the system facilitating comparison shopping? This would be not only the cost compared to Walmart competitors, but how about bringing in Consumer Reports to tell the customers about products that are really a great value, or the cost trending of items that are becoming more expensive or reducing in price.

Not everyone shopping the aisles in Walmart, or any store for that matter, has current information on fashion trends or any idea on what goes with what. In an effort to help all of America to become fashion savvy and look good, how about information coordination, and detailing in the apparel aisles. Maybe even introduce “My Fashion Coordinator” software to allow the consumer the chance to input ergonomic particulars about their bodies, and get helpful input on a desirable fashion direction.

And this goes with my final fact; it is difficult to get help anywhere in a Walmart. So introduce a virtual store concierge who greats you when you arrive, and with motion or heat sensors, guides your through the store. I know that this may be a bit like “Minority Report,” but if that system was developed to be customer-friendly and not creepy, it would be really cool.

Understand that none of these suggestions is better than a front door greeter, a personal shopping assistant, or KNOWLEDGEABLE help available when you need it. But if not, these would be the next best things.
Jerry Gelsomino, Principal, FutureBest

A few thoughts:

1. For in-store digital media to succeed in Walmart or elsewhere, there has to be the realization that, no matter what anybody calls it, this isn’t a television network. While content is king and the reason for someone to go beyond simply noticing and actually watching what is on a digital screen, the medium is not about stopping people for extended periods of time. The environment is retail and people in that environment are on the move. They can get pretty ticked off if someone else is taking up space and interfering with the traffic flow. Messages need to be communicated quickly and be targeted to a given store’s consumers.

2. Digital images on a screen are ultimately unsatisfying even with amazing production values. Retailers need to be looking for ways to use the medium to connect consumers with the solutions available through the store or merchant’s website. Interactivity with video kiosks, especially those that tie to the back-end to recognize a consumer through a loyalty card, RFID key fob, smart phone, password, etc, will provide a level of personalization that will transition digital media from big screens blaring in a store to a tool that helps consumers get the most from their shopping experience.

3. Professionals in this space understand that digital media goes beyond a bank of screens in a consumer electronics department or a monitor offering food preparation tips in front of a fresh meat case. Stores need to start thinking in terms of other locations including store exteriors as a banner and brand-building medium, as well. Look at what Walgreens is doing in New York’s Times Square as an extreme example of another means for retailers to generate revenue and promote products and services.

4. There’s no doubt that marketers are looking more than ever to communicate with consumers in stores. Ultimately, however, the dollars that are starting to move in-store for digital signage and other merchandising tools will go right back out if some, at least vaguely, reliable source of measurement is not in place. There are a lot of companies (brands, retailers and digital tech vendors) working in the digital media space today that are focused on that very issue. It will be interesting to see what they come up with.
‘retailveteran’

The new Walmart network may have sleeker flat screens and a more elaborate audience measurement mechanism than PRISM, but it has yet to deliver the kind of behavior-based metrics that (in my opinion) would put shopper media over the top.

Despite the glowing, rectangular screens, this is not TV. Shoppers are busy people focused on a task who want to get their stuff and go. Messages that are not relevant to their mission of the moment or located away from the product in question have very low value. And measuring opportunities to see a message is a poor proxy for tracking behavior that may be influenced by the message.

That said, I am an enthusiastic advocate of shopper media. The store environment offers an outstanding opportunity to reach and influence shoppers. But framing its value in the antique conception of 1950s television advertising is worse than quaint–from the perspective of the brands themselves, it’s probably negligent.
James Tenser, Principal, VSN Strategies

Wal-Mart plans to move its TV screens closer to eye level and incorporate them into product displays in its second-generation digital TV and signage network, according to another wal mart digital signage article.

Details of this new stage in the Wal-Mart Smart Network are set to be spelled out in New York and Northwest Arkansas on Sept. 3 and are said to also include other key changes in the retailer’s digital video signage, according to the article.

Smart Network Is Said to Echo Retailer’s Project With P&G’s Olay for You

BATAVIA, Ohio — Despite growing talk about and investment in shopper marketing in recent years, relatively little money has flowed into in-store media. Now, Wal-Mart Stores is looking to change that as it readies a second-generation in-store digital TV and signage network.

Wal-Mart is preparing to unveil more details of its next-generation network, dubbed the Wal-Mart Smart Network, to marketers and advertising and media agencies at dual presentations in New York and Northwest Arkansas on Sept. 3, said a sales executive for one of its partners in the project, the analytics and technology firm DS-IQ. He said he was otherwise sworn to secrecy on the plans.

Another executive recently briefed on plans for the network said the concept involves moving TV screens–or digital signage–much closer to eye level, incorporating them into product displays, and creating interactive “virtual assistants” from which shoppers can get product information or refine choices in key categories such as health and beauty aids. The idea resembles a project Wal-Mart began testing earlier this year in which it adapted Procter & Gamble Co.’s Olay for You online recommendation engine for use in stores.

Executives of Wal-Mart didn’t return calls or e-mail for comment.

The payoff is potentially huge for Wal-Mart and an in-store-media industry that faces new pressure — and opportunities — to show effectiveness. Nielsen Co. last month began full rollout of its Prism system to measure in-store audiences and sales impact from in-store promotions and media. Wal-Mart has been a charter backer of the system, allowing Nielsen limited access to scanner data it otherwise withholds from syndicators.

Budgeting
One stated goal of Prism’s backers, including Wal-Mart, P&G and their joint media agency Starcom MediaVest Group, is to provide data on in-store marketing and media comparable to that for other media, so that it’s easier to tap media rather than sales promotion budgets to pay for it.

For years, Wal-Mart executives have compared growing foot traffic in their stores, now north of 130 million weekly, to declining network TV audiences. Yet the Wal-Mart Television Network has never become a big media player. It’s operated by PRN, a unit of the French company Thomson, which owns Technicolor and sells a variety of products and services for the movie and TV industries.

Advertising revenue for Wal-Mart TV totaled about $61 million in 2003, according to documents PRN released as part of an aborted initial public offering in 2004. Thomson hasn’t broken out PRN revenue separately since acquiring the company in 2005, but the unit of which it’s part has been shrinking in the past year, and financial reports suggest the entire PRN business (including other networks for such retailers as Best Buy and Costco) couldn’t have grown much more than $250 million, with Wal-Mart TV ad revenue not much higher than $100 million to $150 million.

Any way you cut it, Wal-Mart TV’s mega-reach has delivered revenue only on par with thinly rated cable networks rather than anything approaching the $64 billion advertisers spent last year on TV in the U.S., per TNS Media Intelligence.

Still, Wal-Mart TV hasn’t been a bad deal for Wal-Mart. PRN’s 2004 IPO papers show Wal-Mart made up a combined 89% of PRN’s $112 million in business in 2003, including around $39 million paid by Wal-Mart to PRN to operate the network, which the retailer also uses to hold virtual meetings with more than 1 million U.S. store employees. Based on a thin 8% operating margin for PRN, Wal-Mart appears to have been getting back more money from ad revenue than it paid PRN to operate the network. Essentially, it gets a corporate video network fully financed by suppliers, with some additional ad revenue to boot.

But it could be getting much more if it can tap dollars earmarked for other media. Wal-Mart and others are banking interest in its new system will be so intense that people will pay to attend a sales presentation. Besides the Sept. 3 presentations, a session on the new network — open only to agency and marketer executives at a price of $275 a head — is set for the In-Store Marketing Institute’s expo in Las Vegas in November.

SixteenNine Blog Writes:

Martin Klett, the longtime VP Operations at Toronto-based ShopCast, left that WalMart TV gig a couple of months ago and has now hooked up as Senior Project Manager at OneStop Media Group, also based in Toronto. Onestop runs the screen network on TTC platforms, as well as screen networks for Sporting Life and Hilton Canada.

Tammy Morris has left digital signage installer group Coxcom, heading to McMasters U to get her masters. She plans to teach and go back to some personal loves like yoga.

They’re both extremely nice people. Best wishes again Tammy, and OneStop guys … good pick-up!

We agree. This is quite the shakeup in the digital signage industry. These folks have worked on some of the leading edge and largest digital signage projects in North America.