Tag Archive | "market"
I'd like to offer up an observation based on nearly a decade of experience in this industry: business as usual hasn't changed much for the small network operator since the turn of the 21st century. For one reason or another, things haven't gotten any easier for companies who manage 100 screens or less. And despite numerous advances in the marketplace, the longevity of a smaller digital signage company doesn't seem to have improved much, either. This baffles me, since in the 5+ years that I've been writing this blog and researching the industry, digital signage costs have continued to decline, the quality of the products and services that make up a digital signage network has improved, and people have generally become more accepting (and less incredulous) of the benefits of out-of-home digital media. I haven't completed an exhaustive analysis of the data, but at this point I want to throw out a couple of guesses as to why this might be the case. With your feedback, my goal is to turn this discussion into a more comprehensive study that can benefit network operators of all sizes.
Why focus on the "little" guys?
Image credit: Stefan
Before I jump into this, I want to point something out: the digital signage business is probably quite difficult for everybody, large and small. I doubt the execs at industry heavyweights like CBS Outernet and PRN just breeze through their operations without a care in the world. However, there happen to be a lot more small companies in our space than large ones, and I certainly deal with many more small companies on a day-to-day basis. Thus, I have a much larger pool of data to work with there. If anybody from one of the really big networks would like to chime in with a comment or two about their own businesses, all the better. Also, there's nothing magical about the 100 screen or 100 venue cap on my analysis. That just happens to be my mental point for dividing networks into "small" and "large" categories, and is otherwise completely arbitrary. So, don't think that installing just one more screen or venue will catapult you out of the danger zone and into safety.
Those who don't know history...
...are destined to repeat it, as the British philosopher and statesman Edmund Burke noted a few hundred years ago. Sadly, plenty of people in the digital signage industry seem hell-bent on trying to prove him wrong. Very few succeed in this endeavor. One of the biggest sources of angst in our marketplace -- to large and small digital signage companies alike -- continues to be the challenge of justifying the value of the screens (or screen time) to entities that might like to put some content on them. The entity might be an advertiser, a government organization, or a non-profit. But whoever they are, networks owners have to convince them that the audience viewing their screens is valuable. Furthermore, they have to prove that the screens can reach that audience in a meaningful way. As many experienced folks in the industry have said: if you haven't sold ads before, then starting out with advertising-supported digital signage is a very difficult path to take -- and one littered with the corpses of dead networks.
Clearly, the gung-ho attitudes of new network startups hasn't changed. And while that continues to lend plenty of optimism to the industry, it also means that more companies are charging into the space head-first, often without the understanding of why so many of their peers have failed. Thankfully, I've talked to numerous institutional investors and angel groups recently who've noted they see many fewer "build it and they will come" propositions from network startups, even while the rate of new network formation (from my perspective) seems to be increasing. So my gut feeling is that more companies are testing the waters with smaller, self-funded pilots, and perhaps relying more on organic growth from real, actual revenues.
Wait, I thought this was a cost-driven industry?
Ask any digital signage vendor and they'll say it certainly feels that way sometimes. And as I noted above, costs have steadily declined since we started tracking them in 2004. But that trend only seems to be helping with the rate of new network formation, not the relative success or longevity of those networks. To me, this suggests that the reason for failure has to do with operating costs (or revenue shortfalls) that aren't related to the technology or initial installation expense (which is really all that we track). It might be content, it might be management, or it might be sales. But whatever it is, it's enough to sink network after network. Of course, the upshot for savvy firms is that once a digital signage company goes under, their screens remain in the field, so over time we've seen smaller networks grow inorganically by purchasing the assets of their defunct ex-competitors.
Obviously, lower costs will continue to reduce entry barriers for prospective network owners. However, just because more companies get started doesn't necessarily mean that more will be successful in the long-term. In fact, I kind of expect the percentage of successful network operators to decrease as more new firms jump in, realize how hard this stuff really is, and then quickly make an exit (or die trying). But on the other hand, more new companies means more innovation, more new and different business models, and hopefully more paths to success. From WireSpring's perspective, we continue to see the strongest growth from new customers starting relatively small networks. But the next biggest growth area is from small- to medium-sized networks expanding their existing operations (which by some accounts is an indicator of their health). For all that, though, there are plenty of networks that have fallen by the wayside.
What's the biggest reason that digital signage networks fail? Is there anything on the horizon that will make things easier for new network operators? Leave a comment and let us know! Click here to leave a comment What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.
I've been going through the results from our last industry poll on what a digital signage network should cost, and I'm planning to publish the results of that study in the near future. In reading the responses, I noticed some interesting differences between the answers given by people who have worked on larger projects, versus those who have predominantly worked on smaller ones. I was obviously expecting to see some differences in terms of what people expected to pay for components, or which services were deemed essential (or not), but even the words used by these people in the course of their open-ended responses differed substantially. This got me thinking about the vocabulary and parlance that I use every day, and how I change it (or don't) depending on who I'm talking to.
Words that need to go away
A few weeks ago, Dave Haynes wrote a great post on his Buzz, Not Buzzwords blog about some common buzzwords and phrases that really ought to be shelved, at least during polite conversation. ("Best of breed", I'm looking at you.) It's one thing for press releases and marketing documents to use ridiculous phrases -- I think we've all come to expect that by now, and with practice we've learned to more or less ignore them. However, I'm still stunned when people tell me about their n-tiered, next-generation solutions in casual conversation (which also tells you about the kind of "casual" conversation I usually find myself taking part in). In addition to minding Dave's excellent list, I will be doing my best to avoid using the words leverage, dynamic and anything that has to do with synergy. I sincerely hope you'll try to avoid them too :)
A sign, by any other name...
Image credit: Andy on Flickr
Long before I started running surveys and taking polls, it was evident that our industry had something of an identity crisis. One man's digital sign was another's electronic display. Captive audience networks were all the rage, until people started realizing that their audiences weren't really captive (aside from those few prison-focused applications). These days, digital out-of-home, or DOOH, seems to have become the de-facto industry acronym, despite the silly sound. But try using that on anybody unfamiliar with the industry -- including those folks who have done their fair share of smaller digital signage projects -- and you'll be greeted with blank stares, funny looks, or worse. Consequently, I stick almost exclusively to "digital signage" when talking about indoor screens and networks, and "electronic billboards" when talking about the big, side-of-the-road displays. From what I've seen of the open-ended responses of this last survey, it looks like most of you agree with that approach. I do find myself occasionally using the phrase "digital out of home," but only in the context of advertising, since "out of home" has been used commonly in ad circles for quite some time.
Referring to big networks versus small
In addition to the myriad words and phrases that could be said instead of "digital signage," I started to notice that those respondents who typically worked on smaller digital signage projects tended to use different words than those who worked on larger ones. Specifically, the folks from smaller projects more frequently used tech-sounding words like "displays," "screens" and "monitors," while those accustomed to larger projects almost never used such words. This might point to the different mentalities of the companies running each type of project. An AV integrator may have made a successful business out of installing digital screens for messaging in many of the local businesses, churches and schools in his area. But if the projects were heterogeneous and largely self-contained, he probably continued to think of them as technical installations of screens and media players. The function of the screens was ancillary. On the other hand, nobody is going to install a 2,000 screen network unless they have a very clear idea of what those screens will be used for -- and usually that means having some kind of digital signage content strategy. Consequently, large network deployers frequently used terms like "media" and "network" in their descriptions, which were uncommon in the responses from smaller integrators.
So while I'll start talking about more substantive results from the survey in the coming weeks, these preliminary, anecdotal findings have taught me that nothing -- including industry parlance -- is a truly settled matter in this business. Part of that is because as we grow, new people and companies from very different markets are getting involved, bringing with them their own perspectives and vocabularies. Plus, some people really just like to throw around marketing schlock, and apparently there's nothing we can do to stop them. I'm hopeful that somebody will eventually figure out how to prevent these people from synergizing their backward overflow dynamics. Until then, I'm leaving my BS filter on.
The difference in terminology for large and small networks is new and interesting to me. What terms do you use for the kinds/sizes of networks you're most familiar with? Leave a comment below and let us know! Click here to leave a comment What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.
Believe it or not, there is institutional and angel money available for digital signage companies and networks right now. Unfortunately, the general consensus is that nobody is dying to invest -- in our market or anywhere else -- at the moment. Given this difficult economic climate, investors have become much more cautious about evaluating not just individual opportunities, but the space as a whole. In the course of preparing for our Digital Signage Investor Conference in New York next month, I had the opportunity to catch up with several equity fund managers and investment advisors who are all tracking the digital out-of-home market right now. Here are some of the more interesting themes and thoughts that have emerged.
Picking winning networks
"In general, across sectors, there is more scrutiny at the proposed ROI model and testing of the cost and revenue assumptions," said Jeff Milkie, a director at Challenger Capital, an investment bank with offices in Dallas and Chicago. The firm was most recently engaged as an advisor to Indoor Direct's series B funding which totaled $22.5 million. While excitement about the digital signage and digital out of home space remains high, it's a matter of "picking the winners and losers" right now.
Image credit: Andrei Niemimaki
But what makes for a winning network? A big driver for investors right now is having manageable capital expenditures, given that building out a network is critical. Then it's back to the basics of rolling out the right venue and DMA so the network would be attractive to advertisers. The investment community -- be it venture capital or private equity -- requires that companies seeking funds be able to "hit it up front" and cover all the hot buttons to them, said Milkie.
A guide to success
Even winning companies can have a hard time raising money. Often, the difficulty lies with the amount of time and effort required to first find the right investors, and then close a deal with them. Hiring an investment advisor is an increasingly common way of accelerating the process. Lon Otremba, CEO of Access 360 Media, successfully completed a series B fundraising in 2008. While the network did not retain an advisor, he does see the benefits in doing so. "Fundraising always takes longer than you plan. It just does. One of the dynamics in any venture backed industry is you're going to have to see a lot of people. It's a very time consuming process. We chose not to retain an advisor to help us through the process mostly because we were introduced to funds through Bessemer (their round A investor). If you have an advisor that can help shoulder the load and help through the process, through time consumption, that's a great thing."
While an investment advisor does typically charge a retainer as well as collect a percentage of the funds raised, the upside to working with one is similar to working with a real estate agent. The firm is largely compensated based on their success. There is therefore a high incentive to ensure a successful placement. "Having the right advisor will help the company tell the story and connect with the right investors," Challenger's Milkie noted. A good firm can get the introductions made, will know specifically what the investors are looking for and be able to tailor the investment thesis to address the points investors are looking for.
Bill's thoughts
Fundraising is a hot topic for many companies in our industry, and I've previously written about how to raise venture capital for a digital signage business and raising money during an economic crisis. While not every firm will want to hire an investment advisor to assist in the process, having a "winning" business model is something that all companies -- whether they're looking for outside funding or not -- should strive for. That's actually one more thing that a digital signage investment advisor can be a gauge of. Taking a step back, it's no surprise that pitching an individual or angel investor group before chasing after larger, more established equity investor groups can help you refine your elevator pitch and determine which points are most important to articulate. Similarly, the act of pitching an investment advisor can give you a quick snapshot of how far away from a successful raise you may be. After all, these firms are largely compensated based on successfully raising money for you. If they shy away from working with your company, they might be telling you that your organization lacks the attributes that their investors are looking for. Of course, there may be plenty of other reasons why one particular group or another might not be a good fit: a digital signage investment might fall outside their target industries, or perhaps they prefer to work within a particular geographic area. But testing your pitch against a few groups can potentially provide some valuable insight. I'm aware of at least three different companies that decided to substantially change their business models (almost certainly for the better) after having little success talking to such advisors.
So if you're going to be in the New York area during the first week of October and are interested in raising money for your digital signage firm, you might want to stop by the Strategy Institute's Digital Signage Investor Conference, which takes place on October 6-7. In addition to lots of other entrepreneurs and business owners, you'll find a number of angels, institutional VCs and investment advisors that are already tuned in to our industry, and might be able to lend a helping hand.
Have the capital markets opened up since last year? Are investors tired of hearing about the recession? Leave a comment and let us know! Click here to leave a comment What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.
For my recent post about digital signage "lingo", I performed a very brief and rather unscientific analysis of the data from our survey on how much digital signage should cost. Today, I want to start a more in-depth review of those results. There is a LOT of data to go through, and I suspect we'll be poking at these results for at least another few posts, eventually leading to the 2009 edition of our annual digital signage cost estimate. So let's start with a straightforward look at what people think the different components of a digital signage network should cost. As a warning, this post has a lot of graphs and charts, so if you're viewing this in your email or RSS reader and can't see the pretty pictures, you might want to visit http://www.wirespring.com/blog to see them in all their glory.
First, the caveats
Did I say a straightforward look at the data? Surely there's no such thing! For example, while we did get a total of 223 responses to our survey (our best showing yet), some people didn't answer all the questions. Also, we're segmenting the responses by network size (splitting "small" networks from "large" ones at the 100-screen mark to stay true to arguments in previous articles). Some people will disagree with that inflection point. And finally, the data is obviously highly skewed toward existing readers of this blog and there is no control set to compare against.
With that said, I'd like to present the following graphs, which tabulate the results from people who answered our "what should this part cost?" questions. We'll focus on the hardware and installation components today, and take a look at the software and support components next week. To begin with, we divided the resulting data into four piles (or buckets, if you insist on using ridiculous business jargon): one for people who have never done a digital signage project before, one for people who have only done small projects (1-99 screens), one for people who have only done large projects (100 screens or more), and one for people who have done all sorts of projects, large and small. Even accounting for the caveats listed above, I think you'll agree that the findings are pretty illuminating.
What do people expect to pay for a 40" LCD screen?
LCD monitors are the components of a digital signage network that people have the most experience with, since they're used in many applications besides digital signage. From corporate conference rooms to trade show displays to break room TVs, the widespread adoption of LCD displays suggests that people ought to provide the most similar responses for this item, regardless of their individual experiences. However, those reporting no digital signage project experience clearly indicate that they would expect to pay less for a commercial screen than those who have digital signage project experience (whether small projects only, large projects only, or mixed). This may suggest that those unfamiliar with digital signage are accustomed to purchasing consumer grade screens, and aren't aware of the price premium for commercial screens. Or perhaps they simply haven't priced a commercial digital signage LCD screen recently.
Approximately the same percentage of people expect to pay $1,200 or more per screen regardless of project size (35% of small project only respondents versus 36-38% for large and mixed project respondents). However, fully 1/3 of small project managers feel that $1,000 - $1,200 is the sweet spot right now, whereas those with any larger project experience seem to think they can get a better deal on average. The latter finding makes sense, since that group would be more likely to commit to volume purchases.
What do people expect to pay for media player hardware?
I was really surprised to see how much consistency there was on the media player pricing responses. I was also quite surprised to see how little people expect to pay for these devices. Whereas our 2008 pricing estimates put the average price of a media player at around $1,100, our respondents on average said they expect to pay only about $890. If that data holds up, it would represent a pretty dramatic drop of 19% from last year. Of course, a few different things could be happening here. First of all, the "no project experience" group is skewing the data a bit. Their estimates were the lowest on average (though not by much). Additionally, some people might have been using the survey results to voice what they'd like to pay, and not necessarily what they would actually expect to pay if they were buying these components today. Or, the price of media players could simply have dropped a lot over the past year. That's certainly not out of the question given today's economy and the willingness of many companies to make deals.
What do people expect to pay for a tilting wall mount?
Like LCD screens, tilting wall mounts are fairly common outside of the digital signage world. However, there is a huge discrepancy in pricing these items between those people who have some digital signage experience and those who don't. Given that those who haven't worked on digital signage projects significantly discounted the price of mounts, the most likely culprit is that this group has either not purchased many (or any) mounts before. Or if they have bought them, they were likely to just head over to Walmart to get the inexpensive consumer ones designed for mounting HDTVs. Those who have done work with digital signage in the past uniformly indicated that the "sweet spot" for mounts right now is the $100 - $200 price range.
What do people expect to pay for screen and media player installation?
The last item we'll discuss today is screen and media player installation. If you believe the data we collected, most people seem to think it doesn't cost a whole lot to install a screen. I wasn't completely surprised to see that those respondents with no digital signage experience would price the expected cost of installation so low -- the average was around $610, with the vast majority indicating "less than $500". If these folks have experience installing big screens, it might be of the do-it-yourself variety, or even a total guess. What was really surprising, though, is how much people with experience said they expected to pay. Our 2008 pricing estimate put the expected cost of a 40" screen and media player installation at around $1100, which was a composite figure that included two laborers (since a 40" screen is heavy enough to require a two-man lift), and a combination of union and non-union cost profiles. However, either we were really off the mark, or prices have fallen significantly, or else this data is totally inaccurate... because the average figure cited by experienced respondents was only $840, which would be nearly a 24% discount over last year's estimates. Granted, the labor market is quite flexible right now, and again thanks to the economy I could certainly see more people making deals just to keep their payrolls current. But it was still quite a surprise to see such uniformity in the data, and such a low resulting average price for digital signage installation costs.
That's all for now, I'm afraid. Those very mediocre-looking graphs took far too long to make, and while I was hoping to continue this article with discussions of the remaining items (software and tech support), that will have to wait until next week. In the meantime, I'll leave you with a question:
What do you think of the results above? Do they fit with your expectations? Leave a comment and let me know. Click here to leave a comment What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.
As promised last week, today we're going to continue the analysis of our recent survey on figuring out what a digital signage network should cost. My last article focused on the hardware components that go into a typical project: LCD screens, media players, wall mounts and installation services. (Admittedly, installation isn't hardware, but it does fit nicely with the other items.) Now we're going to look at the various software components that power a digital signage network. Once again, if you're viewing this in your email or RSS reader and can't see the pretty pictures, you should visit http://www.wirespring.com/blog to view the charts in all their glory.
Picking up where we left off
When we left him, our intrepid hero was struggling to figure out how much to pay for all of the bits and pieces that go into a typical digital signage network. Satisfied with the answers he got for the digital signage LCDs, media players and installation, he turned his attention towards the hydra that is software and support.
The key challenge with getting good data on digital signage software and support pricing is that these things are often interrelated, so paying more for one might reduce the cost of the other, for example. Likewise, lots of people have navigated their way through this business using only one software scheme (e.g. self-hosted versus SaaS), and consequently have little experience with other approaches. Because we asked all respondents to give their opinions on both pricing models, this has probably skewed the data a bit. Let's take a look at the responses.
What do people expect to pay for media player software?
Unless you're buying some kind of low-power set top box or something equivalently embedded, you're probably going to have the option of buying your media player hardware separately from your software. If not, you could probably at least guesstimate the cost of the two components, since most non-embedded media players tend to be off-the-shelf PCs these days. Consequently, there weren't many surprises from the responses to this question: the free/open source/pirated software people make up a small but stable portion regardless of project size, and everyone else is paying for software packages that span the range from a few hundred to over $1,500 per license. This makes sense to me, since there are a lot of very high-end, feature-rich packages out there that can be used for both small and large projects.
What do people expect to pay for remote management software-as-a-service (SaaS)?
On the subject of software-as-a-service, I'm still not sure how to interpret the data. For example, do any of the people who have no digital signage project experience (and thus no experience with digital signage SaaS), actually have experience using any other types of software as a service? If not, it seems like their guesses would have to be coming out of thin air. Roughly equal numbers of large- and small-project people have never used a SaaS solution, though only 15% of those with mixed experience have never tried SaaS. This suggests to me that many of those noting they have mixed experience are probably pragmatists who use different software for their different products, or perhaps they've inherited some older networks using products different from those that they use today. Those running larger networks definitely expect a larger discount on their SaaS bill than their small- and mixed-project counterparts. On average, those doing small projects exclusively pay about $671/node/year (about $56/node/month), and those doing large projects exclusively pay about $470/year (about $39/month). Those who have done both kinds of projects are right in the middle, saying they pay about $598/node/year on average ($50/node/month). Given the very wide range of prices, I believe that some of these SaaS plans include products and services that aren't included with others. Unfortunately, I didn't ask for that level of detail in the survey, so perhaps some folks can leave a comment and let us know what they get with their SaaS subscriptions.
What do people expect to pay for self-hosted remote management software?
Since virtually everyone has experience (or at least some familiarity) with buying boxed software, I don't think the data from the "no project experience" respondents is as suspect as it was for the SaaS question above. Nearly a third of those working exclusively on small projects seem to have gone with either SaaS or (more likely) unmanaged options, whereas that number falls to only about a fifth for those who have worked on large or mixed projects. On a pricing note, one thing that does jump out right away is the huge difference between those who have never done a digital signage project (and have likely not purchased any software for it), and those who have. The "no experience" folks overwhelmingly felt that management software should cost less than $5,000, which is a pretty low number based on my knowledge of today's marketplace. This could be because they simply haven't priced out the market, or it could be because those respondents who have actually read my blog but haven't yet done a digital signage project are studying smaller networks that might eschew formal management software altogether. Otherwise, the numbers for only-small, only-large and mixed experience responses were very close, suggesting that the results here might be a fairly accurate representation of the market. Many server software packages are purchased upfront, before the network reaches a significant installed base, so project size may play a relatively small role in the pricing.
What do people expect to pay for technical support?
Last but certainly not least, we asked people what they expect to pay (or typically pay) for technical support. Phrasing the potential responses to this question was tricky, since many people get support for "free" as part of some other service. Others pay a fixed-fee per managed node. Still others simply pay for the support they use, usually on an hourly or per-incident basis. Because we were basically asking people to condense their experiences into one of a few fixed choices, I'm not as confident in this data as I am with data for the other assets and services studied so far. Still, we can draw some general conclusions. For example, excluding those people who get support as part of their SaaS purchase, project managers are roughly as likely to pre-pay for support annually on a per-node basis as they are to simply pay per-incident, regardless of network size. The number of networks who don't buy any support package at all also seems somewhat steady in the low teens, probably indicating that this portion of projects is handled completely in-house. I'd expect to see this number decline over time -- in lock-step with pricing if past experience is any judge. Finally (and again excluding those who get support with their SaaS service) there is a clear trend toward the lower-end of the pricing scale, both on the per-incident and per-player fee schedules. No big surprises there.
In my simplified view of the world, the eight components we've studied in the past two weeks -- LCD screens, media player hardware, media player software, screen mounts, self-hosted management software, software as a service, installation and technical support -- are the core elements of virtually every screen network out there. Are there other things that need to be taken into account? Certainly. Bandwidth, video distribution equipment and content creation all spring to mind immediately. However, I've opted not to include those in this survey in hopes of really focusing on the most basic (and static) bits and pieces. With our basic analysis of these costs done, next week we'll turn our attention to the additional services that go along with digital signage: content production, project planning, and about a dozen other elements that we included in our survey. Plus, we'll talk about some of the things that people asked us to include in future studies. Now that you've seen our data on software pricing, I'll ask the same question as last week:
What do you think of the results above? Do they fit with your expectations? Leave a comment and let me know. Click here to leave a comment What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.
Over the past few weeks, we've been studying the results of our digital signage costs survey. As you may recall, we're segmenting the 220+ responses into four groups: those with no experience working on digital signage projects, those with experience working only on small projects, those with experience working only on large projects, and those who have worked on both small and large projects. Thus far, we have examined the data for digital signage LCDs, media player hardware and installation and digital signage software, management services and tech support. But there's much more to a running a network than these nuts-and-bolts pieces. Indeed, a wide array of additional services might be needed, ranging from content creation to project management. Today we're going to share more data from our survey respondents concerning the services they deemed essential to making their projects successful. If you're viewing this in your email or RSS reader, you'll probably want to go to http://www.wirespring.com/blog to see the chart with all the survey responses.
A service by any other name...
Image credit: Purple Slog
While there are plenty of web directories that claim to be a one-stop shop for business services, I've never seen a compendium of definitions for these services and their related providers in one place. Further, because some of them are quite complex, they may be called different things depending on who you ask. To wit, one person's "logistics management" might be another's "roll-out management" and still another's "inventory and shipping management". When putting together the survey, I tried to choose what I felt was the most generic name for each of the services that I've run across while working on a large variety of digital signage networks. Still, the results below may be slightly skewed based on what exactly each person felt the listed services comprised. For that matter, they'll be skewed by what you think they comprise too. Here's what each of the services means to me:
Logistics Management: Hardware and software inventory control (possibly but not necessarily including purchasing), shipping and receiving management and RMA/warranty management.
Strategy Consulting: Figuring out what the network is responsible for, setting goals and objectives, establishing measurement criteria for determining whether said goals and objectives have been reached, and possibly translating valid business lingo into management gobblygook to get the deal sold.
Project Planning: Developing an itemized to-do list of things that must be done before, during and after each screen is installed, parceling these tasks out to the relevant teams/groups, and making sure each team achieves their goals (and dealing with the fallout when they don't).
Content Strategy Consulting: Upon figuring out the strategic purpose of the network, figuring out how to make content that will work towards those ultimate goals. May include aspects of content creation, but is often confined to a strategic and then editorial capacity.
Content Production: Making all the pretty content that fills up the screens, and (frequently) cleaning up the not-so-pretty content that other people give you to put on your screens.
Content Management: Assigning the content to the different screens on the network (and different areas on the screen) as appropriate, and then making sure that the content played correctly, at the right dates and times, and in the proper order and proportion.
Network/Operations Management: Once the network is up and running, making sure that the screens continue to function properly, watching for systemic errors, and dealing with the random errors and issues that crop up over time.
Initial Project Management: Some people choose to break out their project management into phases, and have a team dedicated only to the deployment phase. These people are responsible for coordinating site surveys, on-site construction (if needed), installation, shipping/receiving of the various parts that must arrive at each site, and generally making sure that each screen gets installed and turned on according to schedule.
Ongoing Project Management: For networks that continue to grow over time, these services are very similar to those listed under "initial project management." For those that tend to deploy all-at-once and then stop, the services might look more like those under "network/operations management."
Installation Services: The art of hanging screens, running power/network cables, drilling, hammering and otherwise making lots of noise all in the name of getting screens installed and lit.
As you can see, even my pre-selected list has some overlap between items. And without the benefit of formal definitions, some respondents may have interpreted these services quite differently than I did. Still, the breakdown of how many people handle each service in-house, outsource it, or don't bother with it is quite interesting. We'll look at the overall results today, and then we'll break them down by project experience in next week's article.
Looking at the overall results
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Service
We do it in-house
We outsource it
We don't bother with it
Logistics Management
66%
30%
4%
Strategy Consulting
86%
10%
4%
Project Planning
93%
5%
2%
Content Strategy Consulting
74%
23%
3%
Content Production
50%
44%
6%
Content Management
74%
23%
3%
Network/Operations Management
66%
29%
5%
Initial Project Management
89%
9%
2%
Ongoing Project Management
86%
10%
4%
Installation Services
28%
69%
3%
What do these results mean?
I'm pretty confused by some of the results, and I bet you are too. For example, how can somebody "not bother with" installation services? Is your network in a bunch of boxes in a warehouse somewhere? Likewise, 6% of people opted out of content production. How on earth does that work? I understand that you can do a lot with Twitter and RSS feeds, but seriously, are there really networks out there that don't have any custom content at all? Even throwing the word "Jim" into your "Happy Birthday!" template and hitting "Save" would count in my book. Perhaps that 6% didn't think so.
On the other hand, I was very pleased to see that only 3% of respondents gave no consideration to content strategy consulting, though a large number still do this in-house (and my bet is that a fair number of those aren't doing a great job). Even just a few years ago, that number would have been much higher. For the most part, people today seem to understand that digital signage isn't just nuts-and-bolts. It's also arts-and-crafts. Along a similar vein, strategy consulting is done by all but 4% of the respondents polled, though again the vast majority (86%) are handling this in-house. While I believe that most of the networks coming out in the last few years are dramatically better than their predecessors, I still feel that a few days (or sometimes even hours) with a bona fide digital signage expert would help virtually everyone undertaking a new project or revamping an old one.
Not surprisingly, installation was the service most likely to be outsourced. That makes sense, since most people don't have big crews of carpenters, electricians and A/V installers on hand everywhere they want to place a screen. Project planning, which is certainly a very critical element during every stage of a network's life, was the service most likely to be handled in-house. This is probably how it should be -- provided you have some experience doing project planning in-house, that is.
These results speak volumes about the transition of digital signage from a back-room operation largely handled by AV folks to a kinder, gentler sort of project that is now being approached by people with sales, marketing, corporate communications and other backgrounds. While the variety of people and skill sets can make a digital signage solution a bit challenging to sell (since you have to know your buyer and what his pain points are), it also means more opportunities as the marketplace continues to swell. As I noted earlier, the data I've covered today is just the top-line results from the entire set of 223 respondents. Next week, I'll segment the numbers into our small, large, mixed, and no experience groups to highlight some specific trends. In the meanwhile, I'd certainly appreciate your feedback:
Are there any services missing from my list? If you're a service provider, do you agree with my definitions for the items listed above? Please leave a comment and let me know. Click here to leave a comment What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.
Last week we looked at a list of digital signage services to find out which tasks companies tend to outsource, versus handle internally. Today, I'll break down that survey data based on network size, looking at how those with small network experience, large network experience, mixed experience and no experience responded to the questions. This data could be valuable for service providers who are trying to decide which companies to market to. Likewise, it could be useful to network owners and operators as a way of comparing their decisions to similar (but potentially competing) companies. We've got a lot of graphs and charts in today's article, so once again if they're not showing up correctly for you (e.g. in your email inbox or your RSS reader), surf on over to http://www.wirespring.com/blog to get a better look.
So, how do big and small digital signage networks handle their service needs?
If you missed last week's article on digital signage services, you might want to give it a quick read-through, since it presents some top-line findings that we'll be exploring in more depth today. Let me point out one quick thing before diving into the results: there are some slight numerical differences in the results between this week and last, due to rounding errors in Excel and a peculiarity with how the spreadsheet treats blank values in certain formulas. For the most part, these errors are small (less than 3% or so), and in any event they don't change the high-level findings or analysis presented in last week's article. With that out of the way, let's take a look at the charts for each type of digital signage service:
Digging into the numbers
As you can see, there really isn't much variance in the responses from each of the experience groups, which I found quite surprising. After all, a 10,000 screen, 500-venue advertising network is quite different from, say, a 2-screen employee breakroom application. I was really expecting to see more distinction between those with only-large and only-small network experience, but those variances simply didn't show up. Understandably, the group who admitted to having no experience working with digital signage did tend to have different answers than the folks who have done projects before. Whether this indicates a lack of understanding of the marketplace or just a different set of expectations based on some domain-specific knowledge is hard to say. Most of the time, though, even the no-experience people were within a few percentage points of those with some experience under their belts.
However, there were a few areas where the groups displayed more diversity in their responses:
Nearly 80% of those working with large digital signage networks handle their content management in-house, versus 74% of small networks and 70% of those who have done both.
Those respondents who had only worked on large network projects were slightly more likely to outsource their project planning (11%), versus just 3.5% of those who had only worked on small network projects.
Likewise, those handling large and mixed projects were more likely to outsource logistics management (35%), versus only 21% of those working exclusively on small network projects.
While those with both large and small network experience generally tended to answer more similarly to those with large network experience only, one exception is in the network/operations area. Those with mixed experience were markedly more likely to take care of that service in-house (76%), versus just 63% of those exclusively working on large projects, and 64% of those exclusively working on small projects.
Not surprisingly, small network managers were significantly more likely to handle installation services themselves (though it was still only 30% of them). Only 20% of large network managers handled such tasks in-house. Those with mixed experience were split between these two at about 24%.
Things to cover in future surveys
While I got a lot of positive feedback about this survey and its content in general, there were a few common themes in the suggestions that I received. For example, many people asked for a greater focus on content-related costs, including typical production costs, rework costs, and the like. Another popular area of focus was on hardware, with numerous folks asking for a study of pricing for components like directional audio systems, cellular modems and plans, and measurement peripherals. Still another group wanted a look at more business-y items like equipment financing and leasing, costs associated with customer attrition, and related site fees. And then there was one guy who said "Monkeys. Lots of monkeys. And pie."
I'm not quite sure how I can help that last respondent (except perhaps to recommend that he check the dosage of his medication), but for the rest of you folks with requests, I'll certainly begin planning some future surveys to cover these important matters. There's clearly still a lot of confusion and complexity in our market, thanks to both the variety of skills that must be brought to the table, and the wide range of corporate disciplines that have attempted to take on digital signage projects. My goal for future surveys is to continue bringing the relevant data into the open, which should help increase confidence among potential customers and increase the size of the pie for everyone.
Well, I'm finished studying this data for a while, but it certainly has been an educational set of articles (for me, at least). As many of you have been asking, yes, an update to our annual digital signage cost estimate is coming up soon -- either later in October or early in November. To compile the annual budget numbers, I definitely plan to use the data from this pricing survey in conjunction with my usual method of gathering industry-wide pricing (which largely consists of emailing and calling a lot of people). But thanks again to everyone who filled out the survey and left comments during the past few articles. I've learned quite a bit from the experience, and hopefully you have, too.
Did you enjoy the way we published the survey results? Would you like to see them presented in the form of a downloadable report, a slide presentation, a video, or a podcast? Leave a comment and let us know. Click here to leave a comment What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.
Five years ago, we started a tradition that -- much to our surprise -- led to industry notoriety as well as more fans and flames than you can count. Yes, that's right, I'm talking about the annual digital signage pricing guide. As the number of articles on this blog started to become unwieldy, we decided to create a single page with all the digital signage cost estimates and price guidelines that we've published over time. This year, we're introducing a brand new feature: the pricing study will incorporate some of the data collected from our "How Much Should Digital Signage Cost?" survey, which we analyzed in a series of recent blog articles. As you'll see from the results below, digital signage has never been more affordable or more available than it is today. So what are you waiting for? Keep reading to find out just what it'll take to get you into your very own 100-screen network today!
A quick review and introduction
For those new to the market (and those who've read these articles before but have forgotten), the numbers below are meant to model a "typical" 100-screen network. What does that mean? I think this paragraph from last year's writeup still says it well:
While our previous cost estimates and ecosystem components have closely matched those from other industry analysts (so we don't think we're too far off the mark), the myth of a "typical" network is more strained this year than ever before. More vendors and network owners are choosing to implement screens with new formats and more varied locations, injecting more diversity into the projects. Plus, the idea that there's a standard staffing requirement for any digital signage network is pretty ridiculous. While we and others have proposed a list of key positions that need to be filled when creating a digital signage team, some networks are still very heavy on content production, while others might be composed almost entirely of sales folks. Still, as we looked across a wide array of networks -- representing not just our products but also our competitors' solutions -- we were able to get a reasonable feel for what most companies needed as far as the human resources side of things.
What's the cost of a typical 100-screen digital signage network?
Despite the many variables that go along with this type of broad estimate, we found that the data we compiled internally -- combined with the survey results that many of you contributed a few months ago -- paint a very logical picture. More importantly, the pricing continues to follow the well-defined trend that we've observed for several years now. The resulting cost estimates appear in the table below. (If you're viewing this in your email or RSS reader and can't see the tables and charts, we encourage you to visit http://www.wirespring.com/blog to get the full experience.)
Cost of a digital sign for 3 years
40" LCD screen
$800
Player hardware
$775
Display mount
$110
Player software
$405
Management software & tech support
$1,300
Installation
$740
Initial project management
$225
Total
$4,355
How have things changed since our last pricing study?
Right off the bat, you can see the dramatic decline in pricing, which we attribute to the confluence of a few things. First, and most obviously, the broad macroeconomic trends that we've all been experiencing the last 12 months or so have made ours an even more dog-eat-dog world than usual. With slower than normal deal flow and a more cautious customer base, many providers have felt compelled to slash prices in order to keep the deals moving. Stemming from this, several of the better-known vendors in our industry have experienced some pain (e.g. running out of working capital, having major investors withhold cash payments, trying to get bought/sold, etc.), and have consequently tried some... um... creative pricing strategies in an attempt to keep their heads above water. And finally, the tireless march of progress (aided by low or negative inflation rates) has simply made some of this stuff cheaper, as it almost always does. Interestingly, looking at the breakdown of costs by component, you can really see the effect of the commoditization of the hardware:
Hardware items are taking up less and less of the pie, while the service-oriented components like management software and tech support take up larger portions. While I don't think we've seen the end of this trend yet, it's clear that those service areas are where the true value to the customer lies, so it's no wonder that they're getting bigger at the expense of the mere "nuts and bolts." The upshot to you, gentle reader, is that there has never been a better time to get into the digital signage business as a network owner or operator -- provided you have the working capital, at least.
As you can see in the tables below, the cost of implementing a 100-screen network has dropped nearly 23% in the past year and nearly 50% since 2004, which is the biggest annual decline that we've recorded since we started keeping track. (Note: to ensure an accurate comparison, we removed the 24/7 tech support line from the 2004 numbers, since this was not included in subsequent years.)
What happens when you consider personnel costs?
As noted, the table above is a composite estimate for running a 100-screen network over the course of 3 years. Building on work that we did last year to figure out the approximate cost (including personnel) for running such a network, we've re-verified that the "average" 100-screen network takes somewhere between 7 and 15 people to run. We stuck with the assumption that the average salary for these personnel is $50K (which is fair, since average salaries haven't dropped that much in the past 12 months). But we reduced the average staff size by one person (to reflect the dismal state of employment today), bringing the average headcount to 9 people. This adds up to another $450,000 in salaries and associated costs every year, for a total of $1.35M over our 3-year planning horizon. That's equivalent to $37,500/month in expenses, or $375/screen/month. When added to the $121/month in capital expenses, the "average" screen in a "typical" 100-screen network costs about $496/month after salaries are factored in. In other words, a 100-screen network would need to pull in just under $50,000/month to break even.
What about connectivity and content?
First, connectivity. To the people who tell me year in and year out that I need to include bandwidth and connectivity costs in my estimates, I once again went out to the masses and asked. Aside from a couple of interesting exceptions, most networks are still sharing the bandwidth that's already in place at their host venues, essentially getting Internet connectivity for free. So while connectivity could easily add another $30-$150/month in expenses to your network if you need to spring for it, in my experience this will be the exception, not the norm. And with airports, malls, superstores and coffee shops giving away free bandwidth to anybody with a wireless adapter, I really don't expect that to change. I know a lot of people are waiting for WiMax to really start making headroads in the market, but today we're still stuck with 3G at best, and 2.5G or worse in areas with poor coverage. So cellular connectivity doesn't really save anything versus wiring into an existing LAN or using WiFi today.
Next, content. In 2007, we took a look at some of the content creation costs that go along with digital signage networks and found them to be all over the map. Since then, content gurus like Pat Hellberg and Gary Halpin have chimed in with explanations of why certain things cost what they do. But during that period, nobody has really ventured forward with a formula for guesstimating the a la carte content production costs. The good news is that the prices in our 2007 budgeting article have likely fallen, thanks largely to the lousy economy, low inflation, greater competition, improved workflow processes, and offshoring. The even better news is that since last year's budgeting article, I discovered that every single network I spoke to has at least one in-house content person who handles some (or nearly all) of the network's content needs. Consequently, at least part of the content creation budget is already built-in to my estimates above.
Closing thoughts (and some more light reading)
So there you have it, the 2009 digital signage pricing estimate. After speaking with a bunch of networks directly and incorporating the data that we culled from the 220+ responses to our pricing survey, I'm more confident of the numbers above than ever before. Want more info on the survey results that informed our final pricing numbers? Check out our recent articles where we looked at each category in detail:
Digital Signage LCD and Installation Prices Are Falling
Digital Signage Software, Management Services Costs Vary
Digital Signage Services Mainly Handled In-House
How Network Size Impacts Digital Signage Service Choices
Of course, even with all my number-crunching, I don't claim this data is perfect. That's why I hope you'll chime in with your own thoughts and experiences. So...
Are you surprised by the big drop in costs this year? Do our numbers match up with your own experiences on the open market? Leave your thoughts in a comment below! Click here to leave a comment What's WireSpring's Blog All About? WireSpring provides hardware, software and services for digital signage and kiosk projects. But our blog is a labor of love. Our posts cover everything from case studies to creative briefs, and are authored by some of the industry's most well-respected leaders.
Rise Display recently completed phase II of an installation for the Maple Woods campus at Metropolitan Community College in Kansas City utilizing Display Wire, their private labeled brand name for our Rise Vision Display Network - a web service for digital signage management.
The latest noted trend on the Zurich clubbing scene is introduction of new media into the customizable, usually limited club space. If we take Moods, the first address for jazz events in Zurich, as one of the examples for the trend, we can notice ...
Christie Digital took over a nightclub in New York last night and formally launched its MicroTiles products, with the event hosted by fellow blogger Adrian Cotterill of DailyDOOH fame.This was the second time I have seen the gear and was impressed once again, this time by the scale. Bob Rushby (below), one of the inventors of the tiled displays, showed off a wall of tiles that was 16 wide and 6 high (96 tiles) that amounted to (I think he said) a 37 million pixel image. It was some crazy-big number like that.The Christie folks also showed some other new designs and more content, including a huge display suspended at an angle and meant to emulate a 16-sheet out of home poster shape. Impressive stuff, and good event. Lots of familiar faces there, as well as a lot of people from the AV industry who will be all over this. (Disclaimer: I do some work for Christie, but I'd like it no matter the ties)
We would like to welcome Pine Cove Consulting (PCC) into the Rise Private Network Program. PCC worked closely with the digital signage team at Synnex to evaluate their options and create their signage offering.
Another institution that always includes digital signage in their events are United Nations. At their latest conference, taking place from December 7th to 18th in Copenhagen, Denmark, with the theme that occupies the attention of wide international p...
If you are looking to partner with a digital signage software company to resell their services what should you look for? And how do you profit from it?
Like many other digital signage software providers we see the growing trend for users to create dynamic content for their displays using these powerful off the shelf tools. By leveraging these 3rd party applications resellers and end users alike can easily create dynamic content without purchasing or learning proprietary applications.
Toronto-area audience measurement guys CognoVision has been named Canada's Innovation Leader for 2009 at the Canadian Innovation Exchange (CIX), describe as Canada’s most important gathering place for innovative technologies. The exchange does an annual search for innovative technology, products, services and companies in Canada, and whittles that down to a list of 20 finalists who then present and pitch to both Canadian and US senior executives and investors at a one-day conference held last week in Toronto. Industry peers at the event then vote on who they believe should be the year’s Innovation Leader.“This year’s competition brought out some of the country’s most amazing companies and technologies. From super computers and unmanned aerial intelligence gathering systems to new cleantech solutions, we were extremely pleased to see such impressive technologies being developed by Canadian companies,” says Robert Montgomery, Co-Chair, Canadian Innovation Exchange, in a release. “CognoVision was chosen by industry peers based on their innovation and dedication to using technology to provide in-demand solutions consumers will benefit from.”CognoVision (winner of Innovation Leader Award and Digital Media Award at the 2009 CIX) was commercially launched in 2008 to help companies measure the effectiveness of in-store media and shopper behavior in retail environments. This is achieved with the use of CognoVision’s proprietary retail audience measurement software solutions. Using small camera sensors and computers, the Company’s anonymous face detection and people tracking software gathers data on how people watch ads and how they navigate within retail venues. This information is easily communicated to clients with the use of CognoVision’s proprietary reporting system. This system allows end-clients to make data driven decisions to: dramatically improve the effectiveness of media campaigns, increase product sales and advertising revenue, optimize retail execution and to reduce operational costs.The runners-up by were companies that make unmanned surveillance planes small enough to fit in the trunk of a police car and financial grade GPS metering technology that, oh great, provides data needed to migrate roads and parking from taxpayer-subsidized to pay-per-use.
It is an often heard phenomenon these days to integrate UGC into the content programming of DS screens. I know, technical aspects aren’t an obstacle anymore. And I also know, some target groups are more than ready for it. But it still makes me shiver...
Yes, we are talking about the draw for football World Cup, that will for the first time take place on the African continent. The ceremony was held yesterday, in Cape Town, and we were once again impressed by the way that FIFA uses contemporary techno...
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The term Ubuntu stands for a traditional African philosophy which means that a person is a person through other persons. In other words, we affirm our humanity when we acknowledge that of others. We at MediaSignage like to think that we are continuing the tradition [...]
I got the PR direct from YCD Multimedia but I am too stinkin' busy to post (and others do that stuff all day long). However, this is very nice and worth noting. A nine-screen tiled array using, I assume, the Samsung thin-bezel screens.Flat panel screens are so ubiquitous now that consumers would walk by one or two sprinkled around a cosmetic section. But a wall of them three-high and three-wide, has genuine pop and impact. More detail on OOH-TV.
Friday, December 11, 2009
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