According to MarketsandMarkets, the global digital signage industry is expected to grow 27% in the next four years, reaching $13.2 billion by 2016. We see evidence of this growth everywhere.

Whether they're mounted in retail outlets, restaurants, shopping malls, bus shelters, office tower elevators, hotels and airports, digital signs have taken over from paper everywhere you look, and for good reason. Not only can the information and media be updated easily, inexpensively and remotely, but video attracts the customer and holds their attention; interactive elements and cameras can help collect metrics. And while digital displays must be manufactured (and eventually disposed of), electronic signage is easier on the environment as it means less paper and no need for trucks to deliver paper signs to the establishment on a regular basis.

Intel Corp. predicts the global market for digital signage will reach 10 million media players and 22 million digital signs by 2015. In a recent interview with DigitalSignageToday.com, Jose Avalos, Director of Visual Retail for Intel, noted a progression from "dumb digital signage," to connected and "intelligent and multifunctional digital signage with the integration of smart technologies for remote management, energy efficiency, and analytics for return on investment."

In this installment of our digital signage series, we examine the monetization of digital signage, primarily as it pertains to advertising in the retail space, not just for the establishment's own products and services, but also for third-party messaging.

Advertising on Digital Signage

Businesses of all sizes and in all sectors are using digital signage to connect with customers and monetize the booming platform through advertising, which helps offset the digital signage investment.

"A typical sales model is the placement of ad spots within a loop of content and advertising with a specific duration that repeats throughout the day," summarizes Pat Marshall, Vice President of Communications and Investor Relations at Cineplex Entertainment, which includes the Toronto-based company's nationwide digital signage program (Cineplex Digital Solutions).

Andrew Barrett, Vice President of Marketing, Samsung Electronics Canada Inc.: "Digital signage has to be competitive with other impression-based advertising, but being right at the point of sale has a higher value, because we know it works."

Marshall says a typical content loop will contain approximately 50 % editorial and/or entertainment information and 50 % advertising. Advertising is spaced to deliver as many impressions to as many people as possible.

Stores can use digital signage to promote their own products ("Sale today on our party-sized pizza!") or sell slots directly to advertisers directly or through a third party. "Advertising on digital signage networks, including those offered by Cineplex Media, is sold to national advertisers such as automotive, packaged goods, electronics, wireless operators, tourist boards and so on, as well as local retail advertisers in or near specific venue locations," says Marshall.

In a retail setting, sometimes exposure on the in-store digital signage network is bundled together with other in-store merchandising, and Web and print as part of an overall co-op marketing program, she adds.

This is certainly the case with Best Buy Canada, which has a heavy investment in digital signage. "We have a hybrid model," explains Dave Champion, Director of Media Solutions. "For one of the advertising models, we employ a third party who sells to both our vendor's agencies - the Sonys and Samsungs of the world - as well as selling to other advertisers, such as RBC, Toyota and a few others." The second model is cooperative ("co-op") marketing with its vendors, whereby a certain percentage of marketing dollars are set aside when purchases are made from vendors.

For example, Best Buy is currently in the middle of a co-op deal with EA Sports and Sony Computer Entertainment for the videogame NHL 13. The campaign isn't just for in-store screens, but part of a larger package that includes a broadcast campaign, flyers and placements on BestBuy.ca.

But Champion believes the digital signage component might be the most powerful. "A store like Best Buy doesn't just have one screen; we have a lot of HDTVs and laptops on display, which all can run the content, resulting in a significant impact in the store." In total, Best Buy has about 22,000 screens across its 150 Future Shop and 77 Best Buy big-box locations, as well as nearly 30 Best Buy Mobile stores.

In September, Best Buy Canada conducted a co-op program with EA Sports and Sony Computer Entertainment to promote NHL 13. The campaign ran on in-store digital signage, as well as broadcast, flyers and placements on the company's Websites.

Another reason why signage is so effective is because it has the ability to influence purchasers right at the point of sale - as opposed to a television advertisement or reading a flyer at home.

Setting Advertising Rates

When Best Buy Canada began to consider in-store digital signage a few years ago, Champion said his team first looked at outdoor advertising rates. "Even though the [signage] is contained within the store, we looked at the rate and the traffic outdoor advertising netted, based on a cost per thousand views, sort of like TV."

Andrew Barrett, Vice President of Marketing at Samsung Electronics Canada Inc., agrees that advertising rates are calculated on a cost-per-impression basis. "Digital signage has to be competitive with other impression-based advertising, but being right at the point of sale has a higher value, because we know it works.

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