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Understanding the Digital Signage Business Model

November 03, 2017

Research has shown that the global digital signage systems market is expected to reach $13.8 billion by 2017, according to InfoComm International – and with good reason.

The digital signage market is booming, with successful installations appearing in nearly every vertical, from entertainment and hospitality to education, health care, finance and transportation. Digital signage communication can benefit end users enormously. At the same time, the technology provides fantastic business opportunities for value-added resellers (VARs).

The Digital Signage Market

Digital signage refers to any business communication delivered through a dynamic messaging device. The information communicated can be nearly anything, from TV programming and advertising to traffic and weather information or a restaurant’s menu.

Digital signage is becoming increasingly popular for many reasons. Most notably, it can be quickly and easily updated, as often as you need. Not only does this save on costs associated with printing traditional signs, it also means the signage can be updated in real-time as the information changes, which provides the most up-to-date communications possible. And now, new technology also enables end users to take advantage of interactive digital signage, which has furthered public acceptance of this type of media.

The Digital Signage Value Chain

In the digital signage industry, manufacturers produce digital displays, such as LCD or plasma screens, as well as electronic billboards, media players and digital signage software. Media players are used to receive and store content – including video, audio, text and graphics. Then, each media player displays the content using a pre-defined “play list.” The digital signage software is what delivers the content to the displays, controls each play list and helps the end user handle other management tasks.

Audio-visual systems integrators and VARs use hardware and software from various manufacturers to provide end users with digital signage systems to communicate with their customers. End users can create their own content, or partner with ad agencies or other content providers to do so.

Value-add Opportunities

For many VARs, digital signage is a unique opportunity to differentiate themselves from the competition. Those who are already comfortable in the IT space are a natural fit for digital signage, since the market also requires knowledge of hardware, software, installation and networking.

VARs can further add value by offering customized digital signage solutions and, when necessary, integrating digital signage systems with a customer’s other systems and databases. Some VARs even opt to help with ongoing content creation and management for certain deployments.

Another sure-fire value-add is for the VAR to provide ongoing service and support and continually serve as a touchpoint between the customer, the hardware and software manufacturers, and any content suppliers involved.

Types of Digital Signage Deployments

As research firm Frost & Sullivan explains, there are generally three types of digital signage deployments. They differ based on the type of content being delivered:

  • Merchandising: Most often found in retail stores, but also in banks and even restaurants. This type of digital signage is meant to merchandise the end user’s goods and services, increase sales and build brand awareness. An example would be the clothing company American Eagle featuring branded videos with music, text and interviews in each of their retail locations.
  • Advertising: Usually seen in transportation venues, at theaters and in other high-traffic public spaces. This type of digital signage advertises content for multiple brands and is aimed solely at increasing advertising revenue. In many cases, this content is both informational and entertaining. For example, travelers waiting at Dallas-Fort Worth International Airport view digital signage that features diverse advertising supplied from a network operator.
  • Informational: Popular in hospitality venues, health care facilities and educational campuses. This type of digital signage is purely for informational and entertainment purposes. Its goal is to enhance the customer experience, often by decreasing perceived wait time. An example would be digital signage in hospital waiting rooms that features health news and diet and exercise tips.

In all of its forms, digital signage is poised to become even more prevalent throughout the world in the coming years. Where are you most often seeing digital signage – in restaurants, on digital billboards, in other public places? Do you feel that these displays have effectively engaged you as a consumer?