New revenue generation opportunity

Today most of the malls, stores and airports are eyeing the advertising revenue model for digital signage. They let specialized digital signage agencies do the investments and manage the content with a revenue sharing arrangement. On the face of it, this does make sense as upfront capital investments are avoided by these businesses. At no initial investment, this opens up a new revenue stream for the business.

Let's focus on CORE revenue generation objective

Let's reiterate that the primary focus of a business is to generate revenue from its core activities. Residual income can be generated from other activities.

Core activity of malls and public places, are leasing out signage space for advertising as a revenue model. It makes perfect business sense for these businesses to rely on third party digital signage advertising companies (like flash media & DSN in India , Focus Media in China etc.)

Retail shopping insights

It is a proven fact that most shoppers do not shop with a list in mind, spend some leisurely time shopping and are greatly influenced by POP advertising.

For businesses like retail stores, banks, healthcare facilities etc., the focus is primarily to increase the top line revenues by showcasing new products and services to customers. Generating advertising revenues is a definite secondary objective.

The manufacturers or distributors selling products and services are more than willing to pay and advertise on the digital signage network. This is an automatic source of revenue to the business.

Content is the king, Controlled content is the emperor!

The most important aspect in digital signage which is often underestimated is CONTENT. Content has to be real time, updated and linked to other systems. With content that is too static or too long or with no audio, the digital signage looses its impact altogether. With this, it is mandatory that the retail store has complete control over its network and content to make sense.

With investments in the Digital Signage network, the retail store has total control on the content relevant to boosting its top line. Take a look at some examples of typical formats.

Garments: Video of fashion show with models walking in apparels and accessories in the store. This is a replacement of the mannequin by the digital mannequin. By linking the POS system to the signage, videos of items out of stock can be skipped. This ensures you are not promoting what you can't sell. Imagine doing this with a third party network outsourced network and you will realize why it makes sense to invest.

Fresh: Ever changing offers and daily updates on prices have to be updated nationally to sell target items, get stock liquidated, and announce special deals when stock hits a particular level etc. can be done only with a network owned by the business. Local control by SMS or blue tooth interface is provided to empower store managers to take quick action.

Specialty: To convey a store brand statement like "we won't sell, we help you buy" mandates the content to be largely focused on being educative rater than offer based. This helps the customer to choose the right product from a confusingly large range on display and ultimately helps the sale. Broadcasting live events like a super chef demonstrating a new recipe are possible only with an owned network

Setting the right mix

Does it mean that stores that invest in their own digital signage networks never advertise? They certainly do, but restrict the third party advertising to a certain percentage of the time, say 20%. The rest of the time is focused on revenue generation. In this 80% slot, smart businesses would generate some advertising revenue from product distributors and manufacturers who will benefit from faster off-take of products equally as the store would. A deal can be made with the manufacturer to get more discounts on the product and offer slots as a barter deal on the digital signage network. Anyway which way the deal is structured, it has a dual revenue potential by increasing sales and getting advertising revenues.

Investment model also works for businesses that can not advertise. Typical example is a 5 Star Hotel. Here the hotel management focuses on building the brand and displaying its own promotions and events. At most, it can promote other properties affiliated with the group as a cross sell. An exception may be a shopping arcade within the premises where shops advertise on specialty merchandize available with them.

Technology integration

The digital signage solution is no longer an isolated third party effort, it is tightly integrated with the business network, applications and partners in some instances. With applications undergoing constant, newer hardware (RFIDs etc) being introduced, integration is a key aspect of a successful installation. This integration is only possible with a dedicated owned network.

Putting digital signage investment in the right perspective

A typical network of 100 screens in 10 locations would require an investment of approx 15 Million Rs. This investment is typically just 3-4% of the capital spent in setting up the store. There is a variation of 5-10% in the project costs when a new store is being setup. This means that digital signage investments are not really huge as compared to the total store setup costs.

The Streme Business model

With prices of displays and other networking products dropping by the day, the total cost of ownership of the digital signage network is decreasing steadily. It seems like investments make sense for in-store advertising. The challenge is to find a solution provider who understands the end to end requirement. Niche fills this gap with its partnership approach. Niche takes ownership of a setting up and maintaining a successful digital signage network.

Letting digital signage agencies manage the advertising networks for public spaces and malls lets the property owners stick to their core business. It also generates fixed/variable revenue out of spaces that were not used at all earlier. Niche provides complete back end logistics and support to these companies. They are free to focus on their core business of getting advertising content, billing and collection, leaving the operations and setup to Niche