Where's The Return On Your Digital Signage Investment?

So you want to gain an accurate gauge of the rationale behind technology purchasing decisions. You want to know what retailers are buying and why, and what kind of benefits they're experiencing. Do you ask an analyst to offer some facts (hopefully) and conjecture (assuredly)? Poll your subscribers? Or do you simply ask one of the biggest movers of retail technology solutions in the world what they're shipping and why retailers are buying it?

We tried the latter and learned from Marc Barnett, senior manager of solutions marketing at CDW, that retailers are bullish on the benefits of digital signage networks. However, the source of the return on digital signage might surprise you.

While ARTS (Association For Retail Technology Standards) is working on some standards, digital signage best practices have been tough to pinpoint. Will a standard deployment model come to bear?

Barnett: Due to fragmentation of the market, it's tough to get a replicable solution that can be maximized across the industry. Retailers have to approach digital signage investments with an opinion on the particular business problem they're going to solve with it. From there, the initiative can go in any number of directions. It's essentially about content management, but the nuances lie in determining what that content is, who it's for, and what you want to accomplish by presenting it. Then you get into the specifics of the platform. Is it interactive? Is it woven into the fabric of web 2.0? Does it employ social networking? The model can't be determined until the business objectives are outlined. Then, there can be a fair degree of customization involved.

That said, we're focusing intently on our "store in a truck" concept, which takes a complete blueprint of a retailer's IT infrastructure including servers, power, networking, telephony, merchant services and POS lanes, and any other store-level hardware. We then use that blueprint to replicate the environment at new stores and in store refreshes. The goal is to enable retailers to simplify IT implementation. As a result, we're learning a lot about best practices, as are our retail customers. Digital signage implementation is one specific area where we're actively applying what we learn and attempting to replicate best practices.

Many vendors of digital signage hardware and network infrastructure have been pointing to the sale of in-store network advertising as a source of revenue that bolsters the return on a digital signage investment. Does that pan out in reality?

Barnett: That model has certainly been successful for some retailers, specifically in the grocery segment. However, the greatest benefits our retail customers are realizing from their digital signage networks are tied to the control of their content and applications, as opposed to the sale of that content.

We compare selling network ad space to CPG (consumer packaged goods) companies to the Google ad model. But presenting paid content at the retail location is not quite at the maturation level; there's no best practice ready to go. In fact, we've seen many retailers look at what they want to communicate and how they want to use digital signage to shape customer perception, and they often choose to shy away from the advertising model. They realize that an ad for a CPG partner might not be their communication goal. They want to use signage to augment customer service, provide information about their organization or products, enable online shopping, etc. So achieving return is often not so much about making ad revenue; it's about maximizing customer interaction, communicating internal promotions, and helping to establish a corporate culture.

On The Web: Go to ismretail.com/storesystems for more advice on the deployment of digital signage.

What applications are driving return on the digital signage investment, and how are retailers maximizing that return?

Barnett: One of the challenges of a downturn is that when disposable income dries up, one of the first places hit is the traditional retail environment. Everywhere we go, there's a detailed ROI analysis and TCO (total cost of ownership) analysis and deep scrutiny related to infrastructure investments. We believe that the key to maximizing a return on digital signage is to lower the TCO. You do that by first understanding that digital signage is an effective means of delivering more content than simply "today's special." For instance, when viewed as a content management and unified communications platform, your digital signage infrastructure becomes a means of facilitating internal operations via distance learning and remote conferencing.

One of our customers is leveraging its digital signage network to improve the efficiency of its returns management effort. This company set up a kiosk to facilitate the return authorization process, minimizing a portion of the returns process that was traditionally handled manually. This has been a major efficiency gainer for them during postholiday seasons. In this way, the network is helping the retailer minimize an expense.

On the revenue side, a large wireless provider recently engaged us in a conversation about how to use digital signage to maintain a high level of customer service during peak times. They intend to use digital signage in an interactive way to engage customers, allowing them to see what their user experience will be like with certain phones and packages. They want the display to demonstrate a phone or coverage plan without requiring the immediate intervention of an associate. Digital signage investments can help retailers solve many problems. They all start with a common question: What's the business challenge you face?