Growing the Digital Signage Economy Beyond $7 Billion Annually Intel proposes a standardized approach for innovation and scalability

Introduction In a few short years, digital signage evolved from a nascent technology with a highly fragmented ecosystem into a thriving, moderately well organized $7 billion industry with expected 40% cumulative annual growth rate1 (CAGR). Worldwide digital out of home (DOOH) advertising revenue was $2 billion in 20112, and is growing at a projected rate of 15% annually3. Accordingly, Intel predicts that by 2015 there will be 10 million media players powering 22 million digital screens. For those in the business, these numbers portray exciting times.

Sustaining that growth trajectory and building a long-term model for industry prosperity is the goal of Intel’s Retail Solutions Division. The division suggests three key strategies, all at various stages of implementation:

1) Adopting standardized platforms and specifications to ensure interoperability among content and networks

2 Enhancing and innovating upon the current business and solution model in order to monetize the entire value chain and support all members of the ecosystem

3) Developing and deploying a global digital signage network which enables advertisers to reach audiences in many new locations

Challenges Although the current growth trajectory is steep, that vibrant pace may not be sustainable over the long term. Several challenges must be overcome to ensure long-term success.

Lack of a formalized business model. Even though some standardization and organization has occurred, the digital signage ecosystem remains highly fragmented. This makes it difficult to define a sustainable value proposition for all players.

Sustaining that growth

trajectory and building

a long-term model for

industry prosperity is

the goal of Intel’s Retail

Solutions Division.

For example: What’s the appropriate price to charge an advertiser for the display of their message inside a shopping mall or an airport? How do you properly split that revenue between the sign’s owner and the media agency/ad aggregator? Who is the appropriate representative to arrange for the buying and selling of content? How does this brokering happen? Currently, every player has their own ideas on this topic but no consensus exists.

Unknown/undefined ROI metrics. Unlike broadcast or traditional out-of-home (e.g. billboards) media, this emerging industry has not yet developed standard metrics of measurement to determine the value of exposure to an audience. Without metrics, advertisers and media agencies are reluctant to invest in the infrastructure needed to power their digital signage networks. Therefore, definitions and consensus of ROI metrics are needed to grow the industry beyond the isolated networks currently deployed.

Standards in flux. While the industry has begun to standardize on a common hardware/OS platform, other standards are still in process. For example, content standards that will enable devices with differing screen resolutions to properly display any content at any time will ensure scalability of digital signage networks.

CASE STUDY Intel® Retail Solutions

Reference designs. With help from circuit board vendors, reference designs based on the platform specifications were developed for each type of digital signage system. Many ecosystem ODMs were given these platform specifications so that software vendors and other ecosystem partners could order their system of choice from their manufacturer of choice. A standardized API helps software vendors easily add value and customize their solutions on top of this standard platform.

Open Pluggable Specification. Ensuring value for all members of the digital signage ecosystem requires that all components meet certain levels of interoperability. To this end, Intel’s digital signage team worked with several display vendors and ODMs to create a common panel-to-embedded-module interface. Known as the Open Pluggable Specification, this capability enables display vendors to easily connect to any digital signage network through an internet connection.

Measurement and ROI. Intel took aim at the business value and measurement problem by acquiring the capability known as Intel® Audience Impression Metric (AIM) Suite. When integrated into a digital signage platform, Intel® AIM Suite can gather anonymous demographic information about the viewing audience. This data can be used in real time to enable providers to calculate ROI. Additional capabilities allow advertisers to tailor their message for their audience based on this feedback. Today, many solution providers are integrating Intel AIM Suite into their software packages.

Next Steps Out of an estimated total of $200 billion in US ad spending annually, only $1.6 billion is spent on out-of-home advertising. This indicates significant upside potential for the entire digital signage industry. To expand the economic footprint for all members of the digital signage ecosystem, Intel proposes the following strategies:

Shaping an Industry The early days of the digital signage industry have been likened to “the wild, wild west,” where a severely fragmented ecosystem produced an unwieldy variety of solutions. Although much of this disorder remains, several steps have been taken to organize the industry toward greater productivity and innovation. Major developments included: an open, standards-based platform, reference designs and a standard software API, the Open Pluggable Specification, and establishing a means for measuring digital signage effectiveness.

Standards-based platform. Intel believed that an open, standards-based platform was needed to help focus the industry and organize the ecosystem into a more productive and viable value chain. To this end, Intel, Microsoft and several other industry leaders worked together to define and validate the requirements for such a platform. Once specified, the platform was then segmented into three categories based on feature requirements.

Out of an estimated total of $200 billion in US ad spending annually,

only $1.6 billion is spent on out-of-home advertising.

Growing the Digital Signage Economy Beyond $7 Billion Annually

Growing the Digital Signage Economy Beyond $7 Billion Annually

ConclusionWhile it’s certainly appropriate to savor the successes of the digital signage industry’s current growth trajectory, it’s perhaps more important to start working on the future. Sustaining our collective success will take dedication and innovation beyond the current efforts of our community. It’s an opportunity for tomorrow’s thought-leaders to begin addressing these opportunities today. And Intel looks forward to collaborating in this endeavor.

Continued standardization. Development of a common platform and the Open Pluggable Specification are enabling the industry to build out digital signage networks that are interoperable with one another and capable of sharing content. What’s needed next is a standard for content formatting, since content created for one system does not always play well on devices with differing screen resolutions. A standardization initiative – currently in process - should help to resolve this issue.

Next-generation innovation. With the platform elements in place, the entire ecosystem can now innovate more broadly. Ideas include: cost-effective, reliable and secured solutions that interoperate end-to-end; solutions integrating mobile, social and online brand messaging; and business inventory management solutions. These and other new ideas are needed to add business value across the entire supply chain. The phrase “it takes a village” is certainly true here; innovation from the entire ecosystem is needed to ensure the long-term sustainability of the industry.

Building a national digital signage network. Expanding the economic footprint of the digital signage industry requires a new business model. Consider the idea of a national digital signage network across which messages could be “broadcast” to selected audiences as desired by key advertisers. With appropriate innovation, adherence to standards, and a vision for success, such a scaled-out signage network is entirely possible.

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1 IMSResearch,June2011pressrelease2PQMedia,GlobalDigitalOut-of-HomeMediaForecast2012-20163LyleBunn,August2012