Protect your investment

As the digital out-of-home advertising market grows, so does the need for a way to measure its effectiveness. Tim Kridel Reports.

Out-of-home digital advertising is out of this world – and that’s not hype. Instead, it sums up the problems and opportunities that integrators, advertisers and equipment vendors face as this sector starts coming into its home.

Out-of-home’s biggest challenge arguably is the lack of an industry-standard framework that lets advertisers and others measure the effectiveness of ads displayed on digital signage.

“For digital out-of-home to stand toe-to-toe with other media and get the attention of buyers, planners and agencies, there has to be a well-recognized metric, or else they’re not going to fool around with it,” says George Murphy, CEP of TruMedia Technologies, a U.S.-based company that specializes in audience-measurement tools.

That metric directly affects digital out-of-home’s revenue potential.

“Except for elevators and very specific venues where they know what the traffic is, it’s way underpriced or you’re not attracting advertisers because you can’t tell them who the audience is,” Murphy says. “So I think a metric is critical to this industry to get its bigger, fair share out of out-of-home.”


Second only to internet search

Out-of-home digital advertising spans a wide variety of environments, including shopping malls, airports, transit stations, hotel lobbies and elevators in residential and office high-rises. Digital signage also can be found in places such as above urinals in bar and restaurant restrooms and atop gas pumps, where their sheer unexpectedness – at least for now – helps draw attention to the advertising that they display.

Out-of-home digital advertising is evolving from a niche play to a mainstream medium. In Western Europe, for example, revenue will quadruple €160 million in 2007 to €626 million by 2012, according to an August 2008 report by Screen Digest, a London-based research firm. By 2012, digital signage will have about 10 percent of the out-of-home market’s total revenue, the firm predicts. Worldwide revenue is on track to hit nearly €1.2 billion this year, according to Magna Global, another research firm.

Out-of-home also is growing at a faster rate than any other type of advertising, except for Internet search, according to the Out-of-Home Video Advertising Bureau (OVAB), based in New York. That growth is coming at the expense of traditional media, particularly newspapers and magazines.

Reasons for that growth is the declining cost of both displays and the networking technology that connects them. But for advertisers, perhaps the biggest appeal is effectiveness. For example, a MediaWeek study found that in the U.S. market, ads on digital signage caught consumers’ attention 63 percent of the time. By comparison, magazines scored 57 percent, TV 47 percent and the Internet 40 percent.

Even so, there are regional differences that affect the current market for out-of-home.

“The European market is following the U.S. market as per the digital trend,” says Noah Meiri, vice president of sales and marketing at Magink Display Technologies, an Israeli company that specializes in electronic billboards. “Saying that, the size of the average customer makes it harder to justify the large investment in digital out-of-home. As with Europe, you cannot provide one solution that is good for all markets. You need to customize per language, territory etc. So even if you are a large, pan-European retailer, your local digital out-of-home budget comes from multiple places and not from one central decision and deployment. It is not a simple decision.”

Measuring the impact

Despite the growing belief among advertisers that digital signage is highly effective, they – along with media buyers and other members of the advertising ecosystem – still want an industry-standard measurement framework. The OVAB is putting the finishing touches on one such approach.

“Probably within the next 60 days, OVAB is going to publish their recommendation as to what the metric should be,” says TruMedia’s Murphy, whose company works with the OVAB.

The OVAB didn’t respond to interview requests, but one thing is certain: It’s not alone in looking for ways to provide advertisers and media buyers with insights into digital signage’s reach and impact – no big surprise, considering forecasts for how much the market will be worth in a few years.

Two others players are Arbitron and Nielsen Media Research, which have the advantage of already being household names among advertisers and buyers. Arbitron wants to use its Portable People Meter (PPM), a mobile-phone-sized device that users wear as they go about their day. The PPM listens to the sounds they’re exposed to and then uses that information to determine which radio stations they’re listening to, instead of the old technique of requiring them to fill out paper “diaries.”

The same concept could be used to track the out-of-home ads they’re exposed to – at least the ones that include audio embed with a subaudible code that the PPM listens for. And considering that some mobile operators already offer phones with built-in software that identifies songs – with the goal of encouraging subscribers to then buy them through the operator’s Web portal – it’s not a stretch to envision PPM-like software being added to future phones to assist with out-of-home measurement.

Nielsen, meanwhile, plans to adapt its “pocketpiece” TV ratings reports for use with a type of out-of-home advertising known as place-based networks, where it’s often possible to collect information about the people frequenting those places. For example, in the case of signage in health clubs – such as IdeaCast’s service – Nielsen would glean demographic information from the club’s membership roster.

Yet another option – one that’s already widely used with both print billboards and digital signage – is to leverage a device that most Asians, Europeans and Americans have on them whenever they’re out: a mobile phone. Many advertisers now put a text message “short code” on their ads. Passers-by then can send a message to that code in order to receive more information about the advertised product.

At the very least, the amount of messages coming in tells the advertiser whether their ads are getting noticed. And depending on how much demographic information they ask consumers to provide – such as in exchange for receiving an electronic coupon that can be used toward the advertised product – advertisers also can get insights into whether a particular ad is resonating with certain types of people.

Getting personal

While the industry develops ways to track digital out-of-home’s effectiveness, other companies are focusing on ways to serve ads based on who’s viewing them or what they’re doing.

One example is radio frequency identification (RFID), a short-range wireless technology that embeds information – similar to a universal product code (UPC) – on a thumbnail-size chip that’s then affixed to a product. A scanner then extracts that code from nearby chips, called “tags.”

Major retailers such as Wal-Mart have deployed RFID to help track inventory and thwart theft, particularly for high-value products. But some vendors offer systems that attach RFID readers to digital signage so that when a shopper picks up a tagged product from a nearby shelf, the display serves up an ad about that product.

Another innovation is pairing digital signage with cameras and software capable of identifying demographic information about passers-by, such as their race, age and gender. That information can be used in at least two ways.

First, the advertiser can analyze it to understand the demographics that are being exposed to its ads. That information can be used to assess the campaign’s effectiveness, such as whether it’s reaching the target demographics or whether signage in other locations should be used instead.

One example is TruMedia’s iCapture system. Besides collecting demographic information, iCapture also track the number of people who walk by a display, the number who look at it, how long they look and how long they’re near it. All of that information provides the advertiser with insights such as whether consumers perceive the ad as engaging.

Second, if it turns out that a majority of passers-by are women, the advertiser might choose to switch to ads designed to appeal to women. Those changes also could be made in real time, depending on who’s passing by the signage at a particular moment.

“It’s something they’ve been asking for,” Murphy says. “It’s just going to take time for advertisers to get comfortable with it. But that’s the way it’s going.”

Putting the pieces together

Getting there will take a few things. For AV integrators, it means having a working knowledge of the software and networking technologies that clients can use to execute digital out-of-home campaigns. Although there are plenty of other parties that clients can turn to for that assistance, by offering it themselves, integrators can add value and avoid being marginalized.

Others believe that although a lot of the hardware, software and other components are available today to create digital signage networks, many of the seams are showing.

“The most important thing that needs to be automated – and is not there yet – is a tool to optimize the images and campaign across a multitude of out-of-home displays so the ad campaign is seamless,” says Magink’s Meiri. “Today it requires a lot of work done by ad agencies, content management tools and the actual display manufacturers who have their own ideas as to what looks best on their systems in changing ambient conditions. If this can be handled by one tool or process, out-of-home will be more effective and create higher rates and better ad effectiveness.”

One way to make campaigns more effective is by creating ads specifically for digital signage, instead of repurposing content originally designed for other media.

“Today, some agencies, companies, end users and advertisers will take a magazine ad or TV commercial clip and post it as is on a digital display, and it simply looks bad,” Meiri says. “The result [is that] the advertiser says it doesn’t look good. Now if the entire chain was understood and managed, the end result would look a lot better.”

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