Ad-Funded Digital Signage: Is There A Future In It?

Today, I just released a new white paper entitled, “Ad-funded Digital Signage: Is There a Future In It?”. This release came one day after a presentation that I gave at Digital Signage Expo 2010 in Essen, Germany. In both the white paper and the presentation, I laid out the five social and technological trends that I believe are essentially going to make ad-funded digital signage nearly irrelevant to advertisers and their agencies unless the digital signage solutions providers can adapt to what’s coming. If you haven’t already done so, I invite you to click here to download a copy and read it. I think you will find some of the points contained therein both interesting and revealing. I would also welcome any feedback that you may have.

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14 Responses to “Ad-Funded Digital Signage: Is There A Future In It?”

  1. Hi Mr. Gurley: Just read your white paper about the future of ad funded digital signage. I own and operate digital sign networks and total disagree with your take.

    You missed the biggest reason digital signage is not living up to expectations. The biggest reason is almost no one in digital signage has an advertising sales background. In the five plus years I’ve been in the business I am still the only person in digital signage I know with a solid advertising sales background. Every owner of digital signs I know have backgrounds focused more on the technology side.

    Maybe that’s why my four small networks all make good money and are growing. I do agree that mobile will chip away at digital signs. But it will also chip away at all other forms of mass media which you do not really address in your paper.

    Your focus on mobile gives the impression this is where the vast majority of ad budgets are going and the future of digital signage is marginal. I am sure your big investment in mobile had nothing to do with your viewpoint.

    The bottom line is, unless mass media totally disappears, digital signage will eventually be a major player. It may take some time until the tech heads who thought they could run an advertising media wash out and the market place gets fed up with traditional media. Arbitron has been proven faulty by the People Meter and Nielsen can not tell how many people really saw the ads due to DVR’s. But my clients know exactly who they are reaching at my venues and how many opportunities to see their ads they are getting. The metrics issue is a red herring because the truth is Arbitron only tells you how many opportunities to hear your ad and their average quarter hour can not be as precise as the transaction rates at my sites.

    In your white paper your assumption that DSN or weak based on your observation of everyone in the restaurant looking at their cell phones and no one looking at the digital sign in plain ignorant. Obviously, you never made a living selling ads on the radio or any other traditional media. If you did, you would know, few people spend any time looking at or listening to an ad if they are not interested in the content. If you think you are going to force people to look at ads on a cell phone, you are naive. They will only look at them if they opt in or get caught by browser ads. If you catch them with a banner ad, they will not give it more than a split second glance if they are not interested. Yes, the potential to qualify the recipient gives it an advantage of DSN. But that’s limited because people will find ways to avoid getting those ads too.

    My take is you are right that mobile ads will grow but any specific prediction about its future right now is pure conjecture. You are wrong that digital signs have a bleak future. Your prediction would then mean radio is dead too. There will always be a significant amount of mass media because it will always be one of the best ways to reach out to new prospective customers. Out Of Home signs will be the one mass media that can not be deleted, bypassed, opted out, scanned over, or substituted by other devices.

    Best Wishes, Mark

    • Mark, I appreciate your feedback. Your passion and enthusiasm are to be commended.
      In my defense, I never said that I believed ad-funded digital signage will totally die. What I did say is that it has not lived up to expectations and the mobile threatens its existence.

      Frankly, I believe the new era of mobile is a game changer like nothing we’ve ever seen. In your response, you mentioned that my conclusions would suggest that radio would die as well. Have you seen the stat’s on how many people are now listening to radio via Pandora and other music sites via their mobile devices? It’s amazing. I watch my teenage kids, they don’t listen to the radios in their cars, they listen to music sites via their phones connected to the radio. Let’s face it, in today’s world, it’s all about personalization. The mobile phone is the only platform that can deliver true personalization when out of home.

      Will there always be a place for ad-funded digital signage? Yes. As I noted in my paper, signage will rein in those places where the use of mobile is impractical. It is up to the digital signage operator to find those places. It is up to the digital signage operator to learn how to co-exist with mobile.

      I commend you on the success of your networks. In fact, I know members of our team at Symon would like to meet you and hear about your success. What I would encourage you to do is to become more familiar with what is happening in the mobile space.

      One final comment. If you saw the news last Thursday, you saw that lines were forming all over the world for the sole purpose of purchasing a new iPhone. People waited in line for, in some cases, days to get one. What most people fail to recognize, is that the hysteria was not about the phone but about what the phone enables. Almost 2 million phones were sold in three days and many more could have been sold had they had the inventory. That’s unprecedented. Let’s face it. Something big is happening. To ignore it is to do so at your peril. It WILL impact your business.

  2. Dear Mr. Gurley:
    I must say I was disappointed with the paper “Ad Funded Digital Signage” because almost none of it was addressed to the title. So what if mobile is the biggest part of the future? I’m not in that market as of now. My local based DS system is growing quite nicely, mainly because I have reduced costs to next to zero. I could tell you how I did that but then I’d have to…you know the rest.
    If your answer to the DS debacle this past few years is “move to mobile” then I have to again submit disappointment in the article. Give me some feedback as to why the others are all going bankrupt; where is the data? Who is succeeding- if anybody? Why?
    I could tell you not to bother with mobile advertising, because you can make much more money in ethanol!
    Give me some data about DS.

    • Rich, thanks for the feedback. Sorry you were disappointed. As with everything in life, some liked it some didn’t.

      Bottom line, the point is this: why would agencies want to buy time on ad-funded digital signage when the overwhelming trend is for people to spend significantly more time engaged in their mobile devices vs looking at signage. There are many reasons that ad-funded signage has not met expectations, but from my experience people simply don’t engage with it.

      As I said in my paper, there will always be a need for it but it won’t be that overwhelming. It’s as simple as that.

      Thanks for taking the time.

  3. Hello Steve,

    Firstly I really enjoyed reading your white paper.

    I have been studying DS myself now for around 9 years and raised over £3m+ in that period for a few start ups, so like you know a little about the market and have seen DSN work and flop.

    I totally agree that mobile will play a huge part in DS.

    The mobile could infact be seen your remote control and the DS is the teaser or prompt to action.

    DS / Mobile / Social Networks / Wireless / Client Shaping

    = Win Win

    I look forward to reading more from you in the very near future.

    Best

    Michael

  4. I think there is a definite future for digital signage.

  5. Steve,
    You hit the nail… right smack dab in it’s ad-funded head. I have been doing research on Adfunnded networks for the last 3 mo’s as I try to come up with a reasonable business plan for DOOH business venture. Let me tell you, it’s like trying to find a triangle with 4 sides. I applaud those who are running successful networks, but they are the minority. Most of my research shows that many fail after 3-5yrs. It’s just a really hard business to sustain and make large profits from. I appreciate what Steve is trying to do here. It takes a lot of gut to declare that the emperor has no clothes on. I could tell that Steve has put in many hours into his “white paper” Thank you for the insight and direction. And to all you successful Network operators… hats off to you guys. Much respect. It can be done, but it’s a hard road.

    Dan

  6. To the folks on this list. Will any of you be at the DSE 2011 next week in Vegas?
    If so perhaps anyone with an interest in ad funded networks might like to get together to swap war stories?

Trackbacks/Pingbacks

  1. Why Are We So Enamored with Ad-Driven Digital Signage Networks? | Digital Signage Central - September 20, 2010

    […] while people like Steve Gurley have come out with reports suggesting that digital signage advertising will likely never take off in a truly spectacular […]

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