Digital Signage Spot Blog: January 4, 2010

January 04, 2010

Digital Signage is not all about ROI

By Guillaume Proux, Vice President, Asia, Scala

Guillaume Proux

My colleague pointed out this very beautiful example of digital signage (shown in the video below) used by Maison Hermes in Japan.
(You can read a little bit more about the project here).

I think this is a wonderful illustration of how we have to rethink the whole concept of digital signage in shops where the first preoccupation always seems to be the return on investment (ROI).

For more and more companies, digital signage is becoming an essential component of their marketing and communication strategy together with the traditional advertisement based marketing and an increasingly mobile online presence.

However while anybody nowadays understands traditional and online marketing as a necessary evil and indispensable cost of doing business as a modern enterprise, too many companies see digital signage essentially as a revenue opportunity and not as a strategic communication medium.

The reason is of course very simple: a serious digital signage project is very capital intensive in its execution so it only seems natural to see some kind of return on the investment. However, one should liken digital signage with the heavy expenses incurred when renovating and refitting a shop or upgrading all TV sets in hotel rooms to brand new LCDs. How can we calculate the ROI of those heavy capital expenses? Very likely that there is no magic formula. Clearly there is a benefit in doing that or shop owners and hotel operators would not incur such expenses.

However, while the benefits are intangible - hence impossible to quantify - they are usually the kind of benefits that any self-conscious business should strive to obtain:
- better brand recognition
- better brand image
- stronger brand emotional attachment
- higher customer satisfaction rate
- stronger satisfaction index
- bigger average basket size/variety
- higher product or brand loyalty
- better educated customer

Basically, digital signage is all about turning a business that provides basic packaged goods or services into an "experience" oriented business.

As pointed out in the book "The Experience Economy", to extract higher margin and avoid becoming a commodity one should strive to build a business that not only appeals to our basic tastes but also appeals to our mind by building highly differentiated products and services. An oft discussed example (albeit slightly flawed if easy to understand) is how Starbucks has completely modified the coffee industry value chain by managing to extract very large margin on a decidedly banal product like coffee beans.

Today many of our customers harness this principle by building increasingly impressive digital signage deployments that appeals to the mind of people, that enable them to obtain many of the intangible benefits of digital signage. One example of this would be the the Sprint Store Grand Moment special events that any shopper can experience every hour in the Kansas City Sprint Store.

So, when discussing digital signage projects with your customers or business partners, keep in mind that digital signage, even if it can be used in a revenue generating manner, is also an excellent tool for companies wanting to provide their customer a specific and customized experience that has a long-term, high return on investment value.

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