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Fourth Quarter 2008 Outlook For the Digital Communications Network Industry

For the second time this year, Cleverdis Editor in Chief Richard Barnes was moderator for the Platt Retail Institute roundtable conference call bringing together participants from Germany and the USA.

The panel included Robert Koolen, President, Scala, US; Karin Wunderlich, Director, POPAI, Germany; Heiko Carstens, Karstadt Warenhaus, Germany and Steven Keith Platt, Director, PRI, US.

One of the main questions centred of course on the current financial situation and how it is impacting the level of digital signage interest, as well as the number of deployments. It was generally agreed that the US is harder hit than Europe, and that of course the banking sector is feeling the pinch. According to Robert Koolen, “Where we’ve seen a delay is in the large capital projects in the US.  But in the rest of the world -- because we’ve got 450 partners around the world selling and that’s kind of a real blessing for us. -- we see continued good growth in France, we see a 39% increase in Norway, 24% in Saudia Arabia, 58% in the Netherlands, Poland, 350%, Russia 67%.

On the other hand, while deployments appear to be still buoyant, existing advertising-based networks are under pressure, due to the fact that in hard times, some advertisers don’t want to give up the security of TV, while others are going for online advertising or guerrilla campaigns, still hesitating to jump into digital signage.

Karstadt are working on custom in store media, and have installed 800 screens in 14 Karstadt departments stores, with content that changes weekly. The network is set to expand into a major second phase, but the chain is seeking third party backing. Mr Carstens explained, “We already made some market research with very good results, with the lecture coming later, where I can say a few words about the results.  But we still want another 36 department stores to be rolled out in Level 2, so if we find an investor, and hopefully we already did, we want to support the rollout of another 2000 screens in Karstadt department stores in the next six-nine months.”

The retail sector remains one of the stalwarts and indeed future hopes of the industry. According to Mr Koolen, Scala continues supplying primarily in this area: “Retail is the biggest kind of deployment area of digital signage for us with 28%. Financial is about 11%, entertainment is at 10%, health care factoring in at 6%, government, 6% and everybody else, they’re the remaining 33%.”

The hindrance to acceptability of digital signage as a true advertising medium still however hinges on metrics. Robert Koolen, one of the first in the business to hop on the metrics bandwagon by partnering with TruMedia said, “Until we find a good set of metrics, people are sticking more conservatively with traditional ways of advertising, although we all know those ways are not working when people are zipping through the ads with their digital video recorders.”


Steven Keith Platt © photo: Cleverdis

But the question of establishing metrics is not a simple one… Steven Keith Platt underlined this: “My opinion, and what we hope to prove, is this is a different medium, just like the Internet is a different medium, and I think that it’s capable in a sense of achieving different goals.  And I think to try, personally, apply outdated metrics to a brand new technology in a message-delivery system is a mistake.  Here, the ad agencies are eventually going to learn that you measure in-store networks in a specific manner and it’s not going to come down, in my opinion, to in-store metrics versus an out-of-home metric, personally.”

Karen Wunderlich added a cautionary note… ”The only issue with all these metrics right now is that everybody agrees that they’re good, but our tests are stationary tests.  They’re not – right now, our metrics are not established enough to be on a constant basis – that’s number one.  Number two, a lot of these metrics still are so expensive that they can’t be done on a wide basis, and that is something we’re going to have to work on, in one, establishing the value of the metrics, and then getting them so inexpensive that you don’t do just two stores, but you can do 20, 30, 40 stores.”


The idea of centralised selling for digital signage advertising will of course depend on the aggregation of data.

In conclusion, the outlook for the industry, according to all roundtable participants, is still very bullish. To that end, Robert Koolen set the tone: “I think it will probably grow very fast, because once, in my experience of markets, once this pragmatist group of people, which is really the group that’s to be addressed next – once they start buying, they’ll start buying in droves, because then it becomes a competitive disadvantage if you’re not participating, not using a new technology.  If we can get to that point where they will buy it because they don’t want to be left behind, we’ll see the growth rates we’ve seen so far, industry wide about 20% or so, and we’ve been exceeding that.  But once that starts, we hope that we’ll get into that rapid adoption curve that will blow the roof off this thing.”

Meanwhile SK Platt believes that in the short term, things are going to continue to be choppy both due to the economy and some of the issues that were discussed at the roundtable.  His long term outlook is upbeat: “Long term, digital signage is the purest, most effective methodology to communicate messages to consumers.  The ability to leverage that technology and maximize on that is what we need to work through, those are the issues and the challenges.  But ultimately, things like being able to integrate into hand-held phones and other devices and kiosks, and highly target messages through RFID and facial recognition and a whole host of other things.  It truly is the most effective method of medium available to communicate with consumers.  I think over time, as the technology and metrics evolve, we believe this industry is going to be huge on a global basis.  I continue to be of that mindset.”

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  About Platt Retail Institute: PRI is a world-renowned retail think tank and the leading expert in research and consulting to retailers, banking, and media companies, as well as other stakeholders in the global digital signage industry.

US Office:   
Steven Keith Platt, Director                          
Platt Retail Institute                  
P.O. Box 158                           
Hinsdale, IL 60522  USA           
Phone: 630.920.1844  
skp@plattretailinstitute.org         

Denmark Office:
Brian Andersen, Director, European Operaions
Platt Retail Institutet
Baggesensvej 8
8600 Silkeborg Denmark
Phone: [45] 4045 8195  
briana@plattretailinstitute.org

  pri logo

For additional information, please contact:
Melissa Ehret, Director of Corporate Communications
Phone: 630.986.8874
Fax: 630.920.1843

plattretailinstitute@yahoo.com

 
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