March 5, 2010 – Despite the worst recession in 70 years, sales of large-format, commercial-grade video displays broke a record in third quarter 2009: up 41 percent quarter-over-quarter and 19 percent year-over-year, according to DisplaySearch, an analyst firm. For telcos, wireless carriers and other network operators, those figures add up to a big opportunity.
The vast majority of commercial-grade displays 26 inches or larger wind up in “digital signage” applications, which include video and static ads in shopping malls and other public places. Unlike old-school signage, which typically was a TV with a DVD or VHS player built in or nearby, today’s digital signage requires a network to get its content.
That requirement means bandwidth, which means revenue for service providers.
“We see it as a growing market,” says Paul DiGiacomo, executive director of strategy and business development at AT&T, which offers wired and cellular connectivity for digital signage. “Increasingly we’re seeing requests for implementations via 3G, and it’s also another application on the converged IP infrastructure.”
Pieces and Players Come Together
Over the past few years, several trends have been expanding the digital signage market:
* Displays are getting bigger, but they’re also getting cheaper. That means more enterprises – even small ones, such as physicians groups – can make a business case for deploying signage.
Just as important, the displays also are shifting to HD, meaning that SD is found almost entirely in legacy installations. The industry-wide migration from SD to HD affects the amount of bandwidth that each display needs.
“You’ve just raised the bar four or five times in terms of the amount of pixels you’ve got to drive,” says Jeff Collard, president of Omnivex, which specializes in signage software.
* Wired and wireless broadband is more widely available, making it easier to get content – especially HD video – out to signage.
* Advertisers large and small have spent the past few years shifting spending away from print and into digital, including signage, which sometimes is referred to as “digital out-of-home advertising.”
Networks are Key
A nascent but important trend is the emergence of advertising networks that aim to make it easier for marketers and brands to buy space across multiple signage networks owned by different companies in widely geographically dispersed locations.
One example is Vukunet, founded in late 2009 by NEC, a display vendor. Vukunet’s features include a central platform where signage network owners and media buyers can meet to handle ad placement and payment.
In a sense, that model is similar to what telcos and MSOs have offered for years: a single point of contact for getting commercials in front of millions of eyeballs scattered around a region or country. So one possibility is that telcos and MSOs – perhaps via Canoe – could expand those offerings to digital signage, creating a one-stop shop for advertisers looking to reach consumers both in and out of their homes.
“As the larger providers – AT&T, Telus, Vodafone – get more into this space, then you have the numbers necessary to mimic the Internet for ad networks,” says Nash Parker, director of emerging technology and media for Alcatel-Lucent, whose ng Connect Program is aimed partly at signage applications. “You get the reach and frequency and punch that marketers and agencies are looking for.
NEC’s Vukunet also provides proof-of-performance metrics such as the number or demographics of people who viewed a particular ad. Those metrics are noteworthy for a couple of reasons.
First, Vukunet is one of many industry initiatives that aim to provide the kind of information that advertisers say they want in order to judge the effectiveness of signage-based campaigns. The more such information that’s available, the more they’ll be willing to spend on signage, and thus a bigger demand for bandwidth.
Second, to compile those metrics, the raw information has to get from the displays back to the ad network’s owner. That’s more traffic for the network, albeit a trickle compared to the one megabit per second or more required downstream to feed HD video to each sign.
Cached Content and Real-Time Changes
Today, most digital signage feeds a stock set of ads. Those are downloaded either to a local server that feeds multiple displays or to a PC-like device next to or embedded in the display. Either way, signage rarely streams video, except in the case of something like a sporting event that a retailer uses to get shoppers to linger.
“Most digital signage systems have a channel player at each display,” says Derek Paquin, principal at Sensory Technologies, which designs and installs signage networks. “This player is responsible for caching and playing content based on a schedule. Since the content is cached locally on the player, bandwidth becomes less of a concern because content is not trying to be played back in real time over a network.”
A small but growing minority of displays are paired with cameras and other devices that can identify the demographics of passers-by in order to serve up an ad designed to appeal to that type of person.
That means each display now has a larger number of ads, so there are more files to download. From a network perspective, it’s more efficient to cache them at or near each display, instead of having it identify the demographic and in real time ask a central server to send down the appropriate ad.
“Why does it have to go all the way to the mother ship and then come back down to tell the player what to play? Why can’t the player make the decision locally?” says Omnivex’s Collard. “The more we can disperse the intelligence, the more efficiently we can use the bandwidth.”
Signage’s upstream requirements are growing because some displays can report information about who’s viewing ads. Also, some displays now perform a second function: enabling interactivity.
For example, suppose that a consumer stops by a wireless carrier’s kiosk and wants detailed information about its smartphones, particularly the Android models. To prepare for such situations, the carrier basically has two options: staff up its kiosks with at least one person who’s had extensive training on smartphones, or hope that the kiosk’s product literature and generalist salespeople have enough answers to convert the inquiry into a sale.
Digital signage creates a third option, providing an interactive screen that the consumer can use to get more information, including switching to a videoconferencing link engages live feedback from an offsite expert. The basic value proposition applies to a wide variety of verticals.
“You don’t have to have a mutual fund expert at every [bank] branch,” says AT%26T’s DiGiacomo.
Signage that supports videoconferencing also is a good fit for locations with large immigrant populations. That could include non-advertising applications, such as way-finding signage in a transit station.
“We have a two-way solution that allows people to use a digital signage point of information to talk, for instance, with someone in their native language to get more information,” says Roger Sanford, vice president of media services at MediaTile, a signage vendor.
More than Bandwidth
AT&T got into the digital signage business about two years ago after deploying 2,000 displays in its wireless retail stores. That was a “tremendous success,” DiGiacomo says, in terms of upselling customers on additional services. That signage didn’t have videoconferencing capabilities, but the ROI was good enough to convince AT&6T to start a business unit to sell signage.
AT&T currently has two main signage offerings: It can provide just the bandwidth, with other companies procuring and installing the displays and software. Or it can provide a turnkey package of bandwidth, hardware, software and design, as well as managing the content that’s fed to the signage.
“Our global hosting centers have software-as-a-service (SaaS) for digital signage,” DiGiacomo says. “Many clients don’t want to run a NOC and a help desk, so we take care of that. We provide a turnkey solution as a managed service.”
AT&T’s package deal includes the option of paying for the displays as part of the monthly fee. That can help make signage affordable to more enterprises, such as a small chain of oil-change shops that can’t justify tens of thousands of dollars in upfront costs just for the displays.
For signage customers, a major challenge often is the content: creating it and pushing it out to displays requires a human, and usually multiple ones if the content is sophisticated and frequently updated. Not surprisingly, even large enterprises are receptive to signage solutions that let them outsource some or all of those tasks.
Although AT&T is an example of how some service providers are offering content-management services, it’s not exactly low-hanging fruit because there are plenty of other companies in that space. The dominant type is audio-video (AV) integrators, which design and install signage networks. Many have branched into at least content management, if not content creation, too, because it’s a recurring revenue stream.
“We have created our own hosted solution called InterAction,” says Sensory’s Paquin. “By having central servers sitting on a large bandwidth pipe at our location, we can manage the client’s digital signage network by loading/updating content, scheduling playlists, manage all functionality and proactively monitor.”
Sensory also is an example of how some AV integrators also collect information on their clients’ behalf in order to meet advertiser demand for metrics.
“Our digital signage displays are touch sensitive [and] therefore interactive,” Paquin says. “Gathering analytics and metrics to understand where people go and what they touch, allows our client to evolve, improve communication and continually modify the message.”
And like AT&T, integrators sometimes provide hardware as a service, instead of having clients buy the displays.
“By providing a monthly cost structure from this hosted solution, clients benefit from the decrease in capital expenditures, increased cash flow and minimal operational involvement,” Paquin says.
Telcos and Wireless Show Interest
At least for now, AT&T is a rarity: Most telcos, cable operators and wireless carriers don’t have business units for digital signage. Instead, they get revenue from that market mainly by waiting for signage specialists – particularly AV integrators – to come to them, looking for bandwidth for their clients’ installations.
“Some customers want to be completely hands off with their digital signage networks,” Paquin says. “In these cases we will arrange everything, including finding the telco to provide the T1 [and having] the telco billing integrated into the managed service fee that we charge the customer.”
Some signage vendors believe that service providers will take a more prominent role, based on what they’re hearing from those companies and what’s going on in other countries. For example, BT has been selling managed signage services in Europe for nearly four years.
“They’re not asleep at the switch in Europe,” says Omnivex’s Collard. “They’re looking at it very carefully and making plans.”
Telcos are showing more interest than MSOs, says Collard, who couldn’t elaborate because he’s under multiple NDAs. If so, that’s probably a byproduct of cable’s traditional focus on the consumer market
“Telcos are looking really seriously at this space because they know it’s going to be a big consumer of their networks,” Collard says. “I don’t think North America is quite as far along with that.”
Cutting the Cord
Wireless carriers also are targeting the signage market, usually as a subset of their initiatives in the machine-to-machine (M2M) space.
“We were talking with Glenn Lurie, who’s the president of AT%26T’s M2M group, and he felt that digital signage is a big part of their mix,” says MediaTile’s Sanford. “At Digital Signage Expo [in February 2010], we were co-exhibiting with Sprint. We had Sprint’s solution running on our signs.”
At first blush, cellular and WiMAX might seem like an ill fit for signage, if only because wireless has a price premium for bandwidth compared to, say, DSL or the client’s existing LAN, which is basically free. But other benefits can outweigh that premium.
For example, CIOs and IT managers often prefer not to run signage traffic over their LANs for reasons ranging from the additional bandwidth load to concerns about creating back doors for hackers. And even when they do allow it, the signage becomes one more thing that the IT department has to deal with. Putting signage on cellular or WiMAX sidesteps those issues.
“There is a lot less expense in going wireless, because your IT isn’t overburdened,” Sanford says.
In other cases, the appeal can be flexibility, such as being able to deploy signage quickly for a seasonal mall kiosk, or to move signage every quarter as a store’s floor is reconfigured to maintain a fresh look.
“You’re always reconfiguring your end caps,” says Alcatel-Lucent’s Parker. “Having that cellular capability allows you to be flexible.”
Regardless of the application, if the signage is in an area that requires union labor to pull every cable to each display, going wireless can reduce costs by eliminating the fiber or coax pulls.
Of course, cellular and WiMAX aren’t the only wireless options. Another is Wi-Fi, although it has its own set of downsides, including unlicensed spectrum that makes quality of service difficult to guarantee.
Although cellular and WiMAX are becoming more common in signage applications, display vendors aren’t embedding those technologies into their products. Instead, they’re leaving the technology choice up to the end user or sales channel, which deploys what it wants by adding an outboard modem that plugs into the display with a connection such as HDMI.
That design means that the initial choice of display doesn’t lock the client to a single technology or service provider. Whether display vendors embed cellular and WiMAX in future products depends on a couple of factors. A big one is their willingness to bet on a single technology or carry multiple SKUs, one for each technology.
Some signage vendors – such as Samsung – have developed their own LTE and WiMAX chipsets because they also sell mobile phones. It’s not a stretch to see them adapting those chipsets for displays, although judging by what some vendors have heard at recent signage trade shows, signage manufacturers haven’t committed to embedding just yet.
“I didn’t sense that they were saying, ‘We’re going to put LTE in all of this,'” says Alcatel-Lucent’s Parker.
Moving Bandwidth Target
Regardless of whether the network connection is copper, fiber or wireless, the amount of bandwidth required determines both the price and each service provider’s ability to target the signage market.
Not surprisingly, signage’s bandwidth requirements vary widely based on factors such as the amount of compression, the type of content – video versus static images – whether the video is HD or SD and how often each display’s content is refreshed. (For some additional considerations, see www.cisco.com/en/US/docs/solutions/Enterprise/Video/mrndmsaag.html.)
Signage software vendors such as Scala often compete based on how efficiently they can use bandwidth.
“Typically, a weekly update in a retail store using Scala is perhaps on the order of 250 megabytes,” says Jeff Porter, Scala’s executive vice president. “If you are not using Scala, you have a real possibility that the same content would be five to 10 times larger.”
Yet another factor is whether content is fed over a WAN to a media player or server that then routes it over a LAN to each display in a building, or whether each display has its own WAN connection.
“Because it’s a new area, people are going to have a learning curve about how much bandwidth they need,” says MediaTile’s Sanford.
In the case of advertising, one wild card is the length of each spot. Digital signage is viewed by people passing by rather than sitting in their living room, so ads typically are much shorter because there’s a smaller window of opportunity to grad and hold attention. That length affects the file size of each ad.
“A typical 1080p file is about 1 mbps, and 720p is about .8 mbps,” says Omnivex’s Collard.
Non-real-time downloading of files shrinks the bandwidth requirement. So although signage running dozens of HD video ads might initially seem to be an enormous – and expensive – amount of traffic, the actual burden on both the network and the client’s wallet often is much lower.
“We’ve done one customer on 128 kbps,” says AT%26T’s DiGiacomo. “Sub-T1 generally is enough.”
For signage apps that require a fat pipe, one way to keep costs in check is by updating content at night, assuming that the service provider offers a discount for off-peak traffic.
“How we handle bandwidth can vary greatly depending on the client’s needs, current infrastructure and the topology of the digital signage network,” says Sensory’s Paquin. “In situations where bandwidth is a concern we can configure the systems to conserve bandwidth by only pushing updates at night, or only pushing updates of content that has changed.”
Yet another consideration is the signage market itself. All of the factors behind record-breaking hardware sales mean that signage networks will continue to grow in number and size. So for signage owners, one concern is whether growth will come at a price – a concern that some service providers are trying to assuage.
“The carriers have been talking about preferred pricing, where they can get a certain amount of bandwidth and as they grow, not penalize them but allow them to expand at a reduced rate,” Sanford says.