By Matt Pillar, Business Solutions magazine
Success selling digital signage is predicated on sound strategy, consistent content, and the right technology.
Most VARs and integrators serving the retail industry sell technology that helps retailers deliver sales — things like POS units, pole displays, touch screens, and receipt printers. What sets Burlington, ON-based ADFLOW Networks apart from most retail VARs and integrators is that it doesn’t necessarily sell anything that delivers the sale. It sells digital signs and interactive kiosks — the stuff that generates sales and incites consumers to do their consuming — and that’s all it sells.
Focusing exclusively on digital signage — especially in an industry that has largely pared back spending to “essentials only” in recent years — might look like a risky proposition at face value. But, ADFLOW has achieved double-digit growth every year since the company’s launch in 2000, and it has done so without diversion. The key to selling a “nice to have” technology, as ADFLOW Networks’ EVP Gary Davies explains, is demonstrating that when digital signage deployments adhere to a three-part success strategy, they’re really nice to have. But, would-be digital signage sellers beware: Doing digital signage right isn’t for the ill-equipped, and doing it wrong burns bridges forever. Here’s how ADFLOW’s consultative and content-focused approach to digital signage sales will lead to another banner year for the company in 2013.
Focus 1: The Retailer’s Goals
At its core — and in any industry — digital signage deployments are driven by the desire to communicate something. In retail, where 70% of purchase decisions are made within the store, it’s abundantly clear what the focus of that communication ought to be. “Consumers walk into stores with an idea, but the actual experience influences their perception of the brand and the purchase decisions they make,” says Davies. It’s incumbent on his company to help retailers understand their ability to influence purchase decisions and to establish digital signage as a means of achieving their goals. Clearly stated goals are therefore the first key to digital signage sales success. In retail, those goals are often:
“We have to listen to and understand the customer’s goals before we can introduce the value proposition,” says Davies. In a common example, C-stores know that a certain percentage of their customers come in at 7 a.m. to buy a cup of coffee. The value of breaking that blind buying cycle and getting those customers to buy more is understood, but how? “We position digital signage as a means of promoting something extra to shake consumers from the oblivion of a blind buying experience,” says Davies. “And we can demonstrate that, by challenging consumers to snap out of their routines with tantalizing messaging, we can repeatedly turn $1.19 sales into $3.49 sales.” Illustrating this simple concept in practice, he says, is central to making the sale. “Once we’ve understood the behavior the retailer is trying to change and established the parameters by which success will be measured, it becomes what I call a Trojan Horse sell,” says Davies. Rather than gunning for a commitment to install three screens per store across 600 locations right off the bat, the ADFLOW sales team is trained to prove its theory by securing a few stores and a couple of promotions to pilot. “By engaging in small pilots, we allow the retailer an opportunity to realize the cost justification of a full-scale rollout through measurement of the uptick on featured products and services,” says Davies. “In the pilot, we keep the content simple. We generally direct consumers to higher-margin products and introduce new products that demonstrate how digital signage promotions create demand and drive increased revenue. We rarely fail to convert a pilot project into a full-blown digital signage rollout.”
Now, if this seems really simple so far, that’s because it is. The lowest-hanging fruit is easiest to reach, but it’s not where the sustainable results that drive ongoing revenue and rabidly loyal customers come from. What happens next, and where ADFLOW Networks earns its money and has built its reputation, is where most VARs who dabble in digital signage fall flat on their faces. “This is where the content team gets involved,” says Davies.
Focus 2: Content To Support The Goals
Davies doesn’t mince words on the cause of digital signage failure. “Content is king,” he says. “When digital signage fails, it’s because content fails, either at the hands of a lack of technical ability to produce it or a lack of strategy to drive it.” While establishing a goal or two and conducting some simple A/B testing among stores goes a long way toward winning a customer, it takes a much deeper level of expertise to keep that customer. “Most retailers don’t already have content that can be readily repurposed for strategic digital signage initiatives,” says Davies. “Many retailers and quasi-digital signage providers think they can grab Web content and go, which is a flawed assumption. If a digital signage initiative is to succeed, it needs to feature custom content that supports the goals and objectives that led to its adoption in the first place,” he explains.
The content must also fit the medium. Davies says vendors and resellers who sell a box and some screens and leave content generation and dissemination up to the retailers are easy to spot. The content on their digital displays will typically be repurposed from the Web, serving no strategic or tactical purpose. “Committed digital signage integrators are not only able to help retailers establish specific campaigns, but they also understand the finer points of execution,” he says. Specifically, Davies says a digital signage integrator must understand the nuances of such things as dwell time by segment or application, how much video versus static content is appropriate for a specific application, and what font sizes and how many words per page work for a specific screen size. Interactivity increases the complexity. “Navigation is very important, from the physical aspect of getting customers to the kiosk to how many screens deep you can expect to take them before you lose them,” says Davies. That magic number often depends on the specific application at hand, and it can take considerable time and effort for unfamiliar resellers to figure it out — often at the expense of their customers. Davies advises resellers interested in selling digital signage to invest in the talent necessary to curb the long learning curve. “The people we have hired to create content for our customers come from the digital graphic design world. We’ve acquired talent that’s adept with graphic and animation tools, and they also have the technical skills to enable normalization of video and sound across large networks, targeted messaging, and increasingly, interactive digital signage engagement,” says Davies.
Focus 3: Technology To Support The Content
While 100% of ADFLOW Networks revenue comes from the sale of digital signage, including hardware, software, and services, it’s the services offering that is the biggest differentiator in the market. “Effectively, we have three lines of business,” says Davies. “The business line that we accept is that we will not make as much margin on hardware — with some exceptions for highly customized, purpose-built projects — because to the market, a screen is a screen.” That said, Davies is quick to differentiate the hardware he sells. “If a client chooses not to buy our hardware, it’s typically because they find screens that look the same for a smaller investment. We feel obligated to ensure they’re making an apples-to-apples comparison. Inevitably, the screen we sell and the $400 unit they can get at Best Buy are not one and the same, and we make it clear that if that’s the route they choose, they won’t have one throat to choke if the consumer-grade machine they buy runs 24/7 for a short time and then fails.” Davies says the volume pricing his company secures on commercial-grade screens ensures competitive pricing, and he sells on the value of a simplified supply chain and a single-source solution.
Of much higher value to ADFLOW’s customers are the content creation and project management services and its intellectual property, manifest in its proprietary DMS (Dynamic Messaging System) software. “Our DMS platform is what powers our customers’ applications, and it is designed for marketers to use with little to no IT support,” says Davies. ADFLOW sells its users a perpetual license to the hosted application and a customer support program which is billed annually and includes unlimited usage, entitlement to 1-800, and electronic tech support and access to all new releases.
Emerging, Interactive Technologies To Watch
The art of selling, staging, and maintaining retail digital signage networks isn’t one that’s ever quite mastered — especially not in the context of the most rapid tech development the retail industry has ever seen. Davies and company are subsequently playing with some pretty sophisticated technology in the ADFLOW labs, technology that any integrator considering a foray into digital signage should be playing with as well.
For some retail customers, ADFLOW is working on interactive displays that engage consumers by identifying their mobile phones via technologies like NFC (near field communications) and location-based services, enabling highly targeted messaging and access to customer-specific promotions and loyalty data. An equally exciting opportunity to narrowcast content to specific demographic groups is found in facial recognition technology. “Without exception, retailers seek to recognize when a specific demographic profile of a consumer is in the store and customize the messaging accordingly,” explains Davies. “A wireless device retailer, for instance, wants to show under-30 females a very different set of products and services than it would promote to an over-50 male. Facial recognition allows this, and while we don’t think the market is quite ready for it today, it’s coming.” Another means of enabling one-to-one interaction with consumers that’s here now is through screens that interact not with specific people, but with specific products. For example, one ADFLOW customer sells electric drills ranging in price from $79.00 to $179.00, and the retailer needs an efficient means of communicating the features that create this price disparity. “We developed an interactive kiosk that enables product feature comparisons when specific items are picked up off the shelves; when the product is picked up, the signage launches content specific to that product. It’s also a popular concept for electronics and wireless device retailers.
ADFLOW’s ability to respond to retailers’ challenges head-on has also been illustrated by its willingness to go somewhere many traditional retail tech integrators have refused to tread — into the so-called “omni-channel” realm. The concept of leveraging digital displays to enable the endless aisle, whereby consumers can access via digital means certain products and information that aren’t physically available in the store, is one that ADFLOW has embraced. “For at least one retailer, we’ve gone right down to SKU (stock keeping unit) level merchandise information through integration with their item master,” explains Davies. “When a shopper engages the device via touch, NFC (near field communication), or any other means and enters a search term — ski boots, for instance — our application assists them by quickly drilling down to the relevant size, style, and price.”
Digital Signage Is Not For Every VAR
Because it’s so content intensive, deciding to sell digital signage shouldn’t be taken lightly. In fact, most traditional POS VARs are nowhere near equipped to sell and support fully-functional interactive digital signage deployments. That said, there’s much promise in the technology for those willing to sell it right. Markets & Markets reports $3.95 billion in global digital signage sales in 2011, a figure that’s expected to grow to $13.2 billion by 2016 at a nearly 28% CAGR (compound annual growth rate).