A sign of the times

What’s in it for me?

Andrew Shearer, product manager at NEC, said the vendor has been involved in digital signage for the past four years. Shearer said that while it has been relatively slow to catch on, the digital signage market has been growing consistently.

“It’s almost exploding now, with a lot of businesses looking at implementing a digital signage solution,” he said. “We have actually put a lot resources into our business and commercial area and we are doing the opposite for commercial applications products.”

Shearer claimed digital signage is more than just one product. “It’s a total solution which includes monitors, digital signage players and software controlling content creation, managed and hosted services. This gives resellers an opportunity to resell all their components from the integration of the package to maintenance of the products.”

Vendors such as Panasonic are also looking towards digital signage as a viable market for its channel partners.

Mark Deere-Jones, group manager of the AV/IT Business Systems Group at Panasonic Australia, believes the adoption of digital signage is part of a growing trend by retailers as they recognise the benefits of an efficient and cost- effective medium.

“The deployment of digital signage in a variety of commercial environments has created a whole new line of business,” he said. “Retailers, technology vendors, content providers and brand owners are working together to create a new promotional landscape in retail environments, public arenas, sports stadiums, transport concourses and office spaces, using digital signage.”

According to Deere-Jones, Panasonic has received a number of responses from the retail industry that digital signage is exceeding their expectations.

“Advertisers are also recognising that digital signage is now an essential component of the marketing mix,” he said.

“Australian retailers are aware of what a digital signage solution is and we believe more than 80 percent have seen or researched the technology.”

Deere-Jones told CRN that other areas of potential growth would include clubs and pubs, real estate and hospitality.

He claimed both AV (audio visual) and IT resellers need to understand the benefits of a properly managed digital signage system. Potential Panasonic partners must also be able to explain the positive impact such a system can have on sales and productivity.

“If a reseller wants to get into digital signage they must start to understand and address the real needs of the customer, and do a better job in educating the customer and partners in seeing the value of digital service,”
he said. “They must also have skills in displays, software, controllers, networking and content management.”

“With a total package such as an effective and complete solution, there is less emphasis on price and more about the quality of service and ROI that can be delivered.”

Business blossoms

Vendors are turning their attention towards business-to-business offerings which include commercial-grade screens, projectors and media players. This type of hardware is widely used for in-store marketing across a variety of vertical sectors including retail, transportation, healthcare and government.

During 2008 several IT vendors bowed out of the Australian consumer technology market. Hitachi was first in line to announce it would wrap up its consumer electronics offering of home entertainment and appliance products in Australia in January.

Dipak Kumar, general manager Electronic Components Group at Hitachi, assured the market that Hitachi’s business divisions were continuing within Australia.

Hitachi’s head office, according to Kumar, wanted to concentrate on areas where it feels it doesn’t have much of a presence. “We want to ramp up the B2B division in Australia. This includes specialist products such as business-grade LCD screens and projectors,” he said.

Not long after, NEC also bowed out of the low-end LCD monitor market. Daniel Hancox, national channel manager of NEC’s newly consolidated Commercial Display Solutions division, said the decision offered resellers an opportunity to make higher margins on display products.

“Let’s face it, resellers are better off advising a financial institution on the usage of digital signage and looking at these types of products,” he said.

“There’s definitely more of an advantage to selling a total solution than competing in the consumer electronics market, where end-users can jump on the ’net and get
a better price on a TV.”

Boosting sales

Boost Juice is an Australian health juice franchise. Janine Allis, founder of Boost Juice, opened the first store in Adelaide in 2000 after she saw an opportunity to introduce a healthy alternative into the Australian market.

To add information and entertainment to the purchasing experience, the company has rolled out a digital signage solution – branded ‘Boost TV’– across
65 Boost Juice stores nationwide.

“Boost TV” is comprised of Panasonic commercial grade 42-inch Plasma panels with content and delivery managed by Prime Digital Media (PDM), an Australian-owned provider of out-of-home digital media.

PDM installed the screens and selected Panasonic panels after a road test. The portrait-style screens help to create a unique in-store atmosphere for customers and enable direct communication with customers said Jessica Cleeve, national marketing and promotions manager at Boost Juice Bars Australia.

“This provides a communication opportunity, by entertaining them with news and third- party advertising content and promoting new Boost products and upcoming in-store promotions,” said Cleeve.

“The information displayed on the panels is networked and centrally managed via a single best-in-breed content management system.”

Cleeve claims the “Boost TV” network has been a factor in improving customer relations, with each screen providing the opportunity to adjust messages to fit the local market. “The implementation of the Panasonic panels and Boost TV has helped deliver cost efficiencies to Boost Juice’s corporate wide area network by eliminating the costs involved in the production of static advertising,” she said.

According to Cleeve, as a result of the success of Boost TV, Boost Juice is planning to install additional Panasonic panels into stores in Australia and internationally.

Encroaching territory

There are plenty of opportunities in digital signage. Byron Rabone, director at audio visual reseller, Rabone Systems, told CRN that with AV resellers moving into IT territory and vice versa there are increasing questions about who could and should be exploring digital signage.

“IT resellers are moving into our business because their market is trashed,” he said. “The whole AV/IT digital signage integrator market has become a grey area because it’s a market that encompasses both aspects of AV/IT.”

Rabone claimed digital signage provides large contracts ranging from $100,000 up to millions of dollars.

“No one goes and spends a million on a contract because the service provider can shave a couple of hundred dollars off a quote in this industry. What you are going to find in digital signage is vendors trying to grab market share as early as possible and building up a reputation on products,” said Rabone.

Chasing the gold

With no formal qualifications needed to provide and connect the hardware in digital signage, it might seem as if money should be pouring in for resellers. However, digital signage is more than just big screen TV panels connected to a network. While that part of the business can be plundered by IT resellers, the real money is being made in ongoing revenue streams from advertising contracts. Rabone believes resellers must realise that content in digital signage is king.

“There’s no certification in connecting the panels onto a network,” he said. “IT resellers will be used to connecting monitors, so that part of the business will be a free reign for anyone involved in digital signage.”

He believes the profitability in digital signage lies in the ongoing revenue stream produced from services and customer lease agreements with digital media content providers.

Most IT resellers lack the resources to produce this specialised content and can thus only take the installation and service component of the sale. However there are integrators out there that do have specialised media divisions.

“Companies such as TCP have the ability to design a solution, put customers under a lease agreement and make them pay off the product for around four years,” said Rabone. “In return, TCP will guarantee financial returns from advertising. Customers may pay resellers to manage their systems, but you will find integrators and IT resellers won’t be making the same money as
a company such as TCP.”

Rabone said that while vendors can make good money through commercial-grade screens, resellers will find they will still have to resell box products at high volume to make profitable margins.