Digital Signage – Economic Growth May Be Closer Than You Think

Guess which business segment of the U.S. economy is expected to grow 33 percent this year? No, it’s not homebuilding, automakers or purveyors of credit-default swaps. It is the digital signage business, which will experience part of this growth at the expense of other media.

A study released last month from noted research firm ABI Research made the surprising forecast. Even after factoring in the ongoing recession, the “Digital Signage Market Analysis” study foresees the U.S. digital signage market, which includes hardware, software, installation and maintenance, growing by a third.

According to an ABI Research industry analyst, one main reason for the growth is that traditional advertising media are losing their appeal. Possibly unknown only to digital signage newbie’s, digital signage offers something traditional advertising media can’t: the ability to reach buyers with dynamic messaging at the point of sale. When shoppers are in a store, evaluating which brand to buy, digital signage has the chance to snatch a bit of mindshare at the precise moment a buying decision is being made. Radio, TV, newspapers, magazines and even the Internet cannot make that claim.

Another recent report released by SNL Kagan backs up the argument that traditional advertising is losing its appeal. According to SNL Kagan, which has produced annual reports forecasting broadcast industry revenue for the past 20 years, local and national TV spot advertising revenue declined in 2008 by about 7 percent. That decline has continued this year, and the firm projects revenue from television ads dropping about 16 percent in 2009. While the recession is responsible for much of this decline, the changing media consumption patterns of the public also seems to be having an effect. In fact, the SNL Kagan analyst responsible for the report advises broadcasters looking to weather the storm to cut expenses and develop alternate digital platforms -presumably to win back audience drifting away to new media. As that drift accelerates, advertisers seek new ways to reach an audience, and digital signage appears to be benefiting from that desire.  

The ABI Research study also credits improvements in the appearance of displays, declining prices for electronics, lower-cost digital storage and the inclusion of interactive technology as factors contributing to its rather rosy forecast.

To be sure, digital signage exists in the broader economy, and the depth of the decline there will impact its growth. ABI Research acknowledges as much, but it seems at this point that the effect of the broader economy is more akin to slowing a speeding locomotive than pulling the emergency stop cord.

Even during this general economic recession, jumping aboard the digital signage express makes sense, especially for marketers and advertisers who wish to position themselves to take full advantage of the recovery to come. While doing so might seem counterintuitive to those looking to cut expenses, the truth is companies are continuing to advertise during this recession. Choosing to reallocate some of those existing ad dollars to digital signage not only provides an attractive alternative for those who have grown weary of advertising in traditional electronic media but also gives those advertisers a strong presence at the point of sale when shoppers one day return in droves to the stores.     

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