The Food Service sector is made up of giants, some very big players and a huge number of small businesses. If you drive down a busy street in your town, you will see some of each. They have different needs, different use cases for technology, and very different approaches to how they buy technology. What we are seeing today, and what I expect to see more of when I arrive, is further grouping of the vendors and solution providers along the same lines as the prospective buyers. The giants and most of the very big players have staff devoted to figuring out how to integrate technology with their business. They conjure up use cases, study the marketplace, liaise with the IT and operations teams, and try to identify solutions. They tend to buy based upon ROI rather than price, upon requirements being met rather than features per se. They seek solutions. The smaller operators tend to have less sophisticated internal processes and IT capabilities. They tend to buy based upon price, and “good enough” is more often than not good enough. There is less available resource to conduct deep dives and the focus is upon getting the project done.

On the digital signage side of the fence, we seem to have solution providers dividing on similar lines.  There are five or so players who see the sector as strategic enough to invest in their own exhibit hall presence. They have customer stories to tell, knowledge to share and a developed solutions and ecosystems to offer to prospects. There are probably an equal number who are taking the partner booth route, hoping to get traffic and halo effect from larger entities such as display vendors. They have less experience to share, and are generally hoping to port some success in other verticals to this huge market. Both will have busy shows, but how they spend their time during and after the show may be different.

The vast majority of the Food Service industry in terms of doors is obviously among the giants and near giants. The lion’s share of actual companies (and attendees) is really in the small to medium business sector, a reflection of the generalized economy. The small and medium sized prospects are going to have time to listen to the “hobby lobby” of underpowered, under-featured, future-shocked offerings. No doubt, you will hear about the “huge interest” shown in such offerings. Despite the hype, they are barely good enough. We’ve noted that good enough may be all that is necessary for some buyers, but how that translates into sustainable business remains to be seen. The big and the huge are going to want to talk about concepts like integration, redundancy, failover, ROI, roadmaps, localization and turnkey projects, to name a few. There will be requirements for multiple use cases in each venue, and one size will not fit all. The ability to share knowledge and address disparate requirements under one roof will separate winners from losers. Sounds like fun to me.

The Food Service industry serves as a good metaphor for the digital signage market in general. How it plays out in the coming months and years will likely mirror how our industry shakes out. The disruption of low cost computing (more on that in future posts) is simply that: a disruption. It is here to stay, but it will not change the demands or processes of sophisticated buyers, and those who latch on to price points instead of solving problems will find themselves marginalized and commoditized. Knowledge must be transferred as easily as files are, and evolving needs will need to be met. Like the gluten-free macaroon people, it is not sufficient to use buzz words. The product has to stand on its own and integrate with an overall solution. And it has to be extensible. That said, I am going with the coconut.

Boston is an enigma. “Wicked” is a positive term in Boston. The same city that has never been able to fully shake a reputation for racism helped elect the first African-American Attorney General and U.S. Senator in the United States, and effectively led the integration of the NBA. The ancestors of the folks who tossed the British tea into the harbor now just shrug and mutter about living in Taxachusetts. Boston’s place in history, its political legends, incredible schools, hospitals and culture drive a tremendous amount of pride that others often perceive as arrogance. We are comfortable with the nuance, even if you aren’t. Despite our differences, we share that pride.

We go big in Boston, for better or for worse. From Concord and Lexington to Bunker Hill. The Great Fire of 1872 and the Boston Molasses Disaster. The Boston Strangler and the Great Brinks Heist. The rejuvenation of Boston Harbor and The Big Dig. And we run the oldest and best marathon in the country. Always have, always will.

There are rites of passage for Boston area youngsters. Your first time walking up the ancient ramps of Fenway Park with your father and seeing that perfect emerald field and the Green Monster. Your first ride on “the T”. Candlepin bowling. Your first taste of clams, be they fried Ipswich or wonderful steamers (drink the broth!). Your first mouthful of lobster dipped in drawn butter. Trips to Harvard Square, Chinatown and the North End. Shoveling snow. Finding a beach. Getting your drivers license and learning the Boston method: never make eye contact. Watching the human spectacle that is the Boston Marathon.

I grew up 2 blocks from the marathon route where it passes through Newton on Rt. 16, also known as Washington Street. In fact, Beacon Street starts right there at Rt. 16 in Newton and runs all the way into Boston, where it is a bit more famous. As kids, we would set up folding tables along the side of Washington Street, and offer the runners Dixie cups of water or orange wedges as they came by. You learned to run with them, make the handoff, and wish them good luck, as Heartbreak Hill was only a couple of miles ahead. People have always lined the streets along the entire route, cheering for strangers as they test their endurance. The Red Sox still play an 11 AM matinee on Patriots Day, the day of the marathon. From Kenmore to Copley, it is wall-to-wall people, a celebration of spring, sport and spirit. It is the essence of Boston.

So it was this year until shortly before 3:00. An 8-year old boy from Dorchester named Martin Richard was enjoying a day off from school and the wonder of the marathon right at the finish line with his mother. The chances are good that Martin had ticked off many of the Boston rites of passage, including one that day. He was a big Bruins fan. He had a huge smile, and personified the potential of youth. He was Boston. And then he was taken, a bright candle, snuffed out by evil. The heartless piece of sub-human garbage that placed his bomb inches from Martin knew what was next for that wonderful child and the scores of people nearby. What he didn’t know is that Boston doesn’t cower. Heroic first responders ran into the smoke and fire and saved lives in a chillingly gruesome scene. Fires were extinguished with bare hands. Shirts and belts became tourniquets. A city under siege for days came together as never before, because nothing else mattered. And the killers were tracked down. Ultimately, four innocent lives were lost and hundreds more damaged forever. May those who were lost rest in peace, and their families find comfort in their memories. Some have called for a traditional Boston Duckboat parade for the victims, the first responders, the medical teams and law enforcement, heroes all. I’m all for that.

We are Martin. We are Boston.

Martin will never get his drivers license and fearlessly navigate the entrance to the Callahan Tunnel. He won’t get to see his beloved Bruins win another Stanley Cup. But his spirit, his potential and his smile helped energize and unite a city during a horrible crisis. Law enforcement and the people of Boston had something to work for, an overarching cause to fight for. As they worked tirelessly for Martin, they fought for themselves and our way of life. And they prevailed.

For five days in Boston, wicked actually meant wicked. Soon enough, it will revert to its proper usage. So in the wicked hot days of summer, I hope we can all remember Martin, Krystle, Lu and Sean and how their tragic loss helped us realize how strong we all are together. Boston strong.

• The sustainable venues for ad-supported networks have been identified, exploited and/or bungled, but are now mature enough to be considered a zero sum game. Continued growth will eventually require business combinations or modified business models.
• Corporate networks not dependent upon ads are either ready for their 2.0 iteration or hot to get started. As a group they are both savvy and picky buyers. This means that the universe of potential solution providers will narrow, even as new companies spring up and proclaim themselves leaders.
• On top of that, consultants have entered the fray with varying degrees of expertise, independence and useful process. Whatever their methods, their own purposes are best served by keeping an initial list of candidates relatively short, and an internal list of trusted providers even shorter.

In short, the market dynamics will simply not support more than a dozen healthy, growing providers, if that. All of this points to consolidation. (Note: While this post was in process, one consultant spammed industry inboxes with a piece positioning software selection as “You versus the 300”.  One presumes it is his strategy to market to prospects foolish enough to think that there really are 300 candidates that only he could sift through for them. Laughable, folks.)

Without rehashing the deal yet again, RMG Networks made industry headlines with their SPAC-powered acquisition of Symon Communications and the less understandable re-animation of the corpse that was Akoo. Additional deals are rumored to be in the offing. Whether the newly re-formed company succeeds or not is almost irrelevant. Their actions have defined a new liquidity strategy for investors in digital signage: put companies together and create a more attractive exit vehicle.

We are likely to see more examples of strange bedfellows as companies seek a way to find a competitive edge, execute a survival strategy or to achieve liquidity. The recent Wireless Ronin-Delphi Display deal was at least one of the above. Look for rumors or news of other tactics such as:

• Joint Ventures
• Rollups of network or technology assets
• Verticalization
• Traditional buyouts or mergers

Scale, depth and breadth will be the buzzwords that accompany such deals, along with the occasional hat tip to synergy. Regardless of the structure that some of these deals may take, or the rationale provided for them, the new reality reflects a recognition that the industry is in transformation.

Prior to DSE, software vendors had divided into several camps. One camp took the route of leveraging Samsung’s engineering assistance and marketing dollars and created demoware applications for the show. One vendor even enjoyed a very temporary (but significant) spike in its public valuation following a cleverly worded announcement of their “alignment” with Samsung. Such is the power of buzz, as well as its transient nature, and people should take note of both. Another group of vendors resisted the gravitational pull of the Samsung galaxy and undertook unilateral development efforts on ARM platforms. At least one company actually took both routes. And still others remained on the sidelines, proffering orphaned mobile apps or being content with their lot. Regardless of which camp a vendor found themselves in, it seems that the direction of the conversation has veered sharply toward low cost and lightweight. An entire industry seemed to jump on the first train headed out of Santa Clara, as if the long-awaited convergence of DOOH and mobile was actually going to occur at the chip level and not the content level. The speed with which a group of smart people who proudly chant a mantra of content, engagement, commercial grade displays, 24/7 reliability and software functionality dropped any pretense of diligence was amazing. The excitement over first generation low cost player platforms and lightweight software applications seemed very sudden, almost as if end user interest had outstripped the capabilities of first generation offerings, a potentially dangerous situation. I suspect that equilibrium will be found just as suddenly, as it was in the public market, and that ongoing research and product development will get out in front of demand once again.

Make no mistake about it, ARM-based computing will have a significant impact on digital signage going forward. Even from a standing start, it is highly likely that the ratio of ARM-to-x86 digital signage devices deployed will swing towards ARM much faster than you might guess. What is yet to be determined is what form factors, standards and use cases will emerge as predominant in the ARM sector of the market, and what percentage of deployed ARM devices will be incremental end points as opposed to replacement endpoints. It is fair to characterize both the ARM media player and the SoC display approaches as first generation from a digital signage technology perspective. The obvious rush to have something to announce and/or show at DSE underscored the fact that for everyone involved, it is early in the game. The vendor(s) who spew out dozens of redundant tweets per week or take a price point approach in order to get noticed know this as well as anyone, but are happy to receive the attention that those strategies get them, even as they consider next steps.

As one might expect, the sudden entry of ARM into the industry consciousness created many questions. Amidst the trade show hubbub and puffery it is not clear how many questions were asked by network operators or answered by vendors. Here are a few questions to ask yourself, your vendor, or your resident tech person.

1. What is the expected production life of the board/chipset that I am buying into? Am I really future proofed from a capabilities perspective?

2. With the pace of change accelerating, what are the strategies for upgrading and staying current?  Consider that when I buy a Samsung Galaxy Note 3 the day it is released (and I plan to), strong rumors indicate that it will have an Exynos 5 Octa CPU, featuring two chips leveraging ARM’s big.LITTLE design. Eight cores. Even if you can’t decipher all that, you can probably imagine how it might apply to digital signage use cases.

3. What shortcuts are taken to build an ARM player at a low price point, and how does that impact viability in a commercial, 24/7 use case? Here’s one hint: a reliable power supply with a reasonable life expectancy costs $8 to $20. Power supplies generally come in second to fans as typical points of media player failure.

4. Will I need to change my content strategy and the way I build content?

5. Is it appropriate to abandon store-and-forward architecture for my use case? Will I have to?

6. Will I need to give anything up to adopt a low cost model? If so, what?

7. What failover and redundancy strategies are available to me?

8. Can a multi-output, traditional media player offset enough software costs to make it both safer and less expensive than two ARM players?

9. In a mixed environment of ARM-based and x86-based devices, will I be able to use the same software and content seamlessly?

10. Will Intel respond by cutting prices further on Atom-based boards to try to level the playing field? What if they do?

11. How will/can Microsoft respond to an emerging environment where a Windows license approaches the cost of an entire player, rendering it a non-starter?

12. Is there a different approach to the large scale market versus the low volume market?

13. How should technical choices be dictated by content, environment and use case?

Many of these questions are variants of the same questions you might have been (or should have been) asking about media players and architectures for the past ten years, an indication that the more things change, the more they stay the same. The answers to some of them are the stuff of entire posts. The bottom line is that there are more choices now, which is a reason to take a diligent approach to making those choices. That applies to vendors and end users alike. ARM computing has landed on the beach of digital signage, and every constituency in the industry is scrambling to asses how it may impact their business, while strategizing how best to respond to the challenges and opportunities it presents. Many questions will be answered in the coming months as R&D is fed by real world testing and use cases.  It will be exciting times, and what we see today will almost certainly be remembered as early days. You may not regret missing that first train, but it would be wise to contact your travel agent.

Disclosure: Real Digital Media has had an ongoing ARM-based R&D project for months, and we showed a prototype based on that research and our approach to ARM at DSE. We will announce the specifics of our approach and the related products when they are tested and ready to ship, and not before. Real Digital Media is proud to be a Samsung partner. While we were not one of the vendors in the Samsung booth at DSE, we anticipate working with Samsung to bring a differentiated offering to their platform for targeted markets and use cases. We will also continue to offer x86-based players and to invest in extracting every drop of capability from them to meet current and future customer needs.

Rolling your own may have worked for Bob Marley, but even that didn’t end well. Here’s a shot at some thoughts and questions to consider if for some reason secondhand smoke causes you to equate developing an enterprise digital signage platform with a call to Domino’s. The primary arguments fall into three buckets: cost, time and risk. At times, they are very much intertwined.

Cost:

1. The actual cost of getting a first version completed can not be known with precision. For an organization without a sophisticated IT function, doing it professionally would require outside consulting to develop requirements and specifications, manage the project, and of course do the coding and testing. And that is just for starters. An organization with big IT resources would probably have the project management skills, but would still want the perspective of consultants to help develop and write specifications. Just choosing the outside help involves time, cost and risk.
2. Whether the project is done in-house or outsourced, the cost of development and test environments will have to be absorbed.
3. Proper test scripts and procedures must be developed (to include every version of hardware in the field). Nontrivial, unless you plan to debug in the field.
4. A production environment will need to be put in place, including back-up and failover. Decisions and investments will need to be made to provide for optimal cost-performance balance.
5. Not only will server side application(s) need to be developed, but player side software as well. Critical architectural decisions on both sides will not only drive cost, but also time and risk.
6. Documentation will have to be created and maintained, which could be especially tricky or costly if the project is outsorced.
7. A content distribution network (CDN) will need to be put in place and tested.
8. An internal systems group will have to be hired, housed and maintained.  This would include management, operations, tech support and development, and would represent new and significant overhead for most network operators.
9. In some cases, thoughts of rolling their own will arise when a network’s monthly SaaS fees rise to a level that becomes a financial target. There are ways to mitigate monthly expenses while still remaining focused on core competencies. Switching from SaaS to an Enterprise licensing scheme can dramatically reduce monthly expenses, and while up-front costs would be high, they may in fact be less than the all-in costs of a development effort.

Time:

1. The proper planning cycle for a project of this scope would be at least 90-120 days.  This is before a single line of code is written. And that clock starts ticking only after you identify the resource(s) inside your company who will drive that process, even if consultants and contractors are involved.
2. Proper testing of the product when it approaches code completion would also take 90-120 days. Fixing of bugs would take an unknown amount of time, as the testing cycle restarts with each iteration. Are we having fun yet?
3. Say you budget a year to get something developed, which is a reasonable place to start. What exactly will you have a year from now? What are your contingency plans if it is not ready?
4. How will you plan to manage  the addition of evolving requirements? Has any business gone a year without a adding to its functional wish list for its core systems? Will users be left wanting when the first version is produced, or will the design/code/test cycle restart itself to accommodate new requirements? Tick, tick, tick.
5. Completion of a development project does not stop the clock. Guess what? A plan for converting the existing network in the field must be developed and executed.

Risk:

1. Decisions made at the outset will impact every aspect of the project for years after: development environment, operating system(s), hardware choices, virtualization, and more. How will those decisions be made? Can you think of anyone who made choices they’d like to take back? I can.
2. How will you know that the requirements and specs are complete and reflect more than what you have today?
3. What is the cost to your business of the inevitable delays? Will you bear the risk of releasing something before it is ready?
4. How much senior management time will be redirected toward this project, and at what opportunity cost?
5. What if the resulting product is not as good as what you have now or could have acquired in the marketplace?
6. What advances will you miss out on by not being part of a commercial product roadmap impacted by the requirements of other networks?
7. A development effort may be far outside core competency of the business, making it very risky to assume excellent results. “Good enough” implies only parity with what was replaced. How many retailers wrote their own merchandising systems? How many manufacturers wrote their own ERP systems? Why is that?
8. If a less-than-perfect decision was made in acquiring current software, what has changed that will make a from-scratch development effort more successful?
9. Does developing your own software in a marketplace full of commercial options make investors more eager to invest, or more likely to pass?
10. Does adding a new cost center make you more attractive than operating a lean and focused business?
11. If growth through acquisition is on your roadmap, having a proprietary system in place may very well make integration costs higher than a properly designed commercial offering.
12. It is interesting to note that many of the oldest networks in place (run down the long-time DPAA members for a partial list) run on bespoke software, largely because they saw no viable commercial alternatives when they needed one. In many cases, they are now stuck with what they have, and some have found that what they have is not commercially viable itself.

Considering the path of homegrown software should be a reason to pause and reflect. It would be quite rare in our industry that a diligent make-or-buy analysis would end up on the “make” side. As the late, great Marley might advise, “there’s so much stumbling blocks right in our way.” Irie.

Did I miss some obvious arguments against writing your own digital signage software? Are there good reasons to consider it? Let me know in the comments!

1. Networking: The event is not just about people looking for hardware, software and services. Plenty of business will be done, have no fear. But perhaps the number one reason that DSE matters is the unparalleled networking opportunity it provides to the industry. There will be companies looking for employees. Free agents looking for their next gig. Companies looking for partners of every stripe. People looking for contacts to expand their personal networks and influence. And of course, friends touching base with friends, who may often be competitors as well. We are still a relatively small industry and DSE provides a venue to recharge relationships and build new ones in the ultimate digital signage-themed atmosphere. Don’t miss the opportunity to just talk and meet people. Networking provides an example of the organizers’ ability to listen: The Preset Mixer (check out the profile at 0:33 of the video), started as a rogue gathering in a dive bar, reflecting the sensibilities of the man behind the curtain, Dave Haynes. It has since evolved into a calendar mainstay and a networking kickoff to the conference. Rather than continuing to program competing events around that precious Tuesday evening, Exponation has embraced the Mixer, sponsored it, and moved its own Tuesday VIP event to a later time slot. Smart.

2. Education: Exponation spends an incredible amount of time working on the program, the speakers and the educational opportunities available to attendees. They work hard at preventing the seminar sessions from becoming a self-promotion fest for vendors, which is important. Outside of the session programming, on-floor workshops and themed discussion groups offer smaller venues for interactive learning. And then there is the certification programming offered through the Digital Signage Experts Group (DSEG), which offers four tracks perfect for bringing new hires and veterans alike up to speed. If there is something the industry truly needs it is pervasive, rather than elusive expertise. DSEG certification is the ground floor for getting there.

3. Internationalization: The conference has enjoyed participation from outside of North America for quite some time. Now it caters to the needs of the international set with a half-day pre-conference program featuring speakers from across the globe. Attendees are expected from over 60 countries, and one would expect that they are coming for more than the diverse cultural activities of Clark County, Nevada. They are coming to learn, to network, to partner and to buy. It is often very revealing to understand the state of digital signage in different countries. Savvy attendees will listen and learn from the international guests.

4. Las Vegas: Love it or hate it, Las Vegas has been associated with iconic signage since the days of Bugsy Siegel, with none more iconic than the low tech, landmark Welcome sign. Today, there is an amazing array of digital signage, interactive displays and projection projects from the hotels of the Strip to the Fremont Street Experience. You will be accosted with it and amazed by it from the moment you step off your plane at McCarren Airport. The DSE has no problem setting up and selling out a terrific multi-bus tour of in situ digital signage in the Las Vegas area. Those not into guided tours will find both good and bad ideas in their journeys during the week. For all of us geeks who think of nits in the non-insect sense, the bright lights of Las Vegas beckon and serve as a living laboratory. Oh yeah, there are some really good restaurants, too. Me likes me food.

5. What’s New, What’s Coming: The opening of the DSE event signals a mad rush of press releases, and this year will be no different than the past.  Many vendors time announcements of new products, new customers and other strategic shifts to coincide with the large audience at DSE. After all, if there is one thing we all understand, it is the importance of a message relevant to the venue it is delivered in. Many themes and announcements were unveiled at the recent CES and ISE shows leading up to DSE, but most exhibitors will want to have an answer to the question, “What’s new?”. Expect product announcements, software releases, partnerships and perhaps the surprise acquisition. There will even be some non-exhibitors claiming preeminence and leadership from the podium of a partner’s booth, a tactic sure to thrill the conference organizers and unlikely to fool the masses. There will be some innovative products, ideas and strategies on display in the exhibit hall as well as in the corridors and meeting rooms. It is a great chance to gauge the traction of last year’s trends and the emergence of new ones. Smart attendees will leave with a feel for what is baked and what is half-baked but promising, and then plan accordingly.

6. Many Birds, One Stone: With a Who’s Who of buyers, sellers and experts all under one roof for two days, it is possible for any organization, project team or individual to accomplish many goals, provided that they bring the right footwear and and energy drinks. Displays, mounts and media players will abound and perhaps even astound. Software, content and services of all types will be lined up like cattle at a livestock auction. Any organization considering a purchase, upgrade, switch or new venture will have ample opportunity to survey the playing field, assess the players and start to put together a short list in each relevant category. Outside the exhibit hall, sessions and workshops offer the chance to hear from and interact with one’s peer group and to ask questions of knowledgeable speakers. It is a chance to put faces with names, eyeballs on products and handshakes on deals. Plan your time and your team’s time wisely… those days go quickly!

7. The Digital Signage Federation: The DSF came to be in 2010 when the need for a single, independent voice for the industry became quite apparent, and Exponation’s Angelo Varrone provided the impetus and the foundation to bring it to life. (Full disclosure: I am a founding Board member of DSF and currently serve on the Executive Committee.) There was plenty of drama and politics that motivated the launch of DSF, but steel is born from fire. DSF has evolved into a vibrant, vital and growing advocate and resource for the digital signage community. Strong focus on education, standards and ethics have attracted hundreds of new members. Each of the first four DSF Chairs of has committed to a legacy initiative, which has kept things constantly fresh and forward-looking. The DSE is the official trade show of DSF, and DSF will have a significant presence on the show floor. There will be interesting content, a wifi-enabled lounge for members, and Board members giving their time to staff the booth, anchored by incoming Membership Chair Shaneeka James and our outstanding Executive Director Brian Gorg. Stop by, listen to what DSF offers you, your organization and your industry, and join us. Be a part of making the tide rise for everyone.

There you have it, seven reasons why DSE is a must do. Don’t forget to bring lots of cards, extra socks and a smile. Share your observations, pictures and thoughts as you go on Twitter, using hashtag #dse2013. And please come by and say hello at Booth 1613.

Go Big or Go Home

The industry is chock full of smallish companies in virtually every constituent group, from networks to technology and service providers to consulting resources. Of course there are exceptions to this, which only prove the rule that the fragmented and noisy marketplace we live with today is not sustainable. Why? Because ultimately, buyers and investors will only respond positively to businesses that have demonstrated scale, accomplishment and staying power. This is true whether they are buying ads, technology, hardware, content or services. Those who recognize this will be quick to reinforce their position by acquiring or incubating innovators, expanding their presence and footprint in established and new markets and making it clear that they are here to stay.

“Go big or go home” has a fair amount of merit as a mantra for the industry going forward. Certainly RMG Networks’ recent maneuvers indicate that they are taking a different approach to going big in their second pass at it. While some are still puzzled by the perceived synergy of the acquisitions, it is probably fair to say it is a work in progress. Will this inspire similar, reactive moves and speed up consolidation? Perhaps, but almost certainly in a manner more measured than some deals that we have seen that were all about financial opportunism as opposed to seizing strategic high ground.  For example, even the spin masters who once touted the strategic imperative of combining content management software with video extenders have capitulated recently, which should surprise no one. Wise companies will explore opportunities to go big in ways that make sense to both buyers and investors, and that may mean that truly vertical entities will be a path that consolidation takes.

Focus Trumps Hocus Pocus

Will small and mid-sized companies be able to flourish in the age of Go Big or Go Home? Without doubt they can, but it will have to be in niches that can be protected and/or ultimately sold. There is ample evidence of companies carving out space in casinos, education, corporate communications and other markets to support this notion. Matching function and focus to defined markets makes sense. On the other hand, simply chasing the technology wave du jour and latching on to the marketing budgets of others does not appear to be a model with real staying power. How does a company build an identity when it is constantly distracted by the next shiny object, attempting to be everything to everybody? It seems certain, therefore, that the hocus pocus of that panacea approach neither scales nor lends itself to niches. After all, if it did we’d be lining up  to buy Clark Stanley’s Snake Oil at our local pharmacy, right?

Ecosystem Matters

Digital signage exists primarily as a part of a marketing and messaging infrastructure, seldom as an end unto itself. As a result, the ability of digital signage networks and enablers to coexist and interoperate with other elements of that infrastructure becomes a critical factor in positioning themselves to win business and grow. This is supported by the clear trend among buyers of digital signage to look for a single source for all elements of a network, from screens and software to operations, deployment, analytics and more. There is a consistent requirement for compatibility with existing systems as well as emerging multi-channel strategies. Few (if any) companies are able to offer everything required from within their own portfolio. Therefore the development of a top shelf ecosystem of partners, with the ability to piece together a coherent and cooperative team, is becoming the price of poker going forward. These alliances are hard to stitch together and to nurture over time, since very few end up being exclusive. But the time, expense and effort taken to actively manage ecosystem partners is likely to be the piece that will make big look bigger, and focused look hyper focused.

Understanding the evolution of buyer and investor perception of digital signage has become critical for technology companies and network operators alike. Scale, clear identity and the right partners may be three factors that can have positive influence on those important groups. Just like growing up, circumstances and opportunities often dictate path. Now more than ever before, circumstances are dynamic and opportunities are abundant in our adolescent industry. Being nimble, aware and strategic pave the way to becoming big, focused and successful.

How it works

Describing the machinations and history of SPACs would require a post of its own. You can read a nice summary of recent changes to SPAC requirements here. The key point is that the funds from an IPO ($80M in this case) are held in escrow until an Initial Transaction is approved by a supermajority of shareholders, and that the aggregate fair market value of the Initial Transaction(s) must approximate 80% of the funds in escrow, meaning $64M for SCGQ. As best I can determine, the deals may involve cash, equity or both. It is not clear if the RMG and Symon deals represent the entirety of the initial $64M transactions, or if there are others in the offing to get to the magic number. Those juicy details will be made public when the deals close. What does seem likely is that RMG is the lead dog here, and SPAC management will probably revert to a Board role, with the executive team at RMG assuming the reins post-closing.

The SPAC represents a relatively fast way for a private company to go public compared to an IPO, gaining it access to the public markets through negotiation and diligence rather than endless filings, roadshows and delays. The brunt of the capital formation was already borne by the SPAC founders, who are rewarded by  leverage through warrants, and use the lures of speed and cash to negotiate favorable acquisition deals. In the case of SCGQ, we have a VC-backed company (RMG) and a PE-backed company (Symon) effectively going public under a single umbrella. Their investors will get liquidity in some combination of cash and equity for their patience and risk. For those investors, taking money off the table in this environment was probably deemed preferable to putting more in.

The resulting company will be interesting to watch, and I am sure we all look forward to deciphering their quarterly financials once things are launched. However, the first question that comes to mind is whether this is a strategic combination or an opportunistic one. If it is strategic, then one would expect much pomp and circumstance about how Symon’s IP and platform will be used across the board in RMG’s networks. You know, the synergy thing. Presumably, they could use that story to acquire additional networks and use captive software as opposed to commercial software to operate them. However, RMG’s networks are ad-supported, and that is not a sector of the market that Symon has focused on. A change from RMG’s legacy infrastructure could be costly and time consuming, and taking the risk of making a switch would presume that they see a strong fit with Symon as a starting point and a clear path to a new competitive advantage. My guess is that such a project is not likely to happen. Instead, Symon’s significant revenue base and predictable earnings will allow SCGQ (or whatever it re-brands itself as, probably RMG) to show some stability as it builds out the network portion of their new company, which may experience growing pains (as it already has). One clue may be found in the name of one of the founding investor entities: 2012 DOOH Investments, LLC. That would seem to indicate a mindset of opportunistic buys rather than a carefully crafted vertical play, especially given the timeframes involved.

What Does It Mean For The Industry?

The SCGQ deal will be good for the industry if it is consummated and begins to trade with credible volume and reasonable transparency in the New Year. Strong market support for a DOOH conglomerate would bode well for future deals in the public and private market for networks and providers alike. The fact that the VCs and PE firm have a positive exit in the space is also a good thing.  While SPACs have a checkered history, and there is plenty of market risk and execution risk involved, I hope that this one works out well for everyone.

Here are some questions to ponder:

If a major network player whose systems are not necessarily a competitive advantage for them today acquires a software company and does not leverage the acquired IP, how long will it be until someone actually takes that strategy?

Would a vertically integrated DOOH entity be welcomed more warmly by investors than a conglomerate of companies in the field?

If a network company can effectively buy a software company, can the reverse occur as well?

The proposed deal opens a world of possibilities not only for themselves, but also for others in the industry. The RMG-Symon story is largely unwritten at this point, but the fact that investors appear ready to embrace companies with interests across segments of the industry may well open up opportunities for new business models that break the mold and separate from the pack. The announcement of the SCGQ deal may be a catalyst for many to examine outside-the-box concepts. That would only be a good thing. In 2001: A Space Odyssey, HAL may have put it best:

“I am putting myself to the fullest possible use, which is all I think that any conscious entity can ever hope to do.”

If a computer can do that, I suppose companies can as well.

Happy Holidays!

Don’t Settle For Adequate: Alternatives for technology, content and services have evolved and improved to such an extent that it is no longer very smart to settle for good enough. While it is nearly impossible to future-proof any effort in the rapidly changing world we live in, it is easy enough to choose a path that gives you a fighting chance. There are enough resources available to help end users make informed choices that will produce results that are far beyond adequate. Remember, adequacy sits at the razor’s edge of inadequacy. On that basis, anyone who settles for merely adequate is likely either lazy or compromised in some way. Settling for good enough in technology, content or services would seem to presume that you have a material advantage elsewhere. I am guessing that would not include linear programming skills.

Don’t Settle For Cheap: There is a distinct difference between something that is a great value and something that is cheap. A great value provides a very high benefit-to-cost ratio, where something cheap is simply inexpensive in a vacuum. In the age of daily deals (ending soon in a junk mail folder near you), price shopping bots and discounts everywhere, it should not be surprising that buyers seem pre-occupied with cost over benefit or ROI. For example, engaging with a qualified consultant is not free, but there is often great value to be realized by the process, perspective and planning advantages a good consultant can bring to the table. Similarly, if hardware, software and content are viewed as commodities, then there is a good chance your network will be valued that way by viewers. Great often costs more than adequate, but may also provide more value when measured against your objectives and long term operating costs. Cheap has a pernicious way of becoming expensive over time, or alarmingly soon after the sale. Two offerings at similar prices may have dramatically different value! If there is one thing that is rare in this business, it is a true apples-to-apples decision matrix for many key purchase decisions. Savvy buyers will take the time to consider the value points in an offering, of which price is merely a component.

Don’t Settle For Survival: The economic backdrop for the past several years has put many industry players in survival mode. Several have not emerged, and few have truly prospered. What is clear going forward is that settling for survival is not going to be a winning strategy for anyone. There are deals to be made, business models to be built, innovations to be imagined and opportunities to be seized that only come about at true inflection points. With DOOH feeling like it is very much at the edge of an inflection, now is not the time to think small. With apologies to Justin Hayward of The Moody Blues, the tide is turning  (although not so slowly), and we are all part of a fire that is burning. Settle for survival, and you risk being a bystander as others build a another day from the ashes.

Don’t Settle, Period: The ethos of settling in itself creates a culture and expectation of underperforming. Think about both great companies and oppressive companies that you know or may have worked for. Chances are you will agree that the great organizations are filled from top to bottom with people who don’t settle for a role, who won’t settle for status quo, and don’t settle for “maybe”. People, companies and even industries that don’t settle have the best chance to advance, innovate and win.

Life and business are indeed full of tradeoffs, and choices must often be made that are not easy. Challenge yourself, your team and your partners to examine decisions made for evidence of settling.  Maybe then you won’t have to settle for a good 2013. Make it a great one.

The Myth of Big Numbers

Yes, there are literally hundreds of choices in terms of digital signage software providers. But the fact is that for an end user who is willing to invest substantial cash in order to make an informed decision, the field of truly qualified providers is actually less than 20, and I believe that I am being very generous to the last 8. A client should be paying the consultant to understand and challenge business requirements, filter out the obvious non-starters from that group, and ensure that there are no unique needs that might actually widen the search. Anyone throwing the Software Holocron on the conference room table and telling a client how much work it is to sort through all the choices is being disingenuous at best. The truth is that the task of running a collaborative and positive process is far more difficult than narrowing the preliminary field. A good consultant invests his or her time to develop a deep understanding of what is out there and how it changes over time. A client pays a consultant to bring a starting point to the process, and for the process itself. If that makes intuitive sense, and it should, then the number of solution providers is not really that daunting.

To the consultants: You are selling process, knowledge and methodology.

To the end users: You are buying perspective, experience and insurance. Know who you are buying it from.

The Best Consultants Are Independent

The value of hiring a consultant includes gaining their experience, knowledge and perspective. Their ability to assimilate the unique and important elements of your business and relate it to the selection of a solution is also incredibly critical to the success of a project. But perhaps the most important quality that a consultant should bring to a selection process is independence. They should be free of any taint of favoritism, sponsorship or conflict of interest. Why would anyone want to pay for a process in which the outcome is stilted or pre-ordained? That would be letting someone steal your watch and then tell you what time it is. Demand that a consultant not just tell you they are independent, make them prove it. Where have they worked before, and with what software? What biases do they have, both positive and negative, and why? How many different solutions have they selected and installed for clients or purchased and deployed as end users? Have they ever received a check or payment of any kind from a vendor? These are reasonable questions to ask, knowing that everyone got their experience one way or another, and that personal biases are acceptable if they are explainable.

To the consultants: Stake your reputation on independence. It is great and valuable to have relationships with many vendors, insight into what they do well and a sense of their roadmap. Invest your time to build that. Don’t sell out.

To the end users: You must ensure that you and your team are part of the process, and you must be willing to participate and challenge assumptions along the way. That is how you will get the most value and best results.

Pay to Play is a Horrible Idea For Everyone

Credible folks with passion, smarts and experience have posited this idea of a business model where vendors would actually pay them to “review” their software independently, and compile their findings as a resource to potential customers, who presumably would also pay dearly for them. This makes absolutely no sense to me. Independence goes out the door as soon as a check is written. I can’t imagine that any of the usual suspects in the industry who would actually consider this scheme to be a marketing expense (and we all know who they are) would tolerate anything other than a glowing review. I certainly would not, but then again, I would pay a consultant to review our solution right after we play some hockey on the River Styx. The result of this innocent sounding “Consumer Reports” scheme is a self-selected short list of vendors willing to pay to get preferential treatment. This isn’t SEO, and the decision being made is not which smartphone cover to buy! Selecting a digital signage solution is a strategic decision that will cost lots of money. Should an end user assume that anyone not in the compendium of paid reviews has a substandard offering, or that those paid reviews are legitimate? I don’t think so. We exist in an industry where confusion among newcomers is rampant. Having people with good resumes touting paid reviews as value-added consulting is not helpful. Real consultants should be selling process, methods and independence, learning their clients’ business and optimizing client outcomes over personal incomes. Pay to play is a bad model developed by ostensibly good people. If they really are smart, they will abandon it, and apply their ingenuity to methodology and toolkit, even if that requires investment. There would be ROI on that effort.

To the consultants and end users: When independence is not important, neither is credibility.

To my fellow vendors: There are better ways to deploy your capital. Just say no.

There are lots of lists and directories out there that help identify alternatives. What we lack are competitive, independent consultants who have invested the time to understand strategy, the concept of “fit”, the particular strengths and weaknesses of the top offerings, and who have developed a methodology for melding fit with process. Having competition among consultants will allow end users to assess approach, qualifications and results. When we get there, better decisions will be made, which advances the industry for everyone.

The pitch seeks $7 million in investment, ostensibly comprised of $5 million to make an acquisition of a partner company and $2 million for working capital. The PDF associated with the pitch provides a strong financial case for very rapid and profitable growth, both with and without the potential acquisition. It seems clear that this is not a start-up, but a real world scenario where a model is proven, contracts are in the drawer, risks are known or mitigated, and now it is about execution. Pro forma financials that show a $25 million top line with significant profits are the stuff of fast exits for investors, whether it be through a sale or an IPO. In short, a classic deal for a venture capital firm. Why then, does the mystery company choose to solicit investors from an internet site, represented by a third party whose web site seems more focused on executive search than investment banking?

The answer may lie in one sentence of the online pitch: “ownership wants to maintain majority control, so investor(s) must be willing to have minority position”. The ask is pegged at 100% of 2011 revenue for the primary company, and 262x of the combined companies’ 2011 EBITDA.  Offering less than half of the company’s equity on that basis probably would not get one to first base with an institutional investor. If one is willing to accept the dramatic leap in projected EBITDA for 2012, the EBITDA multiple drops to 4.2x. Given further performance gains in 2013, that becomes somewhat easier to swallow… if you buy in to the projections. Everyone loves a hockey stick chart, but most VCs will want to understand why a marginally profitable company becomes very profitable overnight. My guess is that given the owners’ desire to maintain control after a large capital raise, they choose go after angels and private investors who are less likely to undertake the type of diligence that an institution does by routine. Raising that kind of money through individual investors can be a laborious and time consuming project. As in any business decision of this nature, there needs to be an objective that is clearly defined. In this case, the overarching objective seems to be maintaining control. But if their story is valid, is that the best decision?

There are times when working with venture capitalists makes great sense, even for companies used to the structure of angel funded or cash flow funded businesses. Among them are:

1. When a significant raise is needed to meet strategic objectives
2. When a company is entering a new phase in its life cycle
3. When a strategic acquisition is in order
4. When the potential need for a second raise lurks beyond the success of a first raise

A good venture capital or private equity firm can offer the experience and perspective to examine and enhance a business plan; the management input to help navigate the rougher waters of expansion phase businesses; the diligence, process and negotiation capabilities to evaluate and execute an acquisition; and the resources required to make a second institutional round a much less onerous prospect. To gain all of that, one must be willing to deal with the process and the terms of the institutional investor.  This often includes a thorough diligence process, potentially contentious valuation discussions, board seats and/or control, and liquidation preferences. None of these are viewed by the average entrepreneur as a walk through the roses. To go from independent entrepreneur to employee-at-will of a board controlled by relative strangers can be a daunting prospect. But if the right institutional partner is chosen and that partner believes in your plan as much as you do, it is more often than not the right path to go down. Sometimes control is a less important objective than rapid achievement of a strategic plan and the ability to tap into greater resources.

I understand the mindset of the mystery company owners, as our own company has yet to take an institutional round. But when an opportunity to seize strategic advantage, to expand rapidly or to differentiate a company presents itself, certain things matter more than ownership percentage.  Speed, execution, professionalism and deep resources can help create a pie so large that a smaller slice is worth more than the whole of the old pie. Three of the real tests of entrepreneurial management are the strategic calls they make around their own roles, organization structure and capital structure. If the pitch of the mystery company is reasonably  valid, then they are facing all three tests right now. Scoffing at the advantages of an institutional investor at this stage may in fact give them a failing grade.

• Dramatic changes in the playing field: Partial hit. While there has been some consolidation, mostly on the network side, 2012 did not bring dramatic change. I did score on the display vendor software piece, though.
• Ad dollars flow, but retail networks focus on branding and experience: Not so much on the ad dollars unfortunately, but the retail piece was dead on.
• Mobile strategies coalesce around the practical: Score!
• Camera-based measurement will meet resistance: Score! I don’t even hear anyone talking about it.
• Endpoints take on a varied look: I’ll rate this one as a partial hit. Certainly more interest in non-traditional displays, but the small screen avalanche has not yet started. It will.
• The cloud becomes understood for what it is… and what it isn’t: Partial hit. I think people now understand that cloud means infrastructure, not function. New, cloud-fueled business models have yet to emerge.
• Institutional capital remains on the sidelines, waiting for the smoke to clear: Half right. Little to no institutional action beyond portfolio shuffling and recaps. But corporate capital did not appear, either.

Overall, a fairly solid scorecard, even if there was nothing truly bold on the list. Armed and forewarned with metrics produced without a camera, we will climb into a borrowed Vette and provide a touchdown and an extra point’s worth of predictions for the next twelve months.

1. A Fall event is cobbled together to become a permanent fixture in North America

The digital signage universe descends upon Las Vegas each year in the February/March time frame for the Digital Signage Expo, now entering its second decade of growth. The opportunities for education, networking and lead generation are abundant and valuable, and a great way to kick off the year. It has always felt like there is room for something in the early Fall to cap off the calendar year, but it has not yet happened in a sustainable way. DSE’s Exponation wisely ditched a Fall expo in favor of two smaller, sponsored Forums and local huddles. The Fall version of CETW, the flagship show for the DSA, has found its identity and market in its own roots as more of an interactive and kiosk-focused conference than a digital signage event. But now something organic and digital signage-centric has happened in mid-October. A confluence of no less than twelve events are scheduled to occur in a single week in New York. There is something for everyone associated with digital signage, from investors to network operators to vendors and advertisers. Without doubt there are going to be hundreds of industry players in Manhattan that week. With all the activity, there is an Olympic feel to the whole thing: distinct events with varied appeal and several venues. I believe that people are starting to put this week on their calendar every year. What is needed to make this something special and sustainable is an Organizing Committee that helps with logistics, conflict resolution and marketing. Pulling an event together without having a central venue is not easy, but I think it will happen. Since the last Olympic games were held in London, perhaps it will take a Brit to pull it off. Is Sebastian Coe busy?

2. No Pi in the Sky

While the worthy and wholly non-commercial development of the Raspberry Pi has been an interesting story to follow for a year or so, its initial release is not going to change the digital signage playing field. Players will indeed continue to evolve with smaller form, lower prices and more power, driven more by Moore’s Law than by the wishful thinking of tinkerers. The higher end of the market is calling for more function, more integration and more processor-intensive features that will require robust players. ARM-based players running some version of Linux will have an impact for specific use cases, and it will take all of the next year to develop both commercially acceptable players and the attendant use cases. Just don’t expect them to be Raspberry Pis priced at $25 when they appear. That raspberry flavor is not always what you think it is.

3. Streaming is not dreaming

In the world of content, 2013 may be the year in which streaming content makes its way into the mainstream (sorry) of available tools for network operators. No, it is not yet time to predict streaming as the primary delivery mode for content (sorry Cisco), but rather live content, streamed, as a content option within a typical playlist. In the world of corporate communications, think about live sessions from the office of the CEO. In commercial digital signage networks, think about live news feeds keyed to a location or region. In retail, think about live trunk shows, celebrity events and product introductions. The possibilities are endless even if some hurdles to making it happen exist. Many new and engaging ideas can be accommodated by a live stream. Managing the start and end of a live stream within a scheduled playlist will be a challenge to overcome. But the options for streaming are starting to emerge, and used correctly can be valuable and compelling. And guess what?  If you have the infrastructure for streaming, you can push the stream to those smartphones in the consumers’ pockets, not just to the big screen. Look for some examples to appear next year.

4. Big deals define the landscape.

The next year will be one of seismic new network deals being closed. Most will be corporate-driven, some will not. Importantly, the outcome of the various processes around these deals will change the landscape in a permanent way, both in how the game itself is played as well as who plays it. The way that digital signage is sold is going to change, because the old way is simply not how customers want to buy it. And once again, market forces and increased educational efforts will narrow the field for each pursuit, whether based on niche specialties, track record, feature/function/architecture, or all of the above. I am conscious of a habit I have of using the word interesting too often. But this is going to be interesting, and it segues nicely into part of the next prediction.

5. Consolidation? It depends.

Here’s how it works: networks consolidate and vendors shrink. That is because it is easier to rationalize assets and resources on the network side than it is to do the same thing with divergent technology stacks and development organizations. With the exception of bottom feeders, no one has really wanted to invest the time, money and brain damage to consolidate software. Perhaps someone will try it, attempting to leverage customer bases, geography and/or distribution channels. But that is costly and risky business if done on a large scale. Customers will tend to get concerned. On that basis, I don’t think you will see vendor consolidation. Instead you may see shrinkage. Not the George Costanza kind, but the natural forces of an over-saturated market in play. Some vertical expansion is also possible, but beware contrived verticalization… we’ve already seen what that has rendered: not much beyond smoke and (quite literally) mirrors. Networks will continue to be the consolidation play.

http://www.youtube.com/watch?v=1cUNNKzj_Nc

Spending on ad-supported networks has been spotty this year, certainly impacted by the global economic mess. There have been apparent failures and there have been some nice success stories. In the great middle, there are reports of some networks dropping their proverbial pants on pricing to attract advertisers. The result is analogous to George’s experience in the video above. It is tactic that you can’t take back. Agencies smell fear, and will generally prefer to flee to better properties than to get a bargain. While there may be slight downward pressure on rates, savvy networks will counter with targeted buys, legitimate measurement and local sales efforts which can garner higher rates. One disturbing challenge is the lack of momentum of the DSP and ad buying platform part of the ecosystem. We lost a couple of players in the past year, others are struggling, and one new entrant doesn’t seem to realize that this is not an online business. Something has to give on the technology side of advertising. Who it is and what it will be is unclear, but there is a plum to be pulled from this pie.

7. Big money? It is waiting outside the exit.

Like many others, I have anticipated the arrival of big institutional and corporate money for some time now. I thought the corporate money would arrive last year, and I whiffed on that one. It seems to me that the corporations and institutions are actually connected. Here’s how. The first wave of institutional money came into the space in the first few years of the new century. A second wave followed the insane cash-outs on PRN and SignStorey in a typical “me too” reaction. Both of the takers on the two big exits were corporate buyers (Thomson and CBS, respectively) snapping up network-related properties. Cisco jumped in around the same time by snapping up a technology startup (Tivella). Since then, there have been few exits of note. I think the next wave of institutional money will not come until there are some new exits, especially on the technology side. There are in fact several VC-backed tech companies out there with antsy investors looking for an exit. The likely buyers, if they appear, will again be corporations. Until the institutions see new exits and can calculate expected ROI on new deals with some confidence, they are going to hold on to their chips. Since I don’t see huge exits in the offing on either end of the ecosystem, I am going to modify last year’s prediction a bit. Expect no major institutional action for the tech companies until the smoke clears after a busy 2013, followed by some big bets being placed. Look for a couple of exits (to corporate buyers) on the network side in the coming year.

That’s seven to ponder. Let me know your thoughts in the comment section. We can have fun reviewing it all next year. Until then, I’ll have to return the keys to that Corvette. If I smoked, I’d have a cigarette.

Machetes can be inspiring

Much like your dial tone or internet access, the infrastructure of a SaaS or enterprise digital signage platform is often taken as a given. Behind the scenes, it is absolutely essential to monitor key metrics to assess the performance of all production, staging and enterprise servers in order to proactively identify bottlenecks and potential issues. To do this at Real Digital Media, we use a SaaS application called Scout, which is installed as an agent on each server, communicating with Scout’s management application. The tool allows our engineers to define the metrics that they wish to monitor from a set of plug-ins provided with the Scout application. Metrics that exceed a defined level will generate an email alert from Scout, and we have learned that such alerts almost always serve as an early warning that internal users and/or customers are about to report something out of whack. Experience has helped us identify and resolve issues before the calls come, which makes for happy users.  Scout also lets our engineers write custom plug-ins to augment the built-in metrics. The ability to write custom plug-ins without revising code on the remote server comes in very handy from time to time, especially in the deployment of a new enterprise install, where new metrics can be devised and watched to explain or head off typical issues.

In daily usage, we’ve tied the most critical metrics watched by Scout to a dashboard that the support team can keep on a large display or pull up on their desktop screens. That capability, combined with the email alert system, is useful, but does not mesh with our work styles and requirements.  It is rare for all the members of our development and support teams to be assembled in the same place. Geography notwithstanding, it is critical for them to share ideas, issues and information on a continuous basis. They have found that the most effective way to support communications during a typical day is to use a chat room powered by 37 Signals’ Campfire product. To fully integrate Scout with Campfire, we needed to do a little bit of magic.

The problem was well defined. We needed to have Scout alerts routed into the Campfire chat room so that all of the team could get immediate feedback, decide amongst themselves what next steps should be, and who should handle which tasks. Beyond that, the chat room could serve as a repository for previous incidents and actions taken, making us more efficient in responses. Every team member would have visibility of issues and resolutions, as well as the option to make clever, motivational comments to co-workers as appropriate.

To pull this off, a new plug-in with some extra capability had to be written. Essentially, we created a “bot” that sits in our Campfire chat room and uses the Scout webhook API to receive and display alerts. The “bot” is based on “hubot” from github, and is now part of github’s third-party hubot-scripts repository. The team named the bot Roberto, after the knife-wielding, insane criminal robot of fleeting Futurama fame. He was going to spur us to action, one way or another. Roberto was originally going to utilize Scout’s API to paste critical alert information into the Campfire chat room.  But the team wanted more. We wanted to grab some of the graphics that Scout’s in-app page offers to users to provide us with visual feedback on historical norms for each metric without leaving the chat room. A call to Scout support got graphics ported into the API in less than a day, and we were off and running. Full and customized metrics on all our critical servers were now available to the entire team inside a collaborative environment. Works styles were accommodated and both hubot and Scout users were provided with new tools.

Roberto delivers alerts, graphics, and insanity.

Monitoring critical functions and performance on staging and production servers is an important task, seldom seen or appreciated by platform users. We’d just as soon keep it that way. In a world-class environment, good tools allow problems to be solved before they manifest themselves to users. In our shop, Roberto’s technical blade ensures that we stay on the cutting edge. And he made me write this… who am I to argue with an insane robot?

Ed. Note: Thanks to Gavin Stark for bringing Roberto to life and sharing the story.

But while success and failure depend on conditions, the mind neither waxes nor wanes.
― Bodhidharma

“If at first you don’t succeed, destroy all evidence that you tried.”
― Steven Wright

When one encounters a digital signage screen that is black (or blue) or otherwise displaying something other than a perfect rendition of world class content, the typical reaction is to label it a failure. Or, in Twitspeak, a #digitalsignage #FAIL. In our electronic culture of instant dissemination of all news, both good and bad, the world is made aware of mistakes and misdeeds with remarkable speed. And in the world of digital signage, failure conditions in the field are almost always assigned to the technology provider behind the network. While that is sometimes deserved, it is often just the easy assumption to make. The reality is that far more often than not, what appears to be a technical failure is caused by some combination of bad operational execution and environmental issues. In the end, problems generally end up in the laps of technical support staff regardless of cause, as they are perhaps the most qualified to troubleshoot all manners of issues. And they have a habit of answering their phones. It seems that those who exult in the glory of deals closed and networks powered must often bear the pain of fixing not just their own problems, but those of others. That is not a bad thing, as each instance is what educators would call a teachable event. Each failure is an opportunity to improve.

All that said, the #FAIL pictures are really a red herring, because the causes of the failures are almost always easily fixed. The truth is that there may be a number of networks that are actually in the process of failing, and we ought to be prepared as an industry to deal with the fallout of that. These failures are less easily fixed, as they are often caused by bad planning, undercapitalization, poor decision making or lack of commitment from key parties. Slow ad sales will often be named as a culprit, but that can usually be traced back to one of the other symptoms. It is not prudent to speculate or name names here, but those who have their ears to the ground certainly know that theres are folks out there skating on thin ice. Failures, even major ones, are likely to happen, but it can not and will not be the death knell of an industry. Instead, the failures will sharpen the resolve and execution of existing and new networks. They will provide cases studies for investors and operators alike to learn from. They will thin the herd of hacks, wannabes and opportunists, while elevating the prospects of professionals, visionaries and committed teams. Perhaps most importantly, they will create openings for the next generation of operators to fill. That is not a terrible thing to consider.

As an industry, we often bemoan the fact that we are not universally understood and accepted, yet we seem to be quick to point out digital signage failures. That practice is unlikely to stop, and will become more rampant as actual companies and not just screens fail. While it makes great reading and terrific fodder for blog posts, it tends to create a perception that failure is rampant or inevitable, when in fact it is not. Failures, even spectacular ones, are a natural (and ultimately necessary) part of overall growth. It is appropriate to analyze failures of all types, but not productive to revel in them. Bodhidharma and Edison had it right. Failure is conditional, and learning should be a constant. Both are on the path to #digitalsignage #SUCCESS.

Catalogers have known for decades that offers optimized for differentiated groups of consumers deliver superior results. In fact, the catalog you receive may be different than the one your next-door neighbor gets. Catalogers have learned how to use inside and outside covers, bind-ins, different copy and personalization to boost their results. More recently, online marketers have learned to use navigation data, cookies and in some cases, purchase history to present offers that have a greater-than-average chance of getting clicked through. Offers delivered in real time to consumers at a retail location are the next step in the evolution of offer optimization. Mobile, digital signage and big data analytics will combine to change the way that promotions are executed at retail. Taking the best of catalog and online methods to the bricks and mortar showrooms may in fact spark a retail renaissance. Three key problems are going to be solved to make this happen.

Identifying the Consumer

Before a personalized and relevant offer can be made to a consumer at retail, the merchant has to have an idea of who they are and where they are. The notion that every retailer will have a mobile app that consumers will launch upon entering the store is convenient, but not practical. Instead, what we are likely to see are approaches that use variations of geo-fencing. In one case, you may have opted in to a program with a given retailer that wakes an app when you enter their store and virtually checks you in. This requires an always-on app, which is not currently supported on the popular iPhone, yet is on Android devices. In another case, technology inside the store may identify your phone (again if you have opted in) and reach out reach out to you via Bluetooth or other technology. In either case, or in other approaches s that may appear, once you have been identified and located, the magic can begin.

Generating the Offer

Once a customer is identified to the merchant, technology must step in and replace the personal knowledge of the customer that Mom and Pop once stored in their heads. Purchase data from all channels, loyalty program preferences, demographic overlays and advanced profiling techniques must come together to fuel what amounts to an offer engine. That engine must select the best fit for any given customer in near real time and deliver it to the mobile device of the customer. The art of the offer will certainly take many forms, but may include a time box for redemption, provide links for more information, enable the customer to page a salesperson in the store, or even offer up a virtual sales assistant. Once an offer is made, its redemption or non-redemption informs the offer engine and helps optimize the next offer, both for that customer and others who fit their profile or persona.

Integration and Smarter Signage

Digital signage will likely take on two roles in the conversation with customers. Since it is by its nature a one-to-many vehicle, the digital signs within a store are likely to feature general promotions, and will provide methods (QR codes, automated content recognition, Snap Tags, and NFC to name a few) to allow the customers to learn more, and receive discounts or coupons electronically. Based upon what is known about the customers identified in the store, these generalized offers can be tweaked to provide the greatest level of relevance to the current audience, harkening back to the idea of customized catalog covers. In this role, the digital sign is an ignition point, reaching out to many and allowing them to use their second screen to engage. In its second role, the digital sign may receive a signal that a customer has received a specific offer, and then display relevant content on the big screen. This second role as a visual reinforcement to a single offer can be “magic” to one customer, without being unnatural to others who did not receive the same offer. For digital signage to take on the dual roles described above, software will have to get smarter and more flexible and be integrated with the systems supporting offer optimization. The foundation for that capability exists in some places today. The ability to become a leverage point for generalized and personalized offers will only make digital signage more relevant and valuable.

Big data and analytics are moving rapidly to reshape how merchants interact with their customers. As techniques evolve and lessons are learned, retail is likely to undergo a transformation that brings the customer experience into a new dimension. As offers become more personalized and relevant, digital signage can increase its value to the retailer by getting smarter itself. That would be pretty refreshing, wouldn’t it?

The digital signage industry has seen large corporate entities step in and take a position via M&A activity on a number of occasions over the years. Each time, the deals were reviewed (or were self-proclaimed) as transformational, game changing or otherwise signaling imminent consolidation. But in reality, that has never been the case. In some instances, the lackluster results of corporate forays into the space have stemmed from bad timing. In others, culture and priorities were not well aligned to nurture the acquisition. (Hinchcliffe does a particularly good job at dissecting how big companies “metabolize” their prized acquisitions.) In others, it may have simply been a consequence of targeting the wrong entity. Some of the largest companies to invest in the digital signage software space to date have been, in no particular order, Cisco, 3M, Harris and NCR. A look at each may shed some light on what direction the “bigs” might take going forward.

Cisco acquired Tivella in early 2007. The opening paragraph of the associated press release said, “Tivella is a leading provider of digital signage software and systems. Cisco sees enormous potential for digital signage to be integrated into its existing enterprise streaming and live video broadcasting platform.” The first sentence had to be typed with one hand, as the fingers of the other were clearly crossed. The most common reaction to the deal was “Cisco bought WHO?”. Tivella had a platform that made an early bet on streaming content, which no doubt made the folks at Cisco slobber as they saw the need for more switches and router everywhere. Hence the second sentence in the release. In reality, the Cisco product has done much better only in venues where streaming makes sense, like ballparks and arenas. The rest of the world of geographically diverse networks (and painfully inconsistent broadband) is still not ready for streaming everything five years later. Given the size of Cisco’s sales force and its incumbent status in so many large organizations, there is little doubt that the enormous potential they forecast has yet to be realized. They consistently get beat outside their sweet spot by better architecture, better software and better value. My take: bad timing.

3M bought Mercury Online Solutions and their FRED digital signage product two years earlier, in 2005. They hailed it as a perfect fit for their large commercial graphics and services businesses. Bill Collins did a nice review of the deal at the time, noting that impending sales at Cingular and SunTrust made it attractive for both sides of the transaction to get it done. Since then, Cingular became AT&T Wireless, and FRED is not involved. I am not sure what happened at SunTrust, but 3M has certainly not gained a dominant position in banking in any case. One may assume that the interactive part of the Mercury business was equally attractive to 3M, the makers of MicroTouch screens. I have no insight as to whether that toolset has proved to be beneficial, but I am pretty sure that from a digital signage perspective, 3M is simply not a factor. My take: wrong product (notwithstanding the kiosk angle), too early.

In 2004, Leitch Technology purchased Inscriber for $18 million. Inscriber’s core business was broadcast graphics systems, and while it offered a digital signage product, it did not get any focus in the deal announcement. Harris Corporation acquired Leitch several months later for the princely sum of $450 million, the largest of several purchases that formed the core of Harris’ Broadcast Communications division. In Harris’ announcement, digital signage was at best an afterthought. That said, the acquired software, InfoCaster, was nurtured and invested in over the years, and some significant deals were won. Then came Harris’ recent decision to divest the entire Broadcast Communications division, including the financial and technical engine behind the DDN/7-Eleven digital signage network. Harris had done fairly well in large venues as well, providing a well-financed competitor to Cisco. However, In the grand scheme of things, the InfoCaster business is a pimple on the rather large posterior of the Broadcast Communications business, and in all likelihood will have to be sold off separately from core broadcasting assets. While Harris spokespeople have put on a brave face, claiming it is business as usual, it is going to be tough to convince most corporate buyers that Daddy Warbucks is in it for the long haul. Every week that passes without a sale puts them further behind the 8-ball in terms of competitive positioning. It may have been the closest thing to a successful acquisition by a big company, but it never seemed to matter to the powers that be at Harris from the beginning. It was simply not going to move the dial on a billion dollar business any time soon, if ever. My take: a victim of priorities and culture.

NCR has made two digital signage acquisitions, which in both cases amounted to serendipitous add-ons. In 2009, it purchased the assets of Netkey, which had in turn acquired Webpavement two years earlier. Netkey’s most valuable asset was its development environment for kiosk applications, which was clearly NCR’s target. And while they did manage to secure a large digital signage deal with Healthy Advice, the Webpavement product was never a world beater (“leader”) in the pantheon of digital signage software. About a year ago, NCR paid $1.2 billion to acquire Radiant Systems and their strong position in POS and other systems in the retail, entertainment and food service verticals. It was a perfect fit for a company once known as National Cash Register. As it turns out, two weeks earlier Radiant had closed a deal to buy Texas Digital, who had a nice business in order management and digital signage, especially in food service venues. It may be too early to tell what the fate of f Texas Digital will be as part of NCR. The order confirmation piece has some obvious strategic value to NCR in general. The QSR and fast casual channels are fast becoming the battleground of a major digital signage turf war. Time will tell if Texas Digital has the chops to compete or whether NCR intends to invest in that piece of the business. The jury is out on the first question, and I’d guess yes on the second. Neither Netkey nor Radiant were acquired for their digital signage businesses, yet NCR finds itself with two technology stacks and a few nice customers. They may continue to play the role of consolidator, or they may find the upside too small or too far out to care, as Harris did. My take: not a priority… yet.

The dizzying M&A activity in the social business as described by Hinchcliffe is marked by pinpoint targeting, high prices and yet-to-be-determined results. All of this has occurred very early in the life cycle of the social business itself, with three suns (Facebook, Twitter and LinkedIn) around which the start-ups orbit creating urgency and competition for all. In digital signage, early deals by big buyers have met with very mixed results, and in some cases were afterthoughts of larger deals. The hoped-for momentum has yet to appear. However, given the passage of time, the big companies still on the sidelines have had the luxury of watching the market develop, seeing the technology approaches differentiate, and learning from the actions of the early movers. None are going to innovate in our space from within. There are many companies within the rapidly growing Software Holocron that would love to have their phone ring with a prospective buyer on the other end. Yet very few will have that experience. Unless the technology, positioning and customer base become strategic for someone, most will be left to their own devices. Based upon the general experience of small companies acquired by large ones, culture, identity and strategy are often left behind at the closing table. On that basis, not being assimilated by The Borg would be fine for some, even preferable. For others, it is a harrowing prospect. The buyers might do well to impose their will on the former.

Note: I wrote this post on Father’s Day, and while I lost my father 16 years ago, he inspires me still. I certainly have a long way to go as a businessman, as a writer and as a person, but he taught me that it is what I do as a father that will have the longest lasting impact. Thanks, Dad.

I haven’t written for a while now. For those of you that have actually noticed the absence, thanks for caring. I generally get antsy when it has been 7 to 10 days since the last post, so that feeling of obligation and anxiety has been pretty strong for weeks now. Truth be told, it has been a very busy month, and in a good way.  I have also burned hours stewing over having finally identified the lowest life forms in the digital signage industry, quite an achievement considering the numerous candidates. (And you know who you are, dahlings. May you each receive the properly painful karmic comeuppance that certainly awaits you.) I won’t waste further keystrokes or your time on such negativity, as cathartic as that might be. During the blog hiatus, I’ve also been lucky enough to connect with some of the brightest, most uplifting people in and around our space. That has been an overwhelmingly positive experience for me, and reinforces the notion that life is too short to waste time with people who bring you down. None of which has anything to do with today’s writer’s block-busting post, but it felt right to share.

An Industry of Niches

Digital signage has its roots as a non-Internet phenomenon, when early networks burned DVDs and distributed them to locations, usually on a monthly basis. It did not take long to understand that there was an opportunity to create a viable business by leveraging captive audiences, predictable dwell times and advertising sales. As broadband began to proliferate and networked solutions were born, it looked like the salad days for digital signage were on. While there have been many success stories, the gold rush did not turn out quite the way typical network and solution provider business plans projected.  Perhaps the highest and best use of digital signage is not necessarily as an advertising vehicle. If that is true, then events, behaviors and strategies of the past and present need to be re-examined in a different light.

The lure of advertising dollars “certain” to be diverted from television and traditional out-of-home budgets attracted digital signage startups like moths to lightbulbs. On the network side, every conceivable venue type where one could make a case for dwell time seemed to have entrepreneurs aggregating locations. Capital costs, which were far more onerous in the early days, did not faze the startups or their investors, as they bought into the ad revenue model en masse. Two special situations only increased the hysteria in mid-decade. The 2005 sale of PRN to Thomson for $285 million was generally perceived as validation of the ad-based model. Never mind that selling ads to WalMart’s browbeaten vendors is hardly a typical scenario, or that PRN’s model could not be replicated without a benefactor like WalMart. The FocusMedia IPO was the other one-off that received undue hype. People seemed willing to ignore the fact that the FocusMedia networks were not in fact networked, and that China’s media environment is a tad different than that of North America or Europe. Beyond these anomalies, the ad-based networks that succeeded combined focus and scale in various ratios, and it was not a walk in the park for any of them. The number of large scale winners was small enough to spawn its own cabal association (DPAA, nee OVAB), with astronomical dues sufficient to support paid research reinforcing the CPM rates of members, while keeping out the annoying riffraff. The DPAA does some good work, and has recently changed its membership policies and dues structure, but it remains a mouthpiece only for an important segment of an industry, not the industry as a whole.

On the solution side, entrepreneurs sniffed opportunity as well. Software distribution, content creation, media player and kiosk makers suddenly morphed in to digital signage solutions. It is fair to say that most if not all of them were blinded by the light reflecting off the pot of advertising gold. It is interesting to look at how time, market pressure and customer demands changed strategies along the way. Some have invested huge amounts of time and money trying to optimize their solutions for ad-based networks. (Ironically, the majority of the DPAA powerhouses use home grown solutions and have been reticent to make a shift to commercial packages.) Others have seen their solutions take on the look of software built by committee, as different pieces built to mollify key customer requirements have a bolt-on feel to them. Others have tried the shell game of promoting bells and whistles to distract attention from a fundamentally flawed core. All of this was occurring as garages across the world gave rise to a new generation of me-too products. Some were undoubtedly worthy, but encountered a vendor-saturated marketplace in which key targets were either taken or moving at a snail’s pace. The recent demise of DG Screens is a good example of a what may have been a promising solution unable to gain enough traction to survive. We may never know the actual motivation for Harris’ impending divestiture of its Broadcast Communications unit, which includes its digital signage business, but their big bet on an ad sales play may make for fun deal discussions. That pot of advertising gold will almost certainly expand, but it will never be large enough to sustain the hordes of software solutions competing to power the networks. For quick affirmation of this, read the ever-growing list of vendors being compiled by DailyDOOH. If you have heard of 25% of the names, you are doing well. Finally, the demise of SeeSaw Networks, the sale of Adcentricity, the focus of DOMedia on outdoor, and the retrenchment of rVue are all indicators that the advertising angle is not what most people thought it would be.

Here, I’ll just say it: advertising-based networks are a NICHE within an industry, they are NOT the industry itself.

Digital signage may have more usefulness as an activator and marketing tool than as an ad platform. The days of venue aggregators are giving way to the era of corporate deployment. This brings with it a shift to branding and marketing as primary goals, with advertising revenue often discounted in ROI discussions. And it necessarily makes content and engagement, scalability and interoperability, flexibility and cost efficiency the focal points of decision makers. New solution entrants will be hard pressed to get through a proper corporate selection process, and older ones will have to decide what they really are. The market has a way of dealing with those that don’t choose and invest wisely.

The emerging battle will be for niches within the next wave of adoption. And while advertising will be one of those niches, it may no longer be the one with the highest growth rate. Sustainable market strategies and resilient business models will have to win the day.

That RMG is rumored to have been unsuccessful in an attempt to raise a war chest of cash to do acquisitions, and has now gone in the opposite direction is not a failure. Instead, it is a reality check and a reset from the previous shotgun/footprint strategy outlined last year. Since the company is largely owned and controlled by a couple of venture firms, it speaks to a changing mindset at the boardroom level. Instead of continuing to make opportunistic buys of disparate network properties, it appears to signal a retrenching around the best properties: ones that happen to center on transportation. By undergoing the retrenchment, it opens the door to future acquisitions that would actually fit the new focus of the company. There are numerous examples of retail conglomerates that lost their focus and regained it by resetting strategy around core properties. My favorite is Genesco, an old line shoe company (Genesco is shorthand for General Shoe Company, its previous name) that at one time owned the Bonwit Teller department store, numerous specialty apparel manufacturers and retailers, and a soccer equipment business, among others. A retrenchment around footwear allowed them to hone their skills as specialty retailers with multiple tight demographic targets, and eventually create and acquire new concepts that leverage their strengths. Once close to bankruptcy, they are prospering as never before. The guts to divest, and the patience to develop the retail teams that complement their manufacturing legacy has paid off. Perhaps that is the goal of RMG. The next step will be the rebuilding of infrastructure and organization around the new focus. With any level of success, you can expect them to be back on a growth path, perhaps through acquisition, with a much more attractive story to tell potential investors.

So what happens to the networks being divested? A good guess is that the fitness property will end up in the hands of a new owner who already has a presence in that vertical. That type of buyer may be challenged by the need to consolidate technology platforms, but that cost would likely be built into any buy offer. The net effect would be further consolidation in the fitness vertical, and similar ability to gain efficiencies for the new owner. Of course, the eventual buyer may also be someone not currently in the space who wants to establish themselves and use RMG’s network as a springboard for growth. Time will tell. As for the coffee shop network, now known as the New York Times.com Today Network, we can only hope that a sale will result in a new name, and perhaps some more thought around screen placement for starters. My own guess is that the bidding for that network won’t be quite as spirited, and for good reasons. There is not a list of potential buyers that comes to mind, as there is for the fitness network.

The most successful networks out there have something in common. Think about the healthiest and highest growth DOOH network companies. Focus is the underlying theme. RMG’s moves indicate that their Board has come to the same conclusion, and how they got there matters less than getting there. Like a plant or a tree, a little pruning often results in more robust growth and better health. Look for focus and operational efficiency to be the drivers of continued consolidation in all aspects of the industry going forward.

Tools, applications and analytics effectively drive Social TV, and the best examples of the state of the art manage to merge all three. The industry is technology-driven, and benefits from the fact that the end users own all of the hardware at the point of engagement, an interesting contrast with our own world. A tech-driven, young industry is, as you might imagine, heavily slanted toward Silicon Valley, where pitch decks only have one word on each slide, lame metaphors flow like coffee, and anyone over 35 is either washed up Board fodder, a venture capitalist, or both. Cynicism aside, the energy and optimism of the young entrepreneurs who run the various companies is fuel for innovation. The omnipresence of Facebook, Twitter and Google provide both the backbone of the social media infrastructure and the model for success that these startups strive to be. The rush to develop the killer app is on, and that is where the comparisons to DOOH begin.

The obligatory west coast slide: Does it represent exit value, big data, or how many times it has been used?

The apps themselves diverge in their approach to second screen engagement. Frameworks and development environments seem to target program-specific applications. Branded apps cast a wider net with check-ins that leverage a very cool technology called automated content recognition (think Shazam for video). Gamification, the buzzword that currently serves as verbal Viagra for people who simply renamed reward systems and intermittent reinforcement to prove that they are smarter than you, is a common feature across all forms of applications. And it generally works, as B.F. Skinner would attest. It seems clear that the most popular feature of the companion apps is some element of Twitter. Twitter streams, Twitter “rivers” and infographics based on Twitter data get the most attention from users, even when sharing screen space with much sexier features. The element of sameness across many application providers is another parallel to digital signage. The core problem/challenge is well-defined, and solutions tend to cluster around a set of common approaches. Differentiation is hard.

The Social TV industry already has over 100 application shops in place, with many more in stealth mode, and others under the radar or in “pre-funding” phase. There was actually a poll taken during the Summit that asked whether the overabundance of application startups would drive consolidation. Sound familiar, anyone? If the experience of DOOH is any guideline, that poll question will be recycled for years.

Perhaps the most significant parallel between DOOH and Social TV is one of common frustration with the world of agencies. I think it is summed up best by paraphrasing a question that came from an agency type in the audience: “I understand a Gross Rating Point… so how are you going to help me understand what I am buying from you?” The question was met with an audible growl from the crowd. Like digital signage, the Social TV folks have a challenge in helping media buyers value and measure their offering, and it won’t be done using the same metrics as traditional TV. I’m not sure that there needs to be a leap of faith if engagement, click-throughs, and even purchases are quite measurable. Still, like our industry, Social TV suffers from serial testing and toe-dipping, as opposed to long term campaigns and commitments. It makes for a rollercoaster ride for the startups.

Interestingly, the Social TV industry has its own measurement and analytics companies, notably Trendrr and Bluefin Labs, that comb the social sphere to determine what is hot with the socially engaged. Clearly sensing that the same old approach would not play with this crowd, a presenter from Nielsen promised that her company would be incorporating social metrics soon. Recognition that there is value in the social media stream is a huge statement from one of the most traditional media companies out there. It is one that should not be lost on the out-of-home crowd.

Prior to lunch, Jason Kates of rVue asked the audience if they could identify the largest unserved network available to them, one with over a million screens capable of delivering over 300 million targeted impressions per day. The answer, of course, are the networks that comprise the digital out-of-home industry. The message was not lost on the attendees, even if Jason dared to use more than one word per slide. They understand that for the most part, the domain of Social TV is 7 PM to midnight. From 7 AM to 7PM, their engaged consumers are generally not at home, and until now, unreachable. But during that huge chunk of their day, those socially-engaged consumers are exposed to DOOH screens. Sensing opportunity, the Social TV folks weren’t shy about asking questions and seeking to learn more. I viewed that as a strong positive reinforcement for the notion that there is something to be gained by linking our industries more closely.

Actual teenagers watching the Super Bowl (photo: Scott Macklin)

Social TV has linked social media, mobile and tablet computing, game elements and rewards with traditional television to create measurably greater engagement. The DOOH industry arguably owns the eyeballs of the socially engaged outside the home. We need each other, and while this is very much about connected consumers, this is not about mobile per se. In fact, those who are riding the mobile-DOOH convergence pony confuse the tools with the medium that will be the actual glue. Social media is that glue. It is by definition participatory and engaging, and it is part of the fabric of life today. There is innovation occurring and there are valuable lessons being learned. Ignore the mountain of data and the growing hordes of connected users at your own risk. Game on.

The clues are everywhere, like dots waiting to be connected.

• Twitter recently added its 500 millionth user. It was an engine of revolution in Egypt, and has scooped the traditional media many times since the Miracle on the Hudson was captured and tweeted by Janis Krums.
• Facebook has filed for an IPO that is expected to hit the market with a $100 billion enterprise valuation, just a tad more than $100 per user. Despite its flaws, it is the undisputed king of social media, and if someone ever calculated the bandwidth consumed by its users every day, it would be staggering.
• Smartphone penetration in the US has crossed the 50% threshold.
• Apple sold 18.7 million iPads in the fourth quarter of 2011, and the new iPad is breaking more records. These days, if an Apple product is found on a desktop, it is increasingly likely that is only there being recharged.
• Smart TVs and internet-connected game consoles, streaming boxes and other dedicated devices are fast making televisions yet another node on the internet.
• A Discovery Communications survey revealed that co-viewing, watching television while using an iPad, “increases many viewers’ connection to programs and advertisements.”
• GetGlue lets you check in to TV shows, movies and music to earn stickers and discounts. Viggle will reward you for checking in to TV shows from your smartphone. Watching a TV show while using a companion app on a second screen? Second Screen Networks syncs ads inside the companion app to those appearing on TV in real time. Bluefin Labs and trendrr are fast becoming the new age Neilsen and Arbitron by analyzing social media trends related to TV shows and ads. And the list goes on…

Social TV is the concept that connects all of these dots, enabling consumers to engage with the entertainment and brands that they love; allowing television networks to build their franchise, and programs to amplify their buzz and engage with viewers even when the show is not airing; giving advertisers the opportunity to extend the traditional 30-second ad to something much more engaging, much more personal and far more valuable.

At the Social TV Summit in New York last year, co-host and media expert Jack Myers noted that “Social TV is not only a movement in the business, a trend in the business, but a business in the business: and a real revenue opportunity not only for the many emerging players, but for the established and legacy media companies.” He predicted a dramatic shift of marketing dollars over the course of this decade toward social marketing, about $30 billion of which would end up pegged for Social TV annually. Clearly, there is a vibrant and well-funded ecosystem establishing itself around the axis of television, mobile devices and social media. New value propositions pop up frequently as new players engage.

Viggle: Engage, collect points, earn rewards. (photo via Function, Inc.)

Today, the newest value extension to Social TV is established: digital out-of-home.

The digital out of home (DOOH) industry as measured by the installed base of networked displays has been growing rapidly for the past ten years. The technologies enabling network owners to control huge networks of digital displays with pinpoint granularity have matured. However, the majority of ad-supported networks have failed to reach their goals with respect to ad revenue. Even the most successful networks are often saddled with unsold inventory. One of the speed bumps is that media buyers simply do not understand the space, as the metrics and behaviors are not the same as the familiar television world, even if the screens look similar. To them, the medium is irrelevant.

Irrelevant. Is there a more humiliating word for an industry that touches hundreds of millions of people daily? I doubt it, and it seems likely to remain irrelevant until the metrics and behaviors of out-of-home become synchronized with those of television. And we are not talking about the metrics of traditional ratings and behaviors like time-shifting. We are talking about new metrics and new behaviors that are defining how we consume media and relate to that media and to each other.  Social TV.

Today, out-of-home venues offer the current stakeholders in Social TV (the legacy networks, the brands and the Social TV startups) the opportunity to greatly enhance their reach and effectiveness. Imagine extending the reach of a TV program or ad campaign through the integration of social media tools and apps with networks of out of home screens, perhaps augmented by special benefits, offers or rewards to keep engagement high. Would a Revenge fan make his/her way to an out-of-home network venue to check in and thereby receive a preview or clue as to what Emily Thorne is up to next week? Would a brand want to reward consumers who like (in both the Webster and Facebook definitions of the word) their product online, on TV and in the store? Would a TV network want to engage in a second screen dialogue with viewers outside the home, to be continued on a second screen while the show airs (or vice versa)? If the answers are yes, then DOOH becomes immensely relevant when it joins the Social TV ecosystem.

I seldom use this blog to tout Real Digital Media or to announce customer wins or strategies. But this is different. We are fully engaged with our partners at rVue and with others in the process of defining Social TV for the out of home industry and providing the products and services that will add a third screen to today’s two-screen Social TV ecosystem. Done well, the shift toward Social TV will change how DOOH networks drive revenue. It will change how loyalty programs are defined, executed and measured. It will change how content is distributed and how OOH networks operate. It will create a “couch to cash register” continuum for networks and brands to consider in their consumer campaigns. The renewed relevance of what we all work for is at stake, so it is worth talking about before the finished products are fully baked. To be sure, the message and concept will be co-opted by opportunists, but so be it. We are off and running. The dots have been connected. Let’s get busy on the transformation to relevance, the transformation to Social TV.

The Crowd. I experienced it first hand, and heard several others say the same thing: the level of sophistication of the end users at DSE this year was well above past shows. In the past, we have spent hours educating people on the fly in order to be able to begin a normal sales dialogue. That was not the case last week. We were invariably talking to people who had thought through what they wanted to accomplish with digital signage, and who had good, probing questions to ask. There were fewer entrepreneurial network builders, and more corporate reconnaisance teams. That was great to see, and I will optimistically call that both a sign of maturity for our industry and one of acceptance of digital signage’s relevance at the corporate level. I participated in one session, the Content Lightning Round, which had no presentation slides, only audience questions for a panel of four experts (well, three experts plus me). The questions and shared pain points were consistently advanced. Many focused on how to deal with organizational challenges that impact content strategy. It was both fun and refreshing to have a session be a conversation. Kudos to Pat Hellberg for conceiving it and herding the cats. Bottom line, I don’t think folks positioned as experts are going to get away much longer with high level rehashes of the obvious, or with renaming old ideas. And that is a good thing.

The Glass. A couple of people mentioned to me that they were growing tired of display companies muddying the waters with regard to digital signage software. Since I grew tired of that years ago, those words were music to my ears. I completely understand the need for display manufacturers to have some kind of low end software (e.g. freeware) to address a certain segment of their market. But it is hard to find anything resembling a successful move into the realm of real solutions. The roadside is littered with failed attempts at going beyond the basics. Planar tried acquiring a real software company, CoolSign, and could never integrate it into their core business. LG has tried rebranding a light version of an established package, and by all reports that has not exactly taken the market by storm. And of course the travails (and my opinion of) the VUKUNET adventure by NEC are well documented.  Here’s an idea for all the code-minded people at display manufacturers: why don’t you all go to lunch and come up with a standard way to manage an RS-232 interface with a screen? That would fall under the headings of core offering and value added.

The Buzz. There was generally less grumbling about the lack of capital available to various sectors of the industry and more talk of how capital might be applied. I am not sure that means that there is tons of money ready to flow, but I do think it means that both investors and industry players are thinking more strategically about what is next. That would be a positive.

One of the dominant memes at DSE was menu boards. There were so many on display that it appears that many people view this as the next great frontier. I am sure that providers love the idea that it requires lots of hardware, provides scale and also is not dependent upon an ad supported model to get funded. Without doubt, there are deals to be made, but the urgency to make those deals has subsided a bit with some slack appearing in the state laws that were seen to be driving demand. The legal aspect notwithstanding, the market is large, but finite. It will be necessary to differentiate an approach on one or more levels in order to get the attention of the buyers.

The niching of the software segment of the industry appears to be another ascendant theme. For the software players, the days of being all things to all people may be coming to an end with the rise of corporate buyers. Buyers want to talk to people who understand their environment, their pain points and their objectives, and who can demonstrate having dealt with all three in the past. I don’t think hyper-specialization is necessarily the key to success, but a clear focus of effort that is in concert with a development roadmap certainly is. Those who want to dazzle with smoke and mirrors will quickly find themselves masters of nothing. The increasingly sophisticated buyers will easily see through the hokum of empty press releases and constant Twitter babble and demand to be told where the beef is.

Our industry is not unique in terms of having a mix of nice, honest people and some real slime that belongs under a rock. As the years have passed by, my ability to find and embrace the former while sniffing out and avoiding the latter is improving, but it takes constant effort. The sniping, poaching and blatant misrepresentation of reality does no one any good, yet it persists. As an example, one item that generated substantial buzz at the show was BroadSign’s filing for Chapter 11 on the Sunday prior to the show. It was interesting to hear about how some people were anxious to pile on to BroadSign without understanding the actual action or situation. I am told reliably that executive level emails went out from certain competitor(s) misrepresenting the situation and all but burying BroadSign. That is pretty low, and a clear indication of character from where I sit. Our company competes vigorously with BroadSign, but I have respect for them and think that Brian Dusho has done a remarkable job given the cards he was dealt upon assuming his current role. The truth is that there are a number of companies in far more dire situations than BroadSign, despite the filing. This may be heresy to some, but I hope that the planned sale and recap works out for them. Competition makes everyone better. I’d rather save the venom for people who cross the line than kick good folks when they are down.

The Federation. I am happy to report that the Digital Signage Federation, which was born at DSE 2010, is doing very well indeed. Past Chairman Bob Stowe handed the reins and a strong organization to Alan Brawn this year, and Bob received well-deserved recognition for his efforts at the awards dinner Wednesday night. Alan will tirelessly push things to the next level in the coming year. I am particularly proud of how much work has been done in education, outreach, certification and now globalization of the effort. And the work will continue, as DSF strives to provide independent leadership for the industry. If you haven’t joined yet, please do. Your input and energy is welcomed as the industry evolves.

Pinning is the new verb.

I have established a Pinterest account that I plan to use to pin digital signage items of interest. So far I have set up three boards, described below. While anyone can follow another user and “repin” (think retweet) items they like onto their own boards, Pinterest also permits users to allow authorized followers to pin items directly on to their boards. Clearly, a board with a broad array of contributors has more value and interest. Here are the boards I have established that I would love to have others contribute to:

Digital Signage Community: General items of interest, humor or amazement related to digital signage.

Digital Signage Installs: Items related to digital signage installations around the world .

DSE 2012: Items of interest in and around the upcoming Digital Signage Expo in Las Vegas.

I have seeded the first two with a few examples, and i will get to the third next week. If you would like to contribute directly to these boards, simply sign up for Pinterest (if you haven’t already), and follow the board or boards that interest you. I will figure out how to enable you to pin directly. All basic rules of Pinterest apply, and if you do your best not to use the comments as a marketing channel, you can stay. Oh, and no cats, even though mine are very cute. The intent is not to monopolize the digital signage Pinterest discussion, but instead to get it started and make it open. I think and hope that these boards can become a great resource and springboard for discussion for everyone, and I am sure that ideas for additional boards will come up. Others can and will set up boards of their own, and they should. But it has to start somewhere, and now seems like the right time. Happy pinning!

UPDATE: The tools on Pinterest for determining who is following a board are, shall we say, lacking.  If you followed and have not been notified that you can contribute, drop me an email and let me know!

The idea of aggregating the many DOOH networks, segmenting them as necessary and selling cross-network campaigns in an easy manner to advertisers has been around since the second network launched, whenever that was. If one is confident in their ability to package networks and then sell advertising, the commissions typically charged (30% seem to have been the norm) would support a nice business that could be expected to grow at a rate at least as fast as the industry in general. Those assumptions look nice on a business plan, but they were never validated. Ask ten people why, and you might get ten good and different answers. In the end, the biggest challenge for aggregators has actually been the biggest challenge for the industry as a whole.

Simply put, DOOH networks are managed by a dizzying array of software platforms, a surprisingly large percentage of which are homegrown. There are few, if any real adopted standards for terminology, network performance, data collection and reporting. To-date, the few industry platform providers of significance have failed to move the home brew crowd over to the world of known APIs and quasi-standards. Network operators displayed a tendency to over-report actual installations, often counting planned and dormant sites as installed when providing network overviews to aggregators. Detailed, reliable reporting capabilities vary widely, and if you haven’t heard a story about an advertiser going to a paid-for network site only to see a non-functioning display or a playlist that does not include their ad content, then you haven’t been listening. Aggregators learned quickly that having lots of networks did not help their credibility in the sales process when a large percentage of them could not perform or report reliably. They responded by pruning away the worst offenders, beefing up the toolsets for taking deep dives on the remaining networks, and attacking niches of specialty networks. But that was apparently not enough. Advertisers crave predictability, and ad buyers do not like to bank their credibility and jobs on what they do not feel comfortable with. Sadly, predictably variable performance and spotty reporting does not create comfort with ad buyers. As a result, big DOOH ad buys gravitated to larger networks providing wide reach and one-stop shopping. Issues with measurement, reporting or performance were simply elements of price negotiations. It was just easier, faster and generally more effective from the buyers’ perspective.

This never reached its potential. Will digital signage suffer from the same challenges? (Pieter Breugel painting)

With the aggregator channel seemingly fully disrupted, the industry is left with media planners and DSPs providing cross-network platforms and services for DOOH ad buyers. Because they are not actually selling ads, the economics of their business are different. The use of technology provides some opportunities to mitigate the Tower of Babel that DOOH networks represent. That said, the variation of technical capabilities across networks still remains. Presumably, these companies have watched the ascent and descent of the aggregation business model, and can apply lessons learned. As for the networks, some of the homegrown folks may have to take the tumble for industrial strength and trusted software platforms. Others may have to take a look at their first generation platform and determine its viability going forward. The aggravation suffered by the aggregators is not an isolated case. Change is upon us in all aspects of the DOOH ecosystem. Don’t blink, it isn’t going to stop any time soon.

Others have accurately commented on the increased presence of digital signage on the trade show floor. In reality, the variety of offerings was only slightly higher than the past two years, but the more positive sign was that retailers were talking about it and demonstrated some understanding of how it fits in. In a comprehensive review of the buzz at the Big Show, two out of four editors from Retail TouchPoints listed digital signage as a significant theme.  That’s great progress and a good indicator of interest. As exciting as it is to have digital signage beam its way into the general consciousness of retailers, the overwhelming theme that I noticed at the Big Show was Big Data. And when retailers figure out digital signage’s role in that arena, things will get really interesting.

Data is back in a Big way. (Pic via www.haacked.com)

Big Data has exploded as a tech meme in parallel with the growth of ever richer sources of data from ever expanding sources. If you have seen the IBM ads with the “smarter planet” theme, they are based upon the use of Big Data. If you have watched the popular TV series Person of Interest, “the machine” churns out insights based upon the analysis of Big Data. Essentially, the challenge of Big Data is the management and analysis of a huge number of disparate data points in a manner that makes connections that lead to insight. That can be applied to managing traffic patterns, power grids and medical records. But in the world of retail it is all about managing merchandise and customers: Operations and Marketing. The merchandising and operational opportunities are the easier targets, and most of the solution providers churning out Big Data stories were focused there. Retailers can taste the ROI on price optimization, smarter merchandise allocation and supply chain improvements. Yet the customer marketing piece provides what may be a much larger payback.

The old database marketing standard for stratifying customers, RFM (Recency, Frequency and  Monetary Value) is as valuable today as it has ever been. But RFM has been traditionally applied in a world where direct marketing offers (think catalogs, direct mail) are costly to produce and distribute and where it makes sense to make those offers only to those prospects most likely to respond. Technology advances allowed for a variety of offers and tests to be managed, but analysis was always applied to what a customer had already done, not to what they are doing. Today, the customer databases filled with transactions are augmented by volumes of data from web encounters, mobile encounters, and increasingly, in-store media encounters. Today’s imperative is to make relevant offers to customers in near real time based upon who they are and what they are doing now. Big Data gives rise to Big Questions. What store is the customer in? Have they launched the retailer’s smartphone app? What part of the store are they in? What media was playing on the digital signage display when they reacted to an offer? When was their last visit? How can we tailor an offer to this customer to optimize this visit? How can we drive loyalty?

The ability to make enough connections from all the data points and to align them with insights on customers themselves in sub-seconds may very well be a differentiator between the winners and losers in retail and food service. Pulling together all of the relevant data points is part of the job. Figuring out how to stratify customers in a more useful way is another. Being able to operate a virtual offer engine against that data and segmented customer base is where it needs to go. One offer has never fit all customers. Direct marketers have known this forever. Now we operate in an environment where offers can be made at little cost to customers holding the delivery device in their hands while they are at the point of purchase! This is transformational, and a technical and marketing challenge of the highest order. Digital signage will play a role as an activator and as one delivery channel for offers. Data coming from media players will make marketers operating their offer engines that much smarter. Content reacting to intelligence about who may be watching becomes more relevant and effective. Big Data leads to Big Questions and Big Opportunities. The future belongs to the marketers.

My first professional encounter with kiosk technology was back around 1990. I was a young consultant working with a local company in Boston that wanted to provide health and drug information via kiosks to customers in drug stores. To put the timeframe in proper perspective, the technology driving the effort was a laser disk. The idea sounded good: put the knowledge base of the Physicians Desk Reference and other medical references at the fingertips of consumers worried about symptoms, interactions and side effects. Lead them to informed interactions with a pharmacist; help them make decisions about over-the-counter products; and of course provide screen time for potential advertisers. That particular company never gained traction, but they had identified a void in the information flow to consumers and a vertical (health care) that abounds with products and potential sponsors even today.

Since that time, informational kiosks of many stripes have been successfully deployed in retail, public spaces and in corporate environments. Wayfinding, gift registry, customer service and even HR applications are among the drivers of growth in that sector. Transactional kiosks have emerged to dispense movie tickets, airline boarding passes and postage quite successfully. Companies like Zoom Systems and Coinstar have blurred the distinction between a kiosk and a vending machine. Even as the growth of kiosk deployments continues, the pieces are falling into place to drastically alter their lifecycle.

Simply stated, two layers of mobile technology are going to make informational and many transactional kiosks items of fond memory: smartphones and Near Field Communications (NFC). Smartphones, such as the Apple iPhone and various Droid entries, continue to make their way into the pockets of more and more consumers, with 3Q 2011 U.S. penetration pegged at 44% by Nielsen. Their ability to support applications and to connect to the web has quickly made them a go-to personal platform. A Motorola Solutions Survey published in December provides some good insight into the trend toward greater in-store mobile usage among customers and store associates. Among other findings, the survey reports that 43% of consumers responded favorably when asked if they would use a branded store app for wayfinding and shopping lists. Those phones are not staying in the pockets, folks!

The smartphones alone will not displace kiosks, as they are only a vehicle that can move a customer interaction from a kiosk screen to a personal device. Consumers appear widely ready for that. Something still has to replace the initial screen tap or button press to start a session. The elegant trigger for initiating that interaction is still missing, but it is coming. Today, it is possible to provide a link to a web or mobile app using a QR code, SnapTag or even an audio cue. That link could come from a static sign or a digital sign. Both methods provide a one-to-many relationship between the sign and potential consumers, making simultaneous sessions very much a possibility. But each of these techniques have their limitations, and none are likely to survive when NFC is widely available on popular smartphones, a wave that will likely be led by Apple, and quite possibly this year.

NFC would allow a digital sign to run a full screen attractor loop, enticing customers to wave their NFC enabled phones at a hotspot to check in, launch a branded app, begin a web-based session, or download a barcoded coupon. Need a store map? You got it. Your friend’s bridal registry list downloaded to your phone? Easy. Money saving coupons? You bet. Movie tickets? I don’t see why not. NFC triggering and delivery combined with digital signage will serve more customers the way they want to be served (on their smartphones), allow for excellent tracking and measurement, and displace the need for the kiosk device itself.

It is inevitable that one-to-one messaging is going to move to the small screen, and the big screen will be used to engage consumers for specific interactive sessions on their mobile devices. That leaves the mid-sized screens of many kiosks in a tough place. There will of course still be a place for kiosks that have special purpose, such as delivery of physical goods or documents, requirements for special devices such as biometric kiosks and more. But even these will likely have an NFC or mobile hook. The smartphone screen will assert its influence very soon. If big screen digital signage operators play it correctly, they can displace many kiosks going forward.

I closed my conversation with Horatio with a monologue, with apologies to the Bard of Avon:

Alas, poor Kiosk! I knew him, Horatio: a technology of infinite use and many
applications: he hath guided my experience a thousand times; and now I am
sad to see him wither away! Here is that touch screen I have tapped I know not
how oft. Where is your gift registry now? Your wayfinding? Your recipes?
Your database of relevant information that were wont to set shoppers on a roll?
Not one now, to mock your attractor loop? Are you sad? Now get you to my
lady’s chamber and tell her, and have her charge up her smartphone, to the
new reality she must come; make her laugh at that.

Condensed monologue courtesy of www.savagechickens.com

Horatio didn’t disagree, he simply invited me to Denmark to see it in action.

As the concept of digital signage and the technologies to support it grew in tandem over the past eight to ten years, the predictable emergence of entrepreneurial network owners and technology providers grew at the same pace. In the early stages, start-ups were the norm on the network side, with many evolving into significant companies of real scale. Others have remained in the small to mid-size range, or disappeared altogether. Few came in to the space as big, going concerns. Most of the start-ups had to take on every task in the process of creating, acquiring and distributing content; selling, trafficking and reporting on advertising; selecting, mastering and operating software; as well as acquiring, deploying and managing sites and equipment. There was not much choice in those matters, and many of those companies still do it all. Now, as larger companies contemplate DOOH networks and represent a potential quantum leap in investment and growth, they will have a different slant on who-does-what.

To larger companies entering a new space requiring skills and tools that are outside of their current core competencies, the idea of hiring staff and creating new internal capabilities is often anathema. They generally prefer to outsource as much of the work as possible, often as a way to avoid an increase in headcount, and sometimes as a way to mitigate project risk. As such, they work with third parties to acquire and manage content; to sell and manage advertising; to select and acquire technology; and to deploy equipment in the field. Then comes the tough part: operations. The operation of a network requires (among other skills) deep expertise in the software platform that manages content and sites. For a third party to build a business around that, they need to invest in the training and maintenance of a particular platform, and bank upon the success of that platform in order to realize economies of scale. Because of this phenomenon, there are only a few folks that provide network operations center (NOC) services, but usually limited to one or two software platforms. The dilemma of how many platforms to support (and which ones) is complex, and often decided opportunistically rather than strategically. There is risk in the model. Do they invest in cross training people or dedicated resources for additional platforms? If so, how many? What happens if customers from a supported platform are acquired or go away for any reason?  As a result, there remain pockets of operations providers that are essentially specialists.

The existence of so many software platforms in the space makes the development of a healthy NOC subsystem within the DOOH ecosystem a difficult matter. Looking at an example outside of our industry, many large companies have looked to outsource financial operations, usually based upon one of the big platforms in place. Back in the day, that included Oracle, Peoplesoft and JD Edwards. It isn’t shocking to learn that Oracle now owns all three brands, but what that has done is consolidate the skills and infrastructure required to offer consulting and operations services to large corporations. We are certainly not at that point in digital signage, and it is a concern. As very large companies decide to take the plunge on digital signage, and they will, the demand for these services will increase. It is not clear how that demand will be met or by whom, although there are people thinking about it. To a certain extent, the answer may dictate winners and losers on the platform side. It remains to be seen whether the limited choices for outsourcing a key function will be a barrier to entry for large companies, or a driving factor in the development of a NOC giant or two. Choices made by a new echelon of network owners and an evolving subsytem of service providers may play an important role in shaping the industry going forward. Where there is concern, there is also opportunity.

Best wishes to all for a season of joy, peace and family from everyone at Real Digital Media.

Over the course of the next twelve months, expect both the unexpected and the long overdue. At long last, the overcrowded software space will be boiled down through market forces, mergers and acquisitions and flight to niches… Eyebrows will be raised by strange bedfellows on the M&A side and surprise failures.

Since that was written, we have seen C-nario acquired by YCD, as well as some signs of some struggling vendors. Earlier today, my intrepid pen pal Adrian Cotterill of The DailyDOOH posted a story on an investment document making the rounds proposing a Wireless Ronin-Keyser Group merger that would result in a private company. That would cover the strange bedfellows meme. Some thoughts on the concept:

Why now? Wireless Ronin has raised around $70M since going public, and what is left is in the low single digits, and they remain unprofitable. Being public has exposed them to more scrutiny than perhaps any company in their peer group. Their ability to raise more capital in a secondary offering is likely to be near zero without major positive news and trends. So perhaps a combination with an established, very probably profitable company that is already a selling partner makes sense. It changes the story, the capital structure and the focus. And it takes the public company overhead off the table, which is probably a very good thing.

What’s the come-on? The initial announcement of the partnership between the two companies, which came as Ronin announced quarterly earnings, left little doubt what the goal of the partnership would be. McDonald’s is a longstanding and huge customer of Keyser’s, and the implication of the announcement and discussion in the earnings call was that Keyser would walk them into the McDonald’s digital menu board business. I have not seen the investment document, but I’d bet there are similar, carefully worded suggestions of glory therein. Ironically, on the web page of Keyer’s Florida Plastics division is a picture that shows the McDonald’s McCafe menu boards, which Ronin most definitely has nothing to do with. Those snickers you hear are coming from Dayton, Ohio. Makes one pause to wonder. A strategy to focus upon the menu board space is fundamentally sound, and might be accompanied by a sale of their web based and automotive businesses to help fund a deal. Identifying and securing a niche is certainly clear thinking. But that niche is going to be competitive, so putting all of the digital eggs in one basket introduces further risk.

What about RNIN shareholders? Current shareholders of Ronin shares would probably welcome a premium to the current valuation to cash out and wash their hands. That being said, the company is currently valued at about $18M, net of cash on hand, not adjusting for debt. That is roughly two times revenue for a company that is still losing money and not growing particularly rapidly. Some might argue that it is already overvalued. So for someone to pay a premium to take out RNIN’s public float would be a risky venture. Of course, if there was Special Sauce providing strong confidence in terms of future growth, there might be less risk. But there might be some angry shareholders if they got taken out and a McDonald’s deal suddenly materialized. And perhaps some disappointed new investors if it didn’t.

What does it all mean? These type of investment feelers are not unusual, and don’t always mean that a deal will get done. That being said, an investment bank has been engaged to figure out if the pitch will resonate. And given the deal structure of a merger into a private company, one might deduce that Keyser management is driving the bus. These are signs that a Board of Directors is seeking to optimize value in the short term, and that change is coming, in one guise or another. If Wireless Ronin’s ability to do a secondary offering is indeed limited, then the cost of being public exceeds the benefits. Exploring some kind of buyout and private financing should not surprise anyone. The Keyser partnership may offer the quickest path to that, along with the implied refocus on menu boards. This will be interesting to watch. In the mean time, keep an eye out for more surprises and strange bedfellows.

Update (12-7-11):

Today, Wireless Ronin filed an 8-K detailing a direct placement of 3.3 million shares priced at $1 per share. Their placement agent, Roth Capital Partners, will receive 7% of the proceeds, netting about $2.9 million to the company. The press release and related 8-K documents do not make it clear whether there was a single investor of multiple investors participating, or whether they were existing or new investors. But no matter: my statement above that their ability to raise capital thru a secondary was near zero has been proven incorrect, even though it required a 5% discount to the December 6th market price to pull it off. Additionally, the company’s CFO responded to an angry shareholder’s inquiry regarding the DailyDOOH post as well as this one, by classifying them as “rumors” (quotes were his) since they were not confirmed (or denied) by the company. Kudos to the company for raising the cash. The Clintonesque deflection of the matter at hand, not as deft.

This Blog seeks to contend that a unified platform is necessary for the accelleration (sic) of this industry.

<I am all for acceleration of the industry, so I read on.>

We believe Google/Motorolla (sic) combo of Android and DOOH will do just that. So…we call this new platform or if you prefer, interface, DOOHdroid.

<Oy.>

The page also features a video interview with Patrick Quinn of PQ Media, conducted by Tony Hymes of DOOH.com. The interview, done after Quinn’s well-received presentation at this year’s DSE conference, outlines key obstacles to stronger growth in the industry. He speaks at length about fragmentation and the need for consolidation; the need for one industry voice; the lack of trust in metrics used by network operators, and the need for universal buying and planning platforms. All solid points, backed up by primary and secondary research. None of it seems to be a cry for a mobile operating system, which by no means should ever be confused with a platform in the sense that Patrick was using the word. The combination of questionable proofreading and basic understanding of what the issues appear to be left me uneasy. The assertion that Google/Motorola/Android would arrive to “unify” the industry and spark explosive growth was even more off-putting. But we’ll get back to that in a moment.

The only other active page of the DOOHdroid site was a short, undated blog entry in which the author reveals himself as a Floridian, inspired by comments made by Jason Kates and Rob Gorrie, both of whom look at the world through a lens of media planning and buying. When Jason rhetorically asks “what can DOOH learn from Google?”, he understands that the answer has to do with the removal of friction from transactions and the value of applications. When Rob speaks of “fluidity through a platform”, he is speaking primarily about a planning, buying and execution platform for agencies, and to a lesser extent about digital signage platforms. Either would argue that a unified planning and buying platform (presumably the one they control) would close the trust gap that Patrick Quinn speaks of and accelerate ad revenue growth in DOOH networks. As inspirational as both of these guys may be, they aren’t talking about Droid.

Let’s be clear: if Google wants to “unify” the industry, they have the resources to buy enough networks, agencies and solution providers to force that to happen. It would cost a darn sight less than acquiring Motorola. I seriously doubt whether that would be their approach, though. The natural place for them to start would be at the DSP or media planning/buying level. Entering on the planning and buying side would be a natural fit for Google, and would also allow them to leverage learnings and tools from AdWords as they execute. The ad dollars are what would attract Google. It is unlikely that they would want to own networks, as it is very much not their type of business. They have done very well by serving web sites and ad networks without owning them, thank you.  As for software solutions, that would be more of a possibility than network ownership, but would probably be part of a strategy related to using applications to funnel ad dollars through their infrastructure. Any play there would probably be more related to customer acquisition than technology acquisition.

The whole Android thing is a red herring to me. Even if Google wanted to achieve hegemony over DOOH, they would not likely care what operating system was running on media players, any more than they care whether you access Google.com on a Mac or a PC, an iPhone or a Droid. They would care about where the ad revenue is flowing, how to make it flow faster and how to leverage existing Google infrastructure. That happens at the planning, buying and execution level. It does not happen at the player OS level. Besides, if the media player market was so attractive, it would attract Apple (if only it would), and iOS is a pretty competitive environment for app development and media management.

I applaud the anonymous DOOHdroid author for being excited and sparking a conversation. While Google is resourceful enough to immediately dominate the DOOH industry if it chose to, it is very unlikely that the button they would press would have a robot icon on it. Instead they will follow the money, and the button will have a dollar sign on it.

1. Engagement metrics will drive perceived value to the advertisers in our increasingly connected society
2. “Location awareness” is a game changer
3. Ads will become trailers, with the call to action quite possibly being further engagement, rather than a purchase per se

Singh goes on to list six implications of these changes for marketers, and while his insights are focused on television advertising, they are spot on. It is worth a few moments to apply his thinking to digital OOH, and to ponder the implications for our industry.

Engagement as an indicator of value is a notion whose time has come. Traditional media metrics tend to lean upon the concepts of impressions and recall, but engagement seems to be something on a much higher plane than either, and inherently more valuable to the advertiser. I’d go so far as to say that short of carefully constructed sales lift studies, measurable engagement may be a better proxy for effectiveness than anything else.It is one thing to recall a Pepsi commercial, and I am sure Mr. Singh and his colleagues would be thrilled that you did. It is quite another to engage with the Pepsi brand, whether by visiting a web site, scanning a barcode or accepting a coupon offer. Singh’s other key changes recognize this fact and play off of it.

For most people, location awareness certainly evokes the idea of mobile location-based services. But in this case it is much more than that. It refers to the importance of context in the effort to create engagement. Singh refers to a Pepsi campaign that linked a Foursquare promotion to television commercials. The context of the Foursquare check-ins drove additional, relevant content to the consumers. Engagement! In a digital signage context, a television campaign could start on TV, and have different branches in various out-of -home venues. The thread of the campaign might be picked up differently in a grocery environment than in a QSR environment, with different engagement cues and activation goals based on the context of the message. Now layer on the richness of mobile location-based services, and you add new dimensions in engagement and measurability.

The idea of the TV advertisement as a trailer for a longer story simply picks up on the preceding scenario. Rather than a TV ad being a 30-second end unto itself, it is an introduction to a multi-channel, multi-platform invitation for the consumer to connect with a brand. As the engagement moves outside the home, the opportunity to measure impact and success increases, through the use of smartphone apps, sales data, and venue traffic measurement technologies.

Singh’s article reveals the current thinking of digital marketers of big brands, and it is not the same old thing. It seems clear that if engagement, location awareness and multi-channel, connected campaigns are where the big spenders are headed, then it makes sense for them to embrace the role that DOOH will play in closing the deal with their customers and prospects. All these ideas are making me thirsty to refresh everything.

That ecosystem can expand well beyond the diagram above to include mobile applications, web tools and more. Customers will demand it, and it will happen. Me? I can’t wait.

In line with the notion of an ecosystem, that expansion would be analagous to the concept of Biodiversity within a natural ecosystem.  Wikipedia identifies the role of Biodiversity as follows:

A greater degree of species or biological diversity – commonly referred to as Biodiversity – of an ecosystem may contribute to greater resilience of an ecosystem, because there are more species present at a location to respond to change and thus “absorb” or reduce its effects.

It seems like enough time has passed, the wait is nearly over and the digital signage ecosystem is in position to become a part of a more “biodiverse” OOH marketing and messaging ecosystem. That expanded ecosystem would be customer-centric. This is a good transition, as it drags us into the realm of strategic apps, the goal of all new technologies. The technical portion of the emerging marketing ecosystem in retail might look something like this:

Here are some of the essential characteristics of the extended ecosystem:

Multiple points of integration

The on site systems, including digital signage, customer-based mobile apps and POS systems as depicted above, must be integrated with each other to provide maximum benefit. This can occur in a number of ways and will vary by implementation, objective and business rules. Additionally, they must be integrated with external systems including corporate applications (customer management, inventory management, etc.) and media planning applications.

Analytics

Each of the systems referred to above generates data that can be analyzed and used for multiple purposes. Clearly, the data must be captured, organized, stored and accessed in a manner that makes it useful to downstream systems for proof of play, sales impact analysis, content assessment and offer refinement, to name a few. The ability to gain insights through advanced analytics speeds reaction time to trends and allows for near real time adjustment of offers and content, as well as subsequent measurement of impact.

Cloud Services

Given that the integrated marketing system generates data from applications that may be owned by the venue owner (POS), the network operator (digital signage) and many customers (mobile apps), the analytics database and applications may best be positioned as cloud-based services, whether that cloud is public or private. Using analytics, advertisers will be able to jump on trends by increasing frequency, changing content, or segmenting a buy via a cloud based ad server. Inside marketers will be able to refine promotions on its one-to many platform, digital signage. Similarly, they will be able to customize messaging and offers to individuals thru the mobile platform using a cloud based application fueled by analytics.

Is this getting too far ahead of today’s reality? I don’t think so. We have to recognize that digital signs are one type of endpoint in the OOH world, and that digital signage platforms are point solutions. Our value is best realized by integrating with and supporting other endpoints and applications to advance an overall marketing and communications strategy. The tools are there, the need is growing. The wait is nearly over.

If it were easy, anyone could do it.

At the very foundation of digital signage is the simple concept of file transfer. One way or another, a file must make its way from one point to another. It is not, to use a tired metaphor, rocket science. Marry a simple core technical concept with the lure of a gigantic, untapped market and you will certainly attract many developers. Such has been the case with digital signage, where the preponderance of those 340 solutions are basic, untested noisemakers who have proudly “cracked the code” on moving files around. That is easy, and anyone can do it. But there are some hard bits to this business, and the newbies, freebies and wannabes inevitably find that out if they survive long enough to see a real business application of their software magic. Scheduling, security, stability, scalability, screen control, synchronization and support are just a few of the complexities that start with the letter “s”. Resolving these and the rest of the alphabet soup of challenges requires identifying or discovering them, and then having the time, resources, capability and architecture to address them efficiently if not elegantly. Few have or will have the ability to carry that off, so the rest are left to trumpet their approach to what is easy, rather than what is innovative.

The innovators of function, architecture and business models have to deal with the noise of the followers while trying to reach the few buyers who understand and appreciate the complexities of the business. Innovation often falls victim to the market noise and price pressure generated by non-innovators and opportunists. That said, I have seen lots of innovative thinking in the digital signage space: ideas, partnerships and functions that advance the art as well as the business. But we will almost always suffer in comparative innovation to far reaching B2C technologies and their huge target markets. Digital signage is a B2B market, unlike mobile apps, and innovation will truly be unleashed by the competitive requirements of a rationalized market. If Mike’s vision of independent developers writing to open specs ever comes to fruition, it will be after the market is rationalized, and platforms of true scale (and therefore opportunity) emerge.

So yes, there are too many software players in a market that has grown nicely but not meteorically. And yes, it is hard to sell in a space where the barrier to entry is low and the awareness of what a complete solution really looks like is equally low. And yes, innovation is tempered by both preceding factors. But those things tend to wash out over time, as they will here, if only because it really is not easy.

Digital signage is neither necessary nor sufficient

There, I said it. And it is true. Digital signage does not solve a mission critical problem that makes it necessary. It is a technical approach to the distribution of rich media messaging that was enabled in part by the emergence of broadband. There is not a single retailer, medical office, gym, bar, college campus or corporate office that needs digital signage. Each can execute their core business functions without it, and many still do. That does not mean that digital signage adds no value. It most certainly does. But so does a navigation system in a car, although few would argue that navigation is truly necessary. This simple truth seems to have escaped those who continue to bring new solutions to market without determining a need.

Compounding that, digital signage implemented as a standalone island of messaging limits its ability to solve problems and add value: it is seldom sufficient. In order to achieve its optimal value, digital signage must be part of architecture, part of a solution, not the solution itself. In retail, there must be integration with store systems, customer management systems, inventory systems and mobile applications. Without all of the above, the ability to use analytics to optimize both content and customer-specific offers is limited. Interestingly, at the Digital Signage Investor Conference yesterday, RMG CEO Garry McGuire said that his company is morphing into an analytics company. He is really on to something that will fundamentally change the nature, position and strategic importance of digital signage. RMG’s ability to complete their evolution will only increase as steps are taken to integrate with premise, external and customer applications, as they must.

The road to making digital signage necessary is dotted with signs that point to its lack of sufficiency and passes thru the intersection with other technologies and applications. At the end of the road is the core of a strategic marketing system. Stand by: there are going to be many approaches to making this happen, and do not assume that it will be easy. The skills and competencies required do not all reside where you think they might. It is going to be an amazing ride. Doubt that, and reality will hit you hard, bro.

Challenges will be met, dessert will be served

Prior to the explosion of smartphone usage, makeup application was probably second only to eating in terms of causing auto accidents. A few years back, I was driving my daughters to school when I got rear-ended by a nice lady putting on her makeup while approaching a red light.  My daughters were fine, but I suffered from some whiplash, with quite a bit of pain in my neck and between my shoulder blades. A friend referred me to a chiropractor, and despite some skepticism I went in for a visit. I bought in to a treatment program and it helped. In the process, I learned about subluxations, posture and other things.  I genuinely liked the chiropractor and his passion for what he does. The relationship worked out well for all involved. I got the relief that I needed; the practitioner got paid for quite a few office visits and services by makeup lady’s auto insurance company; the insurance company limited their loses to a predetermined maximum. Was it all the adjustments and unusual exercises that cured my ills, or was it simply time and massage? Once I had full movement of my neck I was happily indifferent to the answer.

There is no shortage of skeptics when it comes to chiropractic. This annotated article highlights many points of contention, several related to the measurement of what is actually measurable. One comment of note from the article rang a bell and raised some questions: “Material things can be measured, making it possible to set up and test hypotheses about them using the scientific method. Vitalistic concepts (such as “life force or Innate Intelligence”) are neither measurable or testable.” How much of what is being measured in digital signage relates to that which is material and therefore measurable, and how much represents our version of chiropractic’s vitalistic concepts, and are in fact less or un-measurable? Are traditional audience metric studies the DOOH equivalent of a chiropractic adjustment? Does the patient (network) care if they get the result they want? Are we endorsing vitalistic concepts simply because the insurance company (agencies) will accept them?

Consider this: audience measurement and recall studies are for the most part the domain of ad-supported networks. They are conducted for the primary purpose of legitimizing the basis for ad rates in terms that agencies and brands are comfortable with from their long experience in traditional media. Once accepted in the marketplace, those ad rates serve as a proxy for the effectiveness of a network in reaching a targeted audience. It is similar to the impact of  Robert Parker rating a wine. At the highest level, there are two types of ad-supported networks: those in which products and services advertised are generally available in the same venue as the digital message, and those in which they are not. In venues where advertised products and services are available, why should we care about traffic, gaze, dwell and recall when we can measure sales? If there is a demonstrable sales lift, then the impact of the advertisement and its value can be measured and a value can be associated with a campaign. There need not be an argument over how many people recalled an ad if their behavior can be documented at the point of sale. In turn, non-endemic advertisers can assess the value of a network based upon its performance for endemic products. As we move inexorably toward customer engagement thru multi-channel integration, even non-endemic advertisers will have new tools with which to measure the effectiveness of a network, a venue and a piece of content.

It is the second type of network that suffers from the subluxation caused by little or no empirical sales data. As examples, consider some of the most influential network members of the DPAA, which include some of the largest and most successful networks in the business. For the most part, we are looking at elevators, workout facilities, medical offices, bars and coffee shops. While they are valuable, highly targeted vehicles for brand building, there are not a lot of endemic products in the elevator of an office building or in a gym. Medical offices do drive prescriptions and other services that can be measured if the practitioner agrees to share that kind of data. So there is little wonder that the membership roster includes Arbitron and Nielsen, as most member networks need conventional measures to support their ad rates. Arbitron and Nielsen have added to the advancement of audience metrics in digital signage and do fine work. Both also count on the prevailing traditional media belief system (impressions and recall) with regard to defining the value of a network to drive their DOOH business. The system seems to work for those that avail themselves of it, so like me and my spinal adjustments, there is little reason to question whether it provides optimum value.

But isn’t it time that we all got our brains around measures that reflect the advantages of DOOH? Impressions and recall are great if you are building brand, which is pretty much all you can do on TV. But DOOH is not TV, and we need to measure behavior and the value of targeted messages. We have some ability to do that today where endemic items are advertised in a retail environment. We can also impute some behavior from prescription uptake or ancillary service demand in a medical environment. The breakthrough may finally come when we can fully integrate mobile applications, digital signage and venue applications such as POS. As we move toward that day, we need to do so with networks, agencies, brands and media measurement firms working as partners to define what should be measured: the metrics of behavior, the metrics of results. And we ought to do that before plain old TV gets there and forces their world view on us once again.

Software

Haivision parted ways with Raffi Vartian, the very able VP of Business Development for recently-acquired CoolSign. After CoolSign founder Lou Giacalone’s departure, Raffi was left as probably the highest ranking link to CoolSign’s heritage. The elimination of the position appeared to many outsiders to be a pretty clear signal that Haivision has little interest in preserving the strategy that CoolSign had as an independent company. In fact, over on the DailyDOOH, Editor-in-Chief Adrian Cotterill pronounced CoolSign “dead and buried” in a headline. Given recent events and an understanding of how some acquisitions go, it is hard to be surprised by Adrian’s assessment. In the comment section of that post, Haivision’s CEO responded aggressively, and provided indications that Haivision bought the company for a reason, and is apparently executing its own strategy for integrating that offering with its core business. That strategy appears to include marketing the CoolSign product to the corporate IT customers of Haivision’s core products. If that is correct, then the focus on more traditional digital signage verticals may be non-strategic to Haivision, making a business development function dedicated to a non-core product superfluous. That might also give a hint as to why Lou left. Interestingly, Haivision’s argument against DailyDOOH’s assessment in some ways supports the opening position of Adrian’s post, which asserts that CoolSign as we once knew it is history. But when you pay for the company you can set the product strategy, as Haivision has by plotting its own course for CoolSign. Not great for Raffi, but you can’t keep a good man down for long.

Further south in Chicago, Graeme Spicer and VUKUNET went their separate ways, as reported by Dave Haynes. Graeme was recruited away from Adcentricity to reposition and drive the stillborn CMS/Ad Delivery/Panacea that was VUKUNET. He was not put in a position to succeed. While untold zillions were spent designing, developing and marketing (and subsequently repositioning and re-marketing) the product, it remains a classic example of Field of Dreams investment strategy and straying from core competency. The grandiose VUKUNET vision was unlikely to ever sell a single incremental display, and probably hindered some NEC Display efforts. NEC’s display people openly roll their eyes when VUKUNET is brought up, likely a combination of having to explain its existence to their partner ecosystem and not getting paid to deal with it. Graeme’s departure, whether voluntary or not, is likely a harbinger of more dramatic changes to come. While the Japanese management style is famously patient and long-viewed, eventually someone in Tokyo is likely to decide that enough cocktails have been served trying to find a nail for this hammer to hit, as neither strategy nor execution seemed to address actual customer needs. That makes it a tough sell, as Graeme learned the hard way. He too will bounce back.

Networks

San Francisco-based Brite Media Group announced their acquisition of TargetCast Networks. DailyDOOH covered the news in some detail here. TCN’s earlier acquisition of RippleTV was probably not as synergistic as it was once portrayed, and their earlier deal with Titan did not work out well. All of that left TCN in a bit of a quandary. TCN has some patented IP around the “L-box” that it typically uses to frame broadcast TV programming. Whether you are a fan or not of that technique, there is some significant leverage in the origianl (non-Ripple) model. TCN is able to deploy high traffic screens without paying for the screens themselves, as they typically use existing screens in the bars of busy restaurants. Additionally, they do not have to pay for the core content, as it is broadcast. They deploy relatively inexpensive devices tasked only with serving up and rendering the L-Bar content, which is usually paid advertising, or in-kind restaurant promotions. So in addition to the IP, there is a nugget there for the new owner, assuming they can dump unwanted, high cost sites. Brite Media is new to the digital game, but has selling experience in similar venues. The apparent strategy is to provide digital leverage to existing advertisers. This one will be interesting to watch. If they bought it right, understand that there are differences between static and dynamic advertising, and make the right moves, it could very well work out.

Agencies

On Monday, a very large merger in the advertising agency and technology world was announced with little fanfare in our sector. Donovan Data Systems and MediaBank will combine to create MediaOcean. MediaOcean has a mission to do nothing less than to create the “operating system for the advertising business”. Pretty bold stuff, but two very significant companies in the global advertising world may have the tools to get it done. Between the two of them, DDS and MediaBank provide the backroom platforms for much of the media buying world. Their customers are agencies, and together they will “process $150 billion in yearly global ad spend”. That is a company with influence and reach. A media ocean must be wide and deep, and MediaOcean appears to be both. While there is a significant online component to this merger (with Google clearly in their strategic sights), the buildout of a true operating system for advertising will necessarily encompass traditional media, online, mobile, and yes, DOOH. Keep your eye on the waves in this ocean.

We can expect new strategies and strategic partnerships to be revealed as the coming months unfold. The companies that remember who their customers are, as always, the ones most likely to succeed.

Nobel Prize-worthy science

Looking back, last year’s predictions actually worked out pretty well. Here is my assessment of the seven points:

Direct hits: Industry association confusion will continue… The movement of people will accelerate… Mobile will matter more, but networks will struggle with the best ways to use it.

Partial hits: Network consolidation continues, while new launches are corporately-focused… Agencies will engage and clarify the ad sales environment… DOOH shows true signs of maturity.

Miss: Attrition rears its ugly head in the solution space.

Not bad overall, but maybe I didn’t push the envelope enough. Here is a touchdown and and extra point worth of prognostications for the coming year:

Dramatic changes in the playing field

Over the course of the next twelve months, expect both the unexpected and the long overdue. At long last, the overcrowded software space will be boiled down through market forces, mergers and acquisitions and flight to niches. Display vendor efforts to be in the software business will prove to be costly diversions, and will be curtailed in favor of closer relationships with solution providers. Eyebrows will be raised by strange bedfellows on the M&A side and surprise failures.  As larger, well capitalized entities emerge to form a clear top tier, survivors will work hard to establish niches in which they can prosper. There will be changes on the network side as well. Here, it will be more along the lines of management changes, rationalization of network properties, and the emergence of managed services operators. And don’t bet against a realignment of the digital signage conference space. The current schedule, cadence and politics are unsustainable. That is not a secret. Change is inevitable: embrace it. I’m not sure if an industry can experience a renaissance while there is still an argument over whether it is actually an industry (it is), but 2012 may well be the start of a new era in DOOH.

Ad dollars flow, but retail networks focus on branding and experience

Ad dollars will flow into DOOH networks as never before. The clear engagement of agencies, the emergence and evolution of buying platforms, the continuing quest for measurement standards and closely held but positive results of campaigns will all contribute to legitimizing the channel. At the same time, retailers will begin to understand that digital signage can provide ROI without significant (and in some cases, any) ad revenue. Engaging content that builds brand, enhances the shopping experience and syncs with online and physical marketing strategies will win attention and awards. Ironically, the success of this approach will make the in-store networks even more appealing to advertisers over time.

Mobile strategies coalesce around the practical

Convergence has achieved near-buzzword status in DOOH, and now it is joined by mobile, having been the topic of endless blog posts and mantra-like tweets. No one doubts the value and power of those smartphones in so many pockets. No one ignores the flow of venture capital to half-baked mobile concepts. I am openly a huge fan of NFC, but next year will not be the year of NFC. I think it will be the year that simpler, more pervasive mobile technologies find their way into more digital signage content. Technologies like Twitter streams, QR codes, SMS and to a lesser extent, Bluetooth will see much more exposure. Other techniques that leverage widely distributed features on smartphones may as well. NFC will have it’s day, and it will be an enduring technology. But it isn’t NFC’s day yet for a variety of reasons.

Camera-based measurement will meet resistance

The clamor for better audience metrics drove the investment in camera-based solutions to deliver exactly that. Despite some highly visible and costly marketing of these solutions, I have not detected a clear and consistent demand from advertisers and agencies that such techniques be used, even as overall dollar spend has increased. Without that demand, networks will be loathe to invest. I think there are a few reasons. The cam-based solutions require an expensive retrofit of already deployed networks; some require more powerful and expensive media players in an era where player costs are being driven downward; privacy concerns are not going away, and will soon become visible at the Federal level in the U.S.; and finally, advertisers are finding ways to measure results as an alternative to measuring audience. There goes another cocktail reception invite.

Endpoints take on a varied look

If you want to bet on what is hot, the fastest growing segment of digital signage will encompass endpoints that veer from the traditional hang-and-bang network model. Look for increased interest in small displays; multi-screen matrices; shaped displays and configurations; screens on glass, film and floors; screens riding piggyback on kiosks and vending machines; screens on tablets; Outdoor screens and billboards; and large format LEDs. All of these will extend the reach of DOOH for the good. To be sure, traditional displays in the 32″ to 50″ sweet spot are not going away, and will continue their strong growth. But we will witness a more strategic matching of objective and content to available display technologies. Multi-display network locations will see a mixing of screen formats and types as never before.

The cloud becomes understood for what it is… and what it isn’t

Like convergence, the cloud has been bandied about with disregard for its actual meaning and relevance. In fact, the cloud refers to infrastructure, and not function. The ability to stand up virtual servers with elastic capacity on an as-needed basis is powerful indeed. So is the ability to deploy quickly with minimal capital investment. Look for DOOH providers to use the cloud not to create new function, but to create a new way to offer, deploy and charge for software and services. Those who get it right may change the way networks buy and utilize software. At the same time, look for cloud-based advertising solutions to increase efficiencies in that part of the ecosystem. Near real time, targeted, streaming content for networks equipped to receive it: coming to you soon, courtesy of the cloud.

Institutional capital remains on the sidelines, waiting for the smoke to clear

Most of the VC and PE capital deployed in the DOOH space in the past year has been either follow-on activity or portfolio shuffling and risk mitigation related to existing investments. The biggest capital investment on a network launch may have come from a solution provider! In the coming year, new capital will be more likely to come from corporate entities than traditional institutional investors. The corporate investors may have more insight into the space and the various players, as well as the motivation to get in at recessionary prices. The institutional folks, who are definitely making their usual calls and ramping up their understanding of the space, seem content to pay up later — once winners and losers are more evident. Any new businesses they do fund are more likely to be hybrid players in the DOOH ecosystem rather than pure play solutions or networks. If there is an indicator for this prediction in combination with the first prediction above, it would be the clear shift in the activity ratio of investment bankers to institutional investors in favor of the former.

Well, that’s seven to kickoff the 2012 prediction season. Without doubt, I missed some easy ones. Feel free to sound off or toss out your own predictions in the comment section. Will it be an interesting year?

All signs point to "yes"

Everything in its place, and a place for nothing.

The Graveyard would exist in the best of times, given the nature of the field we plow. However, it seems to me that The Graveyard is actually a microcosm of DOOH: an industry that has tended to get out in front of itself; a technology-based industry that has attracted more dreamers and schemers than true entrepreneurs; an industry that seems to be in a rush to evolve before it even has an identity. And my best guess is that as a group, our collective Graveyards are going to grow before the marketplace resolves the DOOH picture itself.  There are a number of indicators that such a process is underway, and will lead in short order to what I would term an impending DOOH Spring:

The two most recent reports from organizations that conduct active research on digital signage business trends were both trending in the wrong direction. The Platt Retail Institute tracks the North American Digital Signage Index on a quarterly basis. In July, we looked at the 2Q results here. The DSE Business Barometer also polls industry participants on a quarterly basis. Their most recent report showed a definite downtrend in optimism regarding the economy, as well as tempered enthusiasm for digital signage industry prospects. In both cases, industry players answer questions without attribution, and even then tend to err on the side of optimism. Even slight dips in optimism are noteworthy. One wonders if some folks even responded. The negativity would seem to indicate deferred spending plans by customers and prospects and portends some new additions to the collective Graveyard.

There has been a real dearth of significant wins and launches of new networks for quite some time. True, some deals (present company included) are kept under wraps for what seems like ages, but word gets out when big deals go down, and there hasn’t been more than the occasional eyebrow raiser for about a year. That doesn’t mean that there are no new deals and no new network launches. It means they are generally smaller in scope and impact. Instead of a steady stream of new deals, we are relegated to reading periodic updates on existing deals, such as DDN’s Harris’ 7-Eleven network, which is rolling out at a very good pace since the closure of an epic goat rodeo of a process. I hope it does well. So does 7-Eleven, who has no downside. Regardless, there is clearly pent-up demand in the marketplace. There is interest and there is money, but there seems to be no urgency.

There are some very experienced executives from both the technology and network sides that are independent at the moment. What that means is that there are more connected and tested folks out there available to consult, lead and advise than ever before. By way of example, Lou Giacalone recently joined the ranks of consultants, leaving Haivision shortly after they bought Coolsign. I haven’t spoken with Lou since he left, but he has boundless energy and passion for this business, and I suspect he’ll be heard from soon. Steve Nesbit, formerly top dog at Reflect, has done a nice job of keeping active and networked since his departure. Don’t bet against that list of independent veterans growing by two or three by March. There are a few very experienced leaders on the network operations side also working actively independently. Having veteran talent on the sidelines could be viewed as a negative, but the fact that this type of talent has not left the industry means that there are opportunities they are seeing. That would be another signal of pent-up demand.

So what happens in the DOOH Spring? I believe that there will be an unleashing of pent-up capital, pent up demand and pent-up frustration that will transform the digital signage space with great speed. The capital will be deployed to launch new projects and make bets on existing players either through direct investment or acquisition. The pent-up demand will fuel the projects and help clarify the winning sectors and players to the investors. That in turn will create demand for experienced DOOH executives, both as management prospects and advisors. Finally, the frustration of slogging through the doubly thick mud of recession and fragmentation will be too much for investors in many entities on the network and technology sides of the table. They will call in their chips and walk from the table. That alone would have seismic impact on the DOOH landscape, and it may not be a terrible thing.

It will become clear to all players in the crowded digital signage space that if they have not established a solid foundation as well as a go-forward strategy to dominate, then survival itself will be difficult, even as demand explodes. The forces of the DOOH Spring will change things forever. It may not be a Tahir Square moment, but you’ll be able to track it on Twitter just the same. Until then, feel free to whistle past The Graveyard.

Dear Mr. Cook:

Congratulations on being appointed the new CEO of Apple. It is no small task to take the reins of one of the most valuable and revered companies in the world. That task is compounded by having to step into the shoes of your predecessor, Steve Jobs. I would remind you that young Lou Gehrig was probably daunted by the task of stepping into Wally Pipp’s shoes. He made out all right. You will, too.

In today’s dynamic and connected world, the need to constantly innovate is a priority of the first order. Apple has never shied away from that, nor does anyone expect that it will as you assume your new role. There are simply too many good, smart people in the hallways to stand still. If nothing else, the culture will never permit complacency. However, perhaps there is one thing you can do that will send a message to your legion of loyal fans in the technology world:

LICENSE iOS AS AN EMBEDDED, PLATFORM-INDEPENDENT OPERATING SYSTEM.

Apple has spent untold millions developing a tremendously powerful operating system that would almost instantly extend its dominance of the appliance device market beyond Apple’s own products. As solution providers in the digital signage industry, we would embrace iOS almost immediately. Heck, if you would just let us embed our firmware on AppleTV devices, it would become the hottest media player in the space!

Think about this, Tim. Extending the reach of iOS beyond iPhones and iPads is a real opportunity to dominate the ecosystem of appliance devices. It would unleash the creative force of thousands of developers who meet secretly all over the world and perform monthly druid rituals hoping to influence the Spirits to open up iOS. The fire wardens are getting testy, Tim. Let’s just get this done!  Make iOS even more pervasive, and make your mark! I can see the presentation deck for the announcement now: eight slides, seven words, cool pics.

It isn't hard to do...

Good luck in your new position. Let me know if you want some help with that presentation!

Ken Goldberg
CEO
Real Digital Media

One phrase in particular has my hackles raised when it is used and misused in the digital signage space: cloud computing. It is often deployed as the updated buzzword for SaaS (software as a service), when in fact they are not the same concept at all. Cloud computing refers to a highly elastic, on demand computing infrastructure that is massively available and billed based upon usage. SaaS refers to a software application provided as a service on a subscription basis.  The best discussion of cloud computing that I have found is from Scott Maxwell of OpenView Venture Partners in Boston, describing its flavors and uses in a white paper entitled, Leveraging The Cloud. It is well worth downloading and reading more than once.

Maxwell’s paper makes it clear that cloud computing is about infrastructure, while SaaS is about applications. Can a cloud infrastructure be used to host a SaaS offering? I suppose that the answer is yes, but unless the SaaS provider plans to charge separately for infrastructure and application services, than how is that different than a private infrastructure and a simplified subscription plan? To the SaaS provider, it comes down to an analysis of cost, reliability and security. To the end user, the server is not behind their firewall, so they should not care unless there is an argument to be made based upon any of those same three factors. So it is easy to be cynical when you see a software provider claiming to be “cloud based”. You don’t get to muddy the waters just because the Internet is often depicted as a cloud in Powerpoint decks. Being in that “cloud” does not make a solution cloud based. If it isn’t the fully elastic, on demand, billed by usage infrastructure as described by Maxwell, then it isn’t cloud based. It is an Internet-based SaaS offering. Stop trying to go all Web 3.0 on us when you aren’t. Sometimes retro works out just fine:

That does not mean that there is neither a present nor a future for cloud computing in digital signage, because there is. Using our own company as an example, while our SaaS offering runs off our own servers, today we utilize cloud-based virtual machines for tests and simulations and after much planning, we will be moving our fail over environment from physical servers to virtual cloud-based servers in the near future. Could we (or anyone else) move production servers to the virtual, pay by the drink world of the cloud? Of course, but because we have predictable and forecastable CPU requirements, the need for elastic capacity is limited on a day-to-day basis. Costs for the physical environment are known and manageable, and we like having control over security as well. As such, moving production to the cloud today would not result in either a cost or service benefit to our customers. So for now, our primary servers remain on the ground.

Moving forward, there may well be emerging uses of cloud computing for digital signage. The first may be for enterprise licensees of an application. Today, that arrangement would require the customer to stand up test and production servers behind their firewall before installing the application. As we  look ahead, customers may opt to use virtual, on demand servers in the cloud instead of spending capital and maintenance dollars to deploy physical servers in their IT shop. They would utilize what Maxwell describes as a Private Cloud or Hybrid Cloud. Another high value application of cloud computing may well be ad servers. Since the serving of ads can vary from a one location event to a national event spanning tens of thousands of media players, the need for elastic capacity is obvious. Since ad serving is or could be inherently on demand, and contemplates a revenue generating activity, the idea of billing for cloud infrastructure on a usage basis is particularly appealing. And because many campaigns will span multiple networks, cloud-based serving and billing will more accurately allocate costs. It seems to make good sense. There may be other applications of cloud computing that come to mind. Please feel free to continue the discussion with a comment!

Cloud computing is a hot sector for investors and entrepreneurs. Overzealous marketers have already started misusing the term in an attempt to benefit from some kind of buzzword halo effect. But SaaS is not cloud computing at face value. There are current and future high value applications of the cloud infrastructure for digital signage providers and users. But let’s agree to use the term correctly.

This week, we received an inquiry through our web site.  Here it is verbatim, with identifying elements obscured. As tempting as it is to expose the poseur, it serves no purpose.

Name: *******

Company: <fake restaurant name>
Title: Owner
Email: <fakename>@gmail.com

Phone: ***-***-**99
Interest:
I am looking to expand my restaurant, <fictitious name>, into other locations here in **. I have heard that digital media can help me increase sales on high margin items. How much would a content manager cost and what are the features of it?

At face value, a fairly innocuous request that would deserve a response. But there were some factors to consider. First, the gmail address. In my experience, the hit rate on leads that relate back to a gmail, yahoo, AOL or hotmail address is near zero. Anyone making an inquiry from such a domain is either trying to obscure their actual identity, or has no company email to inquire from. Both are big red flags. A web search of his “restaurant” name and the location revealed no hits. Strike two. A quick look at recent web hits made it easy to isolate the visit that resulted in the request. The IP address from that visit was easily traceable back to a competing company’s server. Sloppy work. If you are trying to be clever, why not do it from home, fella? I thought the inquiry deserved a response.  Here it is:

Hi <name>:

Thanks for your inquiry via our web site.  It sounds like you have a single restaurant at this point, and we are really geared toward large scale operators. Perhaps a local resource like <His Employer> in <location> would be a good starting point for you.  If you need their phone number, let me know.  (Here is their IP address: xxx.xxx.xxx.207

Intelligence requires some intelligence.

Needless to say, there was no response.

Gathering publicly available information, networking with people who have exposure to a wide range of products and companies, attending industry conferences, even speaking with customers and prospects about what they have learned are all in play (as long as no one violates non-disclosure agreements). But going undercover to learn whatever information you are after belies an underlying lack of character, ethics and guts. But of course it happens all the time. I would have probably taken a call from that company just to see if there were opportunities to cooperate. He may not have gotten the pricing information he seemed to be after, but he might have learned where our products and strategies intersect with their own, which might have been useful. We might have at least parted as respectful acquaintances. Instead, all I learned was the widely divergent approach toward ethical behavior between the two companies. Too bad.

No F-bombs from either of us in four minutes: impressive.

A couple of weeks ago, Phil issued a rant because he was upset at a friend’s son, who bragged to Phil that he was entering the digital signage space in a big way, and had already purchased 300 Samsung displays and an unnamed software package. Phil took the kid to the woodshed for investing in the technology before he knew what he actually wanted to accomplish. His advice, which was sound, was to have a plan, objectives and goals, and then match the technology to that plan. Sort of like drilling a round hole and then buying round pegs: things tend to work better that way. Phil blamed the mentality of vendors who claim that they can deliver everything without understanding needs. As an example, he went on to take his own vendor, Stu Armstrong, to task for positioning his newly merged company was a “one stop shop”. Phil called BS on that, recognizing (as most sane people do) that adding ethernet extenders to a software company does not make it vertical. Figure out what you do well, and focus on that. At least Phil practices what he preaches. I will confess that I especially enjoyed that segment of the rant, although in fairness Stu’s pitch-laden comments in a previous segment didn’t really sound like he was claiming to be vertical, just willing to be a single point of accountability. Phil clarified a couple of days later, after apparently receiving some emails, perhaps including one from The Future of Digital Signage. In the last rant, which was actually quite calm, he pinned the problem on the vested interests of integrators, who are motivated to sell the lines they carry, not necessarily the best fit for the customer needs. Phil believes that we should all demand “agnosticity” from an integrator, and while I think he has that concept right, it will never be delivered through an AV integrator in our industry. The fact is that most represent several hardware vendors, and will favor the one that they believe will give them an edge in any particular deal. The tipping point may be function, price, margin, availability, warranty or something else. That does not make them bad people, and they serve a vital role in the business. They don’t represent themselves as truly agnostic in the first place. Most AV integrators only resell a couple of software solutions: one of the big channel feeders (usually Scala), and another more accessible solution. There is no effort to look further, because it is simply too painful a process for them to do so. Hardware is easier. Again, this does not make them bad people, just focused business people.

Newbies like the son of Phil’s friend who start with an AV integrator are simply not going to have many solutions to choose from. After all, a Ford dealer is not going to offer you a Toyota test drive and quote. The type of independence Phil speaks of is delivered through consulting firms with requirements checklists, not AV integrators with line cards. A consultant deals with process. An AV integrator deals with product. Our industry is dominated by the AV integrators, and is ready for consultants, and there is plenty of need and room for both.

In the retail IT world that I came from, there were lots of consulting firms managing systems integration for key applications such as POS, merchandising, planning, warehouse management, workforce management and much more. Each had a process for making software and hardware selections, and most were pretty agnostic. Some had the horses to also manage the integration and deployment tasks. We just don’t see that yet in digital signage. While there are a few reputable folks out there providing process, expertise and independent guidance, there are more than a few charlatans selling smoke, mirrors and wire jobs as well. We still haven’t seen digital signage become a practice area for larger firms that have the muscle to implement as well. I’ve often said that when we get to that point, we will have arrived. One reason why we have not may be that even the large corporate buyers of digital signage technology have in many cases either run the process themselves, or outsourced it to a trusted integrator. That would seldom happen in retail. As Phil says in his first rant, “bring somebody in”. It is the best insurance policy against making a big mistake. We have great AV integrators, and we need more great consultants on the front end of projects. They are not mutually exclusive by any means. Having a few more big picture thinkers like Phil Cohen wouldn’t hurt either.

In a recent presentation, Facebook investor Roger McNamee had lots of things to say about the world of media and technology. It is well worth reviewing. The one nugget among many that caught my eye was this:

“Television is the last protected media business,” but it’s going to get disrupted. For one, once televisions are computers, analytics of who watches will get more accurate than Nielsen panels. “Everyone knows that if we go to actual measurement, ad rates will collapse because the numbers aren’t as good as Nielsen makes them look.”

With technology comes precision

Pretty insightful stuff, and concepts that will have television executives shaking in their Armani suits. Nielsen ratings were good for everyone: networks, advertisers and Nielsen, because there simply was not a reliable way, or any real imperative to get a a greater degree of accuracy. And to be  sure, the networks have little interest in being more accurate. The age of TiVo has been disruptive enough for them. The age of granular viewer analytics will be even more so, as McNamee predicts. But will more precise metrics result in a collapse of TV ad rates? If American Idol is still the most-watched show on television, will Coca Cola, AT&T and Ford want to pay less to be associated with it once they know about the impact of bathroom and kitchen breaks? I don’t think so, and the fact that I didn’t have to think very hard to name the three top Idol advertisers should be evidence enough of that. Advertising still works, and pricing at the top end is still a supply and demand business. It is at the fringes of ratings and viewership curves where TV ad rates are likely to drop, closing the gap between a huge chunk of television advertising and digital signage advertising.

How does this impact the world of digital signage networks? If television numbers are less than they have appeared to be for decades, and the net impact on television rates is primarily on second and third tier programming, digital signage may start to look even better on a more even playing field. I don’t think that anyone in digital signage had delusions about CPM rates that would approach those of network television. Nevertheless, if the reach of larger DOOH networks can be established, and the venues of the screens are arguably more conducive to driving a purchase decision than a television in a bedroom, is it not a better value? I think so. Of course this presumes that networks will have research numbers to back up traffic data, whether it comes via old fashioned legwork or emerging technology. Clearly, that is the direction of the serious players in our space. If we lead the charge for precise measurement, there is a chance to make the case for digital signage as a leader in transparent metrics. Television will be left to catch up, and answer questions about the veracity of their numbers. That can only bode well for DOOH networks.

Will better precision on television viewership impact rates for TV?

Will it impact digital signage uptake or rates?

Should Ken have admitted to watching American Idol?

The index relies on quarterly responses from a cross section of vendors, network operators and a smattering of consultants and agency types.  The second quarter index had 32 respondents, including my company. Each component of the NADSI showed a decline from the first quarter, with the overall index off by 11.21%. Components declining more than the average were Capital expenditures (-11.61%), Screens Deployed in Network (-16.72%), Screens Deployed in Industry (-17.67%), and New/Expanding DOOH Networks (-12.4%).  Firm Sales Revenue was off 11.2%, while prices were relatively flat, down 4.98%. These are troubling numbers, particularly the number related to screens deployed, as this is about as good a bellwether as we have for real activity. This trend would seem to have two causal factors. First, existing networks are deploying at a decreasing rate, and second, new networks are not launching in quantities sufficient to pick up the slack. This would likely relate back to flat or reduced ad spending on DOOH networks, as reflected in the index, and quite possibly to the availability of new capital to launch and/or expand networks. Both factors would be worthy of sleepless nights. In somewhat of a surprise, the only industry sub-segment with a positive trend was Agency/Brand, which is odd when seen in the light of reduced spending. That being said, the forward look for revenue, capex and ad spending are all robust.

In the first quarter optimism is generally driven by the annual strong 4Q carryover and a key trade show right before the respondents are polled. But the industry clearly seemed to run out of momentum in the second quarter. The hardware firms, who have the greatest need and an organizational requirement to forecast accurately, were the most negative in the second quarter, but were in a virtual tie for the most optimism looking forward. That would mean that they see firm orders following a quarter of softness. While networks and software firms were also quite optimistic, both of their forecasts tend to get time shifted on a regular basis, and their optimism must be discounted, whereas the hardware folks generally require POs to back up forecasts. So I see the negative trend as indicative of a bad quarter in a bad economy, and a speedbump that we just have to drive over (carefully).

Hold on to your coffee.

It is easy to blame things on the economy, and respondents seemed to do that when polled on their biggest current challenge. But in truth, the economy has been tanking for far longer than 3 months, so that feels like a cop out. Of more interest, a large number of respondents cited competition as big obstacles in the present and the future, seeming to echo the frequent cries of fragmentation, “me too” products and networks, and the resulting confusion that it causes both buyers and investors. If there is one positive thing that the tough economic situation may do for our industry, it may be the acceleration of a process of natural selection on each edge of the DOOH ecosystem. That, in what we all hope is a recovering global economy, would portend better times for the survivors. Maybe that is the basis for all the go-forward optimism. It will be interesting to see how the 3Q Index turns out, since this will be our first chance to gauge its ability to capture current performance and forecast future trends. Steven Platt, Margot Myers and the PRI team are to be commended for their ongoing contribution to the industry knowledge base.

What do you think? Was this a blip, or is the go-forward optimism unwarranted?

In related news, McGuire confirmed the departure of Suzanne LaForgia, EVP of Advertising Sales and Luke Zalentz, EVP of Business Development. LaForgia was a ballyhooed hire just a year ago, after her stint as the figurehead atop the Bilderberg Group of DOOH, a/k/a the DPAA. Zalentz was a long-timer at RMG. Of note is that neither position was replaced. These departures come on the heels of the April departure of Bob Martin, then RMG’s CMO, to work for SeeSaw Networks. Martin had been at RMG for 18 months. There is no Marketing executive currently listed on the RMG management team web page. Are all these moves just turnover, or a thinning of the top heavy herd in preparation for discussions with potential new investors, either private or public?

I'll take door number two, Monty.

McGuire also unveiled a reorganization of the RMG networks into three groups, as reported in the DailyDOOH article:

1. Executive Traveler – which includes all the airplane, airports and lounges;
2. Fitness and wellness – which includes gyms, health centres and pharmacies;
3. RMG Local – which includes taxis, hotels, casinos, and N.Y. Times (coffee bars and casual dining.

This bears an uncanny resemblance to the way RMG described itself two years ago in a Digital SIgnage Today article: “RMG’s three initial audience networks – the Business Traveler network, the Health & Fitness network and the Urban Mobile network.” While this sure sounds a lot more like a renaming than a reorganization, it does seem to confirm the rumored end of RMG’s representation of mtvU, which is a college campus network that still exists in RMG’s online Media Kit (link here), which provides some other clues to the nature of RMG’s business model and potential changes in store.

Let’s look at the pieces of the puzzle. RMG was formed and launched after the Danoo acquisition of IdeaCast in 2009. The legacy Danoo network is now known as the NYTimes.com Today network, and is focused on urban cafes and eateries, with 650 locations according to the RMG Media Kit . Interestingly, press releases at the time of the IdeaCast acquisition claimed 850 locations for the Danoo eatery network, although that may have included some airport shops. In any case, it does not appear to be a growth vehicle based on number of locations. Most people who have observed that network would agree that the screens are generally placed in non-optimal locations within the cafes, that the screens themselves are too busy to be engaging, and that there do not appear to be many advertisers. It is hardly a case study for a world class digital signage network from any perspective. To my limited knowledge, the technology that powers NYTimes.com Today is not leveraged in the RMG portfolio beyond that network. More on that later. IdeaCast brought the In-Flight Entertainment business to the party, which is appears to be the crown jewel of the business. IdeaCast also brought along the Fitness Network, which by some reports is hardly a world beater. The network apparently has lesser ability to target content at the site level due to the nature of its infrastructure, as compared with its key competitors, Zoom Media and Health Club Media Network. A brutally candid view of the Fitness Network appeared here. A 2011 acquisition, Executive Media Networks (since renamed the Executive Travel Network) is deployed in many top airline clubs and lounges, and is reportedly a very good property, and obviously a good fit with the In-Flight business.

RMG’s entry in the Point-of-Care business (now lumped in under Fitness and Wellness) is an acquired company, Pharmacy TV, which went belly-up several years ago after deploying in over 400 Long’s Drug Store locations, later re-emerging with fewer than 100 locations, all far less attractive than Long’s. The media kit also lists two non-owned health-related networks which they claim to represent, although only one of those is also listed on the web site itself. Draw your own conclusions. One might ask where the sales leverage is between the primary businesses of cafes, fitness clubs, in-flight entertainment and VIP lounges and the tightly focused world of pharmacies and doctor offices. Adding to the mix of sales rep agreements are the now-departed mtvU and a casino network based in Caesars, Harrah’s and Horseshoe properties. Finally, there is a Taxi Network in conjunction with Taxi Magic, which appears to be early stage from what I can glean.

All together, there are owned networks that are split between very good and marginal, and a series of ad sales rep agreements that in a perfect world would deliver hefty commissions without the need to make a capex investment. Actual results of the sales rep activity may have varied from the ideal however, especially in light of the executive departures confirmed yesterday. Those executive departures may signal a decisive move away from the third party ad sales rep business, and a reinvestment in owned networks. I believe that the rollup model for networks has some validity, but acquisition diligence will trump opportunism in the end. Kleiner, which backed Danoo/NYTimes from the start, picked up the In-Flight gem with IdeaCast, but also the less attractive Fitness network. The Executive Media Network win was offset by the questionable-at-any-price Pharmacy TV move. The group of networks with which RMG has ad sales rep agreements (or had, based on the conflicts between the media kit and the web site) is a mish-mash of verticals, demographics, technologies and special situations. It does not leverage the strength of the core properties or the time of the sales team. Hence the logic of refocusing on owned properties.

RMG has a defensible top position in an attractive niche in the Business Travel vertical. They are not even close in any other vertical with an owned network. Is this the stuff of an executive summary for a pre-IPO S-1 filing? Decide for yourself.

Yesterday’s news article refers to the desire to raise $250 million for new acquisitions. Potential investors need to ask two questions. First, what percentage of the RMG juggernaut does one get for $250 million? You can bet that private investors, which is probably the path of least resistance, would get a much lower pre-money valuation than public investors. Life is a series of tradeoffs. Second, will the acquisitions leverage strengths or simply be whatever they can find at bargain basement prices? They have not made a game changing acquisition since the relaunch of Danoo-IdeaCast as RMG. The EMN deal was a good niche deal for sure, but they have not been successful in pulling off something bigger, and that is not for lack of trying. It seems clear at this point that RMG has little taste for funding the capex for new networks, having experienced that at Danoo, whose growth stalled, perhaps in an effort to conserve capital. Since McGuire said that he now has three deals in line that would eat the full $250 million, he must not be bottom feeding for the next Pharmacy TV deal. So what could it be? Given the relabeling of the network groups and the size of the potential deals, the candidates for acquisition are relatively small in number. We may never know who the companies are that McGuire is referring to, but I will bet the traditional box of donuts that he knows the executives of at least two of them from DPAA meetings. I have sealed the names of my short list in an empty mayonnaise jar buried in the backyard.

RMG has also struggled to create a consistent technology infrastructure that would deliver operational efficiencies. If they proceed with multiple network acquisitions, that situation is likely to be exacerbated. In fact, one savvy observer told me a year ago that RMG could not successfully go public without making a technology acquisition. The reasoning was twofold. First, running multiple networks on multiple platforms is very costly and inefficient. Rollups need to exploit efficiencies of scale, and infrastructure is a big piece of that. Second, a consolidator like RMG would need to have a captive technology advantage to build and maintain barriers, a story that plays well on IPO road shows. The Danoo legacy platform has not been asked to scale into thousands of sites to date. It is probably not viewed as the answer. If RMG chose to acquire technology, the list of potential candidates for a scalable platform deal is actually fairly short, but it is not clear that it is a current priority. In any case, a harmonization of technology infrastructure will be a costly effort, but will have to make its way on to the pre-IPO to-do list at some point, whether they choose to make or buy.

The tea leaves seem to indicate that RMG is focused on filling its three network buckets with more owned networks, and rationalizing its efforts to sell ads for non-owned networks, which is a very competitive business. A second box of donuts says that they will raise more private money before they consider an IPO, betting that investing in and fixing the model and then hitting some proof points will render a higher valuation down the road. To their credit, RMG was bold and early in the consolidation game. They have learned some tough lessons, and are now at a crossroad where they must choose a path toward the next stage. That path must leverage what has worked and address areas that have not performed as well. As you can see, it is a toll road.

Since the topic is measurement and reporting that relates to advertising, it is no surprise that the world of digital signage orbits around the sun of the agencies. The agencies control the purse strings and the campaign strategies for their clients, the brands, and as such are the focal point of various organizations trying to develop standards in these areas. They are on the Board at DSF, in the DNA at OVAB Europe, and very much active players at DPAA’s critical Media Operations Committee. One of the challenges that can’t seem to go away is the desire of some folks in the agency world to view digital signage in the same way that they view broadcast television. That means having reliable, third party measurement of audience and viewership related directly to ad rates. Never mind time shifting, ad skipping, potty breaks and laptop screens competing with the message on the television. The operative Latin phrase is In Ratings Speramus. The unwavering desire of some to make a narrowcast, targeted, location-relevant technology conform to traditional broadcast measures makes little sense, and ignores the very compelling factors that make a well-planned and executed DOOH campaign a terrific vehicle and a great value, not the least of which is that its effectiveness is not in doubt. Audience metrics are not a simple or inexpensive proposition, but proof of play and compliance ought to be. While there are some enlightened agency folks who do their homework on venues and ask primarily for a promise of delivery along with proof of same (and make-goods as required), the majority are hung up on audience related metrics over delivery, and can’t seem to find the comfort to make commitments. Without doubt, reliable delivery augmented by verifiable audience metrics will demand higher CPM rates than reliable delivery alone, but it should not change the inclination to make the buy itself. We are dealing with rates and value here, and not arguing over effectiveness. Markets have a way of calibrating value, and it will here as well. Yes, it would be nice if we could make DOOH look like good old broadcast TV to agencies, but Mick Jagger said it best:

You can’t always get what you want
But if you try sometimes well you just might find.
You get what you need.

Sing it, Mick.

The second constituency in the search for common ground are the network operators. The conundrum here is that they reflect the fragmentation of the technology base in our industry. Many of the largest network players on the DPAA Media Operations Committee, for example, run on their own legacy, home-grown platforms. They apparently work just fine for them, but from a business perspective, their core competencies are more likely skewed toward site acquisition, content development and management, and ad sales. It may be more convenient for some to rely on audience metrics to drive sales than on proof of performance or campaign compliance. Their motivation to drive toward technical standards that may require them to reassess or reinvest in their technology capabilities has to factor in to how quickly they want standards to appear. To be fair, they are moving ahead, albeit slowly. We need to pick up the pace. From a rock ‘n roll perspective, I would go with the wisdom of Led Zeppelin:

Hear my song. People won’t you listen now? Sing along.
You don’t know what you’re missing now.
Any little song that you know
Everything that’s small has to grow.
And it has to grow!

The Song Remains The Same

And finally there is the third perspective, that of the technology providers. Industry observers love to cite the hundreds of digital signage platform providers that make up the fragmented marketplace, offering a dizzying array of approaches, business models, prices and capabilities. The race to differentiate often degenerates into a battle of hyped feature bloat and intentionally misleading customer announcements. Neither practice advances the industry or the common interests of the vendors. Competition is great: it drives innovation. I’m all for it. But in this case, the technology sector of the industry needs to lead and bring the networks and agencies along the path to standards that legitimize our industry. Frankly, it is the software providers who pay the heaviest price for a lack of technical standards, as they must meet the divergent needs of customers, their content providers and agencies. Getting standards in place can redirect technical resources toward true innovation. So it is in their best interests to lead. Advice from the rock ‘n roll world comes from The Who:

You don’t have to play,
You can follow or lead the way,
I want you to join together with the band,
We don’t know where we’re going,
But the season’s right for knowing,
I want you to join together with the band.

Join together

The path to the next level for digital signage is littered with divergent perspectives, conflicting priorities, and competitive pressures. That is nothing new. But the path is going to get cleared, because it has to. Traffic is backing up behind us. All those British bands knew what they were saying.

Why use tomatoes? (Photo credit: fallout.wikia.com)

Back in February at the very well attended Digital Signage Expo in Las Vegas, a couple of level headed members of DSA’s Advisory Board spoke to me and a fellow DSF Board member, suggesting that we “end the madness” and “have a lunch”. The clear message was that everyone had bought in to the concept that a single industry association could better marshal resources and galvanize support for our growing industry, which does not require MENSA-like abilities to figure out. I eagerly reported the overtures to Bob Stowe, the new Chair of the DSF, and the Executive Committee. The news was well received, albeit with guarded optimism. We discussed the topic at our next Board meeting, and agreed to reach out at the executive level to the DSA to understand their intent. We developed a clear set of principles from which we would potentially negotiate.

A couple of weeks later, the conversation was apparently had. I was not a party to the actual call, but it seems that the DSA’s old regime was operating under the impression that they were doing the DSF a favor to have the call, and that DSF was struggling financially. It was implied that they would gladly subsume the DSF, deign to allow a few folks onto the exclusive, 71-member Advisory Board, and send out invoices for dues. When that parry was not warmly received, the response was essentially a comment that unless DSF was coming on bended knee, there was no basis for further discussion. In addition to basing their arrogance upon a completely false assumption, the DSA executives betrayed the intentions of their members who made the initial overtures. The call did not last long, and there are no further calls on the schedule to my knowledge. That is too bad for the DSA and their members. The chance to unite both an industry and their own fragmented member base around a common cause was lost due to an unwarranted haughty attitude. It is a sad fact that the same attitude drove the actual formation of the DSF when the same DSA leadership tried to strong-arm Exponation, the owners of the Digital Signage Expo, some 18-plus months ago. Rather than submit to the over-the-top demands of an association funded and controlled by Networld Alliance, a for-profit media company, Exponation provided seed money for an independent DSF and subsequently signed an agreement to become the exclusive trade show sponsor of the Federation. No one from Exponation ever did or ever will have a seat on the DSF Board, or a vote on any business matter. Independent means independent. The same can not be said of DSA, unfortunately. Despite their bravado about “independence” around their 2011-2012 board elections, we still see Dick Good of Networld Alliance remaining on the Executive Board, along with Executive Director (and all around good guy) David Drain, who came to DSA as a Networld employee. I have been told in the past by people in the know that Networld isn’t going anywhere until their cumulative investment carried on the books of DSA is recovered, and it is no small amount. I suppose all of those banner ads that obscure some good editorial work on Digital Signage Today have not generated enough ROI. In any event, DSA is certainly a long way from being independent, and the seemingly permanent existence of a media company on the association board raises more questions than answers for many people.

As a result of strong and ongoing membership sign-ups, an incredible and diverse working Board and the agreement negotiated with Exponation, the DSF is healthy, vibrant and growing. There is an uncommon spirit of working for the common good and a real lack of personal/company agendas in the affairs of the Federation. I can report that it is an honor and a pleasure to work with the fine people who give unselfishly of their time there.  The only evidence of desperation is a desperate desire to achieve the goals of the industry faster. The DSF recently joined the DPAA as an associate member, in recognition of the perspective and body of work that DPAA brings to the table. We felt that playing even a small role there would be beneficial to our membership and increase awareness and communication between the associations. I encourage all industry advocates to join DSF and work with us as the only independent voice of a growing industry.

Had DSA and its masters shown genuine intention of doing the right thing for its members and the industry earlier this year, the silly tomato fight that no one understands might well be over by now. But that was not the case, and it is a pity. I sincerely hope that new DSA President and good guy Brian Ardinger can steer the Good Ship Screenmedia into calmer waters. I know members there who capture the selfless spirit that I witness every week at DSF, so nothing is impossible. If they get frustrated, that “join” link above will be working for a long time.

Few people were shocked that an EnQii deal went down, as it was fairly common knowledge that the company (or perhaps its North American business) was being actively shopped in recent months. The reasons for that are not known to outsiders, a group of which I am certainly a member, but one can guess that the VC backers were getting itchy about getting some money off the table. Whether that reflects a bullish or bearish outlook is also unknowable. But the fact remains, the Board wanted a deal done. MDS, whose business is aptly described by DailyDOOH’s Adrian Cotterill as “having a very high profile in the industry and a global reach but bottom line doing little more than selling some cable adaptors and switching equipment,” needed to expand its portfolio in order to truly have the “DS” in its name have some meaning. A software solution would seem to fit that bill. Whether EnQii will bring new deals to their MDS brethren or vice versa remains to be seen. Personal experience would tell me that a software company can certainly provide leads and referrals for a hardware supplier, but it seldom works the other way around. That is just the way the decision cycle works: companies don’t lock in on connectors and then search for software. Some of that can be solved by adapting the way one goes to market, and I assume the capable people at both firms will figure it out.

While the deal is presented as a “merger of equals”, the outward signs indicate that the MDS folks are driving the bus. Jerusalem Venture Partners, who were key investors in MDS, led the round that sealed the deal. Another MDS VC investor and EnQii’s two primary VC investors were characterized as “participating” in the new round. From the outside, that sounds like a merger and a recapitalization, with new money invested proportionately to ensure that the desired post-deal ownership shares came out a certain way. Given JVP’s lead role, the Board chair going to Shlomo Nimrodi and  the CFO role staying in Israel, it sure sounds like the shots are being called from Jerusalem based upon ownership leverage.

Is it a match made in heaven?  Dave Haynes of Sixteen:Nine opined that he’d “rather see complementary skills put together than two rival software development teams“. That is one view. I take a somewhat different view, which is that a combination of solution providers and their customer bases might have been more meaningful in the larger picture. Yes, the rationalization of the technology stacks and development teams can be a long process, but it has been done before in the software business, and as long as there is a clear plan it can be done again. Those deals are dicey as well, but when done, they can be very dynamic. I witnessed it many times in the retail solution space. A chance to radically alter the balance of power on the solution side by way of acquisition appears to have passed for EnQii, even if temporarily. It may be that there were no viable software partners for them to merge with for a variety of reasons, and I don’t take the existence of the ongoing acquisition fund as a sign that it will be used horizontally. Rather, the words in the press release seem to indicate a more vertical bias to the strategy. There are some good folks on both sides of this deal, and I wish them well.

It is always exciting when deals get done inside the industry. It means progress is being made, strategies are being formed, and new money is being invested. Sometimes it means that investors are antsy. EnQii was a fairly high profile player in the solution space and the merger seems to reflect a willingness by their Board to let their destiny be determined in large part by folks with a vertical view. In the grand scheme, the software side will be sufficiently funded to go after whatever strategy they get approved, and will likely go about their business after the dust settles. This was not a consolidation as much as it was a merger and recapitalization. I don’t think it will alter competitive strategies very much (if at all), or kick off a round of “me too” deals. The industry-altering deals will happen when the big money steps up to the table and places some bets.

Those limos may be pulling up to the casino soon. The night is young.

The past several days have been a storm of wall-to-wall meetings. All were productive, all were important and all were very instructive. It began with our User Group meeting ten days ago, which saw 16 customers from all types of networks come together for a day and a half of planning, brainstorming and networking. Last week saw four key partners make the trip to our global headquarters in Sarasota. I came away from the five straight days of meetings invigorated, motivated and very optimistic.

The User Group meeting was designed to be the catalyst for the design and build phase of our next major release. We have learned over the years that the most used and most useful functions within our application have been customer-driven. Our job is to design and deliver them in a manner that is flexible enough and abstracted enough to provide value to all users. This ensures the single image, multiple-tenant value proposition of the SaaS model that we employ, and of course minimizes (eliminates, hopefully) forks in the application itself. The User Group is the natural venue for taking the temperature of our expert customers and for setting priorities going forward.

The key sessions were ones in which we presented a laundry list of things we’ve heard, both vicariously and through direct communication, that customers want, followed by our roadmap for the key features of the next release. Amazingly, items that we thought were contentious were not, and new capabilities that we thought would unsettle some people due to new concepts within the application were received rather calmly. We had long discussions on tactical enhancements versus strategic shifts, allocation of time and resources, and emerging trends in the industry.

Here’s what I learned. Our customers, large and small, old and new, and across vertical markets make up a real community. We must make it our job to support and enhance that community in order to optimize every single customer experience. You would think that would be intuitive, but until you see how effective that community can be, it does not really hit home. But now it has, for sure. If customers want to interact with each other, we have the responsibility to make it easy and effective. And we will. It is often easy to become cynical when you are on the receiving end of a fire hose of development requests. But when we brought everyone together, we learned that customers are willing to be patient if we communicate well. Essentially, we seem to have earned their trust. We don’t take that lightly or with even a hint of cynicism. It is the Holy Grail in our business: trusted first with powering their networks, and then with taking them to the next levels in a consistently excellent way. We can’t breach that trust and hope to succeed.

Following the User Group meeting, which included a great dinner, two long nights and one hit-and-run accident, we welcomed four key partners to our offices over a three day period. Naming names wouldn’t be prudent, but I can say that for me, the meetings were a sure signal that our quiet company is being appreciated beyond the loyal customers we had entertained only days earlier. We were able to communicate our plans, prospects and strategies and match them up with those of some impressive partners. We gained a number of very helpful insights into the industry and the world outside of our insular solution space. Three things were clear:

1. There is no single company large enough to dominate this space today, even as consolidation has begun. The imperative of creating a partner ecosystem is obvious.
2. Despite rumors of one large company leaving the space altogether, all signs point toward some very large players organizing to leverage what they see as a wide open, growth business. The lure of big game is what will bring the big players to the table. In many ways it is a self-fulfilling prophecy, as the increasing presence of everyday names legitimizes the industry and removes barriers.
3. Like the customers, the partners thrive on communication. A little trust also goes a long way.

Change is in the air, and established players in the space crave it as much as potential new entrants. After a week of active listening, we’ve learned that proactive communication will be an important part of the path to the next level, both for individual companies and the industry as a whole. Since we are all in the communication game at some level, we’ll hope the shoemaker’s children are not barefoot.

The challenge of accelerating the flow of advertising dollars into DOOH from other channels pales in comparison to that faced by the Japanese nation. The need to find the equilibrium between DOOH and mobile is pressing, yet hardly as pressing as rebuilding in Alabama. You can be sure that Japan will rebuild, no longer how long it takes. So will Alabama. Despots and cowardly mass murderers will meet their fate as they always seem to. The common thread of recovery, rebuilding and redemption is the selfless and dedicated work of many otherwise unconnected people toward a common goal. Politicians call it “unity” or “coming together”, hoping to take credit for it. In reality, it is the human spirit that can not be repressed and that rises to any challenge when the going gets tough. We may need some of that in DOOH.

In the world of digital signage , we have lots of important work to do in order to optimize the amazing potential of our young industry. Sadly, the short history of DOOH is littered with shameless self-promoters, opportunists, liars, backstabbers and people who will say anything yet do nothing. Cynical, or all too true? Perhaps it is thus in the frontier phase of any emerging industry. However, I see signs that the human spirit will emerge here as well. The community response to the Japanese disaster was impressive, and from that was born DOOHgood, led by Dave Haynes. Bravo to all who participated! Both efforts are evidence that a community of good, and a spirit of cooperation exists in our midst.

I have heard the saying that “a rising tide floats all boats” used in the context of digital signage for nearly eight years now. Until recently, I was not sure that anyone really meant it when they said it, and that their own boat, be it dinghy or yacht, was the only vessel that mattered. I have had many conversations with customers, competitors, vendors and partners over the past several months that lead me to believe that folks are starting to buy into the rising tide and to look at partnerships, ventures and opportunities in a more holistic manner. There are examples of this in the more mature media channels. From such thinking comes innovation, and it is innovation that we need to realize our potential. In a marketplace that craves leadership and something big, the winners will break through the barriers of conventional thinking.

Despite the slew of industry awards given out recently, I’d suggest that the best awards will come from the marketplace, in recognition of creativity, innovation and a burning desire to advance the industry. When we work together, we can overcome virtually any obstacle. It isn’t like we have to rebuild a town. Or a country.

Relevant content: Analog signage at Grand Central.

Despite my good intentions I only had time to watch Patrick Quinn’s insightful keynote and one session. I was attracted to the session titled “Assessing DOOH Technology“, as I thought it would have some crossover with my world of digital signage platforms.  The panel included Peter Bowen of SeeSaw, Rob Gorrie of Adcentricity, Jason Kates of rVue and Graeme Spicer of NEC/VUKUNET/DOmedia/EIEIO. Based upon the panel, it sure looked like we were going to hear about ad planning and buying and execution, and not so much digital signage platforms, which people still annoyingly and incorrectly call CMS. That was OK, as I consider Rob and Jason good friends; I remember speaking with SeeSaw founder Monte Zweben in 2005 about the idea of aggregating digital signage networks; and while my opinions never seem to generate goodwill in Itasca, IL, Graeme and I remain friendly. If nothing else, I’d enjoy watching the byplay as the panelists positioned their firms.

From where I sit, the two companies represented that have the most similar business models were SeeSaw and Adcentricity. My quick description would be that they represent a number of networks and actively sell in to them utilizing a number of proprietary tools to ad value to that process. Interestingly, when introducing himself and SeeSaw, Peter Bowen started down that path and then swerved a bit, announcing that SeeSaw “has a Demand Side Platform (DSP)”. That was puzzling on three counts: first, SeeSaw Ads is not a DSP, it is a fine planning tool; second, a cursory look at their web site does not turn up the words Demand Side Platform; and third, that he felt the need to juxtapose SeeSaw with rVue (a DSP) rather than Adcentricity. Hmmmmm. The camera did not show the reactions of the other panelists, but Rob quickly and joyfully described Adcentricity as an ad network with the requisite planning tools and focus, and Jason crisply described what a DSP does. Graeme deferred to all three on the planning side and threw his chips down on ad delivery. OK, then… this was shaping up to be fun.

The session took a thought-provoking turn when an audience member brought up the fact that at other media events focused upon social media and internet, he has never observed the lack of trust in the numbers as he does in DOOH. He correctly asserted that this poses a real hurdle for the industry and applauded the efforts of the panelists as agnostic middlemen who bring a sense of believability to the process. Mr. Mandese postulated that a single industry voice was going to be required. (Uh oh, standards and leadership rear their beautiful heads!) A discussion of DPAA Audience Metrics standards ensued. Then came an exchange in which Jason suggested that digital signage software “has never been better”, which Rob disagreed with, saying that while there is some good stuff out there, there is still lots of software out there that simply can’t do what agencies demand, and even more that do them in non-standard ways.  I think they are both right. I fundamentally agree that there isn’t much “voodoo” left for digital signage platforms, as Jason put it, and I said so here. But I also agree that the fragmentation of the software market has created an equally fragmented market in the network world. That has to drive all four panelists crazy, and it is also an impediment to the flow of advertising dollars, both to the members of the country club, and quite a few scratch golfers who don’t care to join. Looking at the networks on the DPAA roster, the dominant platform is clearly “homegrown”, which doesn’t inspire confidence per se. Until there is a way for agencies to trust networks based upon their platform, the challenge will not go away. You may see some independent efforts to help that along in coming months, but from a market perspective it is going to take a rising tide of concern with standards and what agencies want in order to cull the herd down to a manageable number. And at some point, industry leadership has to materialize and coalesce in a similar way. Neither can happen soon enough for the nervous agencies. Or for those who really care about accelerating the growth of the industry.

Thanks for a lively panel go to MediaPost and the panelists. While the session title may have been a bit misleading, that’s OK. Their discussion brought up important points worth thinking about. A few New York minutes can be time well spent. (Note: A tip of the hat to Dave Haynes for having a faster WordPress trigger finger than me with his take on the same session.)

What We Think We Know

In decoupling and organizationally re-assigning the digital signage tool formerly known as VUKUNET, now renamed NEC CMS, NEC has stepped out of the mainstream fray with respect to digital signage software platforms. Mr. Haynes suggests that they will be content to compete with lightweight products from display foes Samsung and LG in an attempt to mend channel fences with providers of more heavy duty software platforms, who have access to larger deals. Most have cut NEC out of any customer discussions. Bravo to NEC for retrenching after figuring out what was obvious to just about everyone from the start. The first step of the twelve-step program is admitting that you have a problem, so I am supportive. But they still have work to do. The VUKUNET approach and overhead required to make the system work is still a no-go for many third party systems, including any that run under Linux or that are managed by this writer.

DOmedia, a venture-backed firm, very much needed to make a splash to enhance its profile and increase the speed and value of a potential flip. Presumably, they also needed to gain some functionality that agencies clamor for, most notably ad inventory management. I have not seen the VUKUNET inventory management software, but I assume that proper diligence was performed.

Both companies have proclaimed their respective pieces and the combined offering to be a new standard. Hyperbole like that is exactly what we don’t need: it is the digital signage equivalent of the “Mission Accomplished” fiasco aboard the aircraft carrier. Win market share, establish new relationships, move the needle to the right… then maybe you have fodder for chest pounding. This game won’t be won in the press.

It might be a tad early to proclaim victory. Again.

What We Need To Know

How will this be monetized? Is the VUKUNET functionality simply given away free to DOmedia users, or will there be fees involved? Inquiring minds want to know.

How will it really work with someone else’s solution? NEC has decoupled inventory management, reporting and proof of performance from the rest of the legacy CMS. By doing this, they have kept the functions with potential monetary value on the DOmedia side, and minimized the capabilities that they will continue to offer for free through the display side. Probably reasonable logic. In my opinion, most network owners will want to have a single delivery and reporting system for all content, be it advertising or non-advertising content. As important as the basic proof of playout is, the context and timing of the playout are also critical, something that would be missing if you had two separate reporting systems. Those pieces need to run through the resident digital signage platform. I understand that it would be seamless if that resident platform was NEC CMS, but that will be the rare exception. The partners need to entice network owners to demand this functionality and software providers to interoperate.

Where does ad inventory management belong? Ad inventory management administers data that is needed by both the network and the agency/buyer.  Because some ads will be trafficked through DOmedia, and others will be sold directly or via other platforms, that data management task may become messy. I’d suggest that ad inventory management might best be deployed as a standalone (perhaps cloud-based) application, with reads and feeds as needed enabled for the network owner, agencies and trading platforms. Going proprietary may limit the audience.

What is the official standard of DPAA? On Wednesday, the release announcing DPAA’s place-based advertising study results dedicated a third of its editorial space to promoting its “search and discovery planning tool, InfoCenter“, a product of DPAA heavyweight Francois de Gaspe Beaubien’s Ayuda, which by the way launched without a geo search capability. On Thursday, in DOmedia’s release, DPAA’s Susan Danaher provided a quote to endorse two other members offering a model competing with InfoCenter/Ayuda. Let’s just say the carefully worded quote for the DOmedia/VUKUNET venture exhibited the minimum amount of enthusiasm required. The infighting at the country club is only just starting. A review of the membership roster also includes SeeSaw Networks and rVue, both knee-deep in ad planning, buying and execution, and BroadSign, which markets an ad inventory module of its own. Ought to make for some fun meetings of DPAA’s Operations Committee, charged with establishing standards… standards that have already been proclaimed by several entities. Have fun with that.

What will be the next shoe to drop? On the heels of the DOmedia announcement came an announcement from Key Systems throwing their hat into the same ring with signagelive as its first partner. Call me crazy (many do), but I am thinking that deals like this create momentum of their own. The concepts of media planning, ad inventory management, ad serving, trafficking, analytics and reporting are swirling around each other. Other parties will be heard from. The good news is that this is a sure sign that the ad world wants to buy DOOH in a familiar way, and companies are moving to accommodate them. That is very good news, and it is early in the ballgame.

Scan it if you dare!

QR Codes

Dan tweeted about an eMarketer article that indicated that about two-thirds of smartphone users have seen QR codes, and about half of that number had used one. The article acknowledged that this would seem to be a pretty good indicator of awareness, if nothing else. I wonder how many of the users have done it multiple times, but regardless, people know what these crazy patchworks of black and white dots are. Couponing and getting additional product information were by far the two largest motivators to using a QR code. As you may know, QR codes require a user to launch a special app and then use their smartphone camera to snap a pic of the two-dimensional square. The application interprets the code and launches the phone’s browser, directing it to a specific landing page with a specific purpose. It works pretty well. But it has drawbacks. The fact that a user must grab their smartphone, launch an application and then frame a code in the camera requires intent and reward to overcome the process. In that light, the popularity of couponing is easy to understand, especially if the reward (the coupon) can be stored on the smartphone for later use.

The application of QR codes to digital signage content still feels problematic. I first learned this during the Super Bowl in January, when Sears ran ads with QR codes at the end. Try as I might, and motivated by the urge to tweet and write about it, I failed on three attempts. The code was too small and did not stay on the screen long enough. A noble attempt by Sears, but still a #FAIL. To try to use a QR code within digital signage, therefore, it seems that the code must be fairly large and stay on the screen long enough to complete the process of recognition-decision-app launch-frame-click. Anything less than 20 seconds may be too short. Anything longer may exceed the length of a typical ad. Alternatively, the QR code could exist in a sidebar or be overlaid in a corner during an entire ad or clip. It might detract from the content itself. Finally, imagine yourself among five viewers of a digital signage screen. Which one of you gets to stand in front of the screen and get a shot at the code? In the end, QR codes will find their highest and best use in static signs, perhaps even signs adjacent to digital screens. I think they require too much consumer effort to drive convergence.

Just wave.

NFC

The continuing surge of NFC-related news items seems to be encouraging, especially from the perspective of NFC as a wave-and-pay technology. Just yesterday, Amazon announced that it was entering the NFC payment derby, and Sprint decided to go it alone, bucking the Isis axis of AT&T, T-Mobile and Verizon. Good luck with that Dan, we’ll look forward to your ads. It seems obvious that NFC is coming to mobile handsets, despite the “will they/won’t they” intrigue around the intent of Apple with iPhone5 (they will).  I am excited about the potential for NFC-based mobile payment systems, but even more excited about how NFC might become a driver of DOOH-mobile convergence.

I believe that good DOOH content includes some kind of location-specific relevance, a call to action or both. As such, using NFC as the pivot point from passive viewing to active engagement makes a lot of sense. In the call to action scenario, such as obtaining a digital coupon, compare the required action of waving a smartphone at an NFC hotspot near a screen to the clumsy process of snapping a picture of a QR code described above. I compare it to going from a keyless ignition scenario back to an analog car key, something I recently experienced. It feels strangely 20th century to take my keys out of my pocket to start the car. So will it be to use QR codes when NFC is deployed alongside digital signage displays. NFC will also be able to pass stored data on topics relevant to the displayed content with a wave of the phone: the collateral rack will go digital, and the engagement will extend beyond the screen, beyond the location and beyond the sacred dwell time. I say bring it on.

While we seem to get excited by all new technologies as they appear on the scene, their benefits always come down to application. Because of this, good old SMS (text messaging) is still the dominant mobile technology in terms of integration with DOOH campaigns. Virtually anyone with a cell phone can respond to an SMS campaign call to action, and it is reliable and relatively cheap. No add-on hardware is required at the location level, no add-on software is required at user (phone) level. It is not going to go away quickly. However, the rise of NFC as a data transfer technology, fueled by the payment application will vault NFC to the head of the class in one generation of smartphone hardware. By the way, those who were scoffing recently at the idea of direct response advertising on DOOH screens: will it still seem silly to you when viewers can buy with a wave of the phone, and have credit for the sale go to the network? Stand by, because NFC has the potential to make DOOH displays dispensers of data and collectors of cash. Both of which are quite measurable. Won’t that be nice?