A year ago, I took a shot at seven predictions for the digital signage industry, trying to get a jump on the annual swarm of year-end posts that seem to pop up. It seems appropriate to take a look back and score the hits, misses and near misses a year later, and toss out some new and recycled predictions. It turns out that last year’s predictions were pretty good, but won’t be confused with a missing quatrain of Nostradamus.
Here are the predictions, grouped by accuracy:
#1 & #2, Big hardware and big software step up their game: Certainly the best example of this was the much-ballyhooed Intel-Microsoft mashup that debuted in January. While really just a prototype designed to show off their respective wares, it was treated as if they invented interactivity. Nevertheless, it signals their interest in the business. Cisco threatened an ad exchange product, but instead wrapped it into the existing product. Google continues to amass patents and pieces that will ease its eventual entry. Big display companies extended their offerings to include media players and content management software. One actually acquired a software firm (Barco-dZine). One even decided to sell ads, and then decided not to, and then decided not to decide.
#3: Capital for networks gets smarter: There is pretty clear evidence that while networks are getting better at positioning their pitches, institutional investors want to see real evidence of traction before the launch… no easy task. As a consequence, there has been more investment in existing networks than new networks, and corporate investment in their own networks has started to ramp up as well.
#6: New consulting practices will cater to big companies: Shortly after the original post, The Preset Group appeared (I wasn’t tipped off). They’ve already started racking up big corporate clients. Other big companies, such as Dunkin’ Donuts, have also engaged established firms to handle RFPs. Others have stuck with single shingle guys. Look for more folks to team up.
#4 Smaller ad-supported networks dwindle: While there have been what feels like a “normal” number of failures in smaller networks, the predicted consolidation was not evident. Instead, what we saw was larger networks connecting, such as TargetCast with Ripple, RMG with Danoo, and Zoom with LA Fitness and Sports Display. I thought the action would be at the other end of the market.
#5: Retail and replacement business will accelerate: I will call this one a near miss. There was increased retail activity, especially in the QSR segment, but not at the rate I anticipated. The recession in the US struck fairly deep, yet there are lots of lines in the water right now, so the call may have been early and not completely wrong. The same logic applied to the replacement activity, as network operators are holding firm and conserving cash in uncertain times. Some switches (not truly replacements) were made early, between proof of concept and launch when the cost is minimal.
#7: Solution winners emerge by marketplace: Another case where I picked the wrong end of the spectrum to discuss. While there were clear signs of strong players emerging in several marketplaces, it seemed more clear which players were losing. Tales of woe and a slow stream of any significant new wins across the board seem to indicate battles of attrition are being fought, rather than decisive victories being won.
All-in-all, four hits and three misses. Good enough to win the World Series, but not enough to consider writing new predictions in verse like Nostradamus. Maybe if this year’s batch of predictions is better, I can aspire to a different level of seer:
Seven for ’11:
- Network consolidation continues, while new launches are corporately-focused: The need to reach critical mass and economies of scale will drive further M&A activity on the network side. Perhaps the gas station wars will resolve themselves that way. There are still some big deals out there to happen, and plenty of smaller ones will occur as the big targets disappear. VC money will continue to focus on existing deals (Zoom’s recent financing is the most recent evidence) as opposed to launches, and corporate entities will finance their own entries.
- Attrition rears its ugly head in the solution space: There is clearly not enough significant business to support the hundreds of software companies in the DOOH space. Mergers are difficult, as the cost of rationalizing the customer base onto a single platform is generally high. As such, you can expect to see recognizable names come off the board in the next 12 months as their models become unsustainable. A tiered solution space will clearly emerge, as discussed in the past, where there is a clear premium end, a hotly contested low end, and a middle squeezed from both sides.
- Agencies will engage and clarify the ad sales environment: There has certainly been no shortage of activity in the ad sales space. To name a few, Adcentricity continues to solidify its position in the aggregation game, SeeSaw is marketing its targeted segments, rVue has emerged as the first demand-side platform offering tools to bring buyers and sellers together, BookingDOOH appeared in Europe, that display company has dabbled, and RMG has extended its business model to include ad sales for non-captive networks. In the coming months, the media buying community will begin to take DOOH more seriously, and the manner in which they buy will determine how the middle men fare going forward.
- Industry association confusion will continue in North America: The DSF will continue its emergence as a viable industry leader, DSA will pursue its “screenmedia” strategy of lumping digital signage with mobile and kiosks, and the DPAA appears to be ready to consider changing its membership requirements. Trouble is, they would also have to refocus their efforts to meet the needs of a more diverse membership base. One thing seems certain, however: The chances of consolidation in this part of the industry are low in the near term. In a way, just as networks need to pick a focused ad sales strategy, industry constituents will eventually vote with their dollars as to which organizations deserve support. My guess is that it will take at least another year to get to the point where consolidation is an obvious event.
- The movement of people will accelerate: This one is easy. Between the effects of the first two predictions, the level of activity that can be observed on LinkedIn and the increasing engagement of headhunters in DOOH, the mobility of digital signage talent of all types will be dramatic in the coming months. We will see more executive changes, lots of sales and business development movement, activity in the consulting world and more.
- Mobile will matter more, but networks will struggle with the best way to utilize it: Despite the ramblings of some who view the world through a 4 inch screen, the imperative to integrate with mobile applications will prove to be more along the lines of operations than technology. Engaging DOOH viewers through their smartphones before, during and after their engagement with a digital signage display makes sense. The rub is that there are simply too many ways to use mobile to make the choices simple. Even an established DOOH mobile player like LocaModa has many different ways to engage with mobile viewers, from surveys to games to Foursquare check-ins and moderated Twitter streams. The ability to offer coupons has no shortage of methods and providers. Good old SMS still offers coverage of the whole market, not just smartphones. Networks may choose to develop their own branded smartphone apps and micro-sites. New applications will undoubtedly pop up. So the buzz around mobile will not subside, but the application of mobile by network operators will have to be rationalized, and we will see more testing than commitment in the coming year.
- DOOH shows true signs of maturity: Perhaps this is a recap of the first six predictions, but four of the five key signs of maturity have almost reached critical levels: interest of huge and established technology companies in the space; clear signs from the advertising community that DOOH is a valuable vehicle for their campaigns; rationalization of network operators and solution providers; and institutional interest in all aspects of the industry. Only the unsolved industry leadership puzzle prevents a clean sweep. Given all these factors, 2011 will likely be a year of foundation building for the mature industry that should emerge in 2012. There will be no shortage of interesting events to observe and analyze.
Did I miss anything? That would be a good bet. Feel free to post your thoughts and comments.