Children are frequently asked a throw-away question as they make their way through grade school: “What do you want to be when you grow up?” As a parent, it is always fun to hear how the answer changes over time, and how the stress level associated with the answer increases as grown up status approaches. Truth be told, there are few among us who knew what they wanted to do with their lives at 12, 22 or even 32 years of age. In more cases than not, circumstances, opportunities and personal networks have more influence on careers than proclamations made to Uncle Fred at a family gathering. So it is not surprising that digital signage, arguably an adolescent industry, will likely adapt to its own environment in much the same way as it matures. Let’s look at what some of those adaptations might look like.
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?
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.