Digital Signage: Not Just Pretty Pictures!

Unless you’ve been living under a rock, chances are you’ve seen digital signage applications pop up just about everywhere. In fact, the digital signage industry is one of the fastest growth markets in the IT space. For example, from 2014 to 2015, the business-to-business large-format commercial display market increased from $217 million to $316 million, representing a 16.5 percent year-over-year growth rate, and outpacing the overall B2B market that grew 2.1 percent during the same period.

From a unit perspective, the 55” and 46” displays led the market with an even 13 percent or a combined 26 percent unit share. However, the 55” segment grew at 20 percent while the 46” segment declined by 36 percent. Looking at the top ten display size segments (e.g., 55”, 46”, 42”, 32”, 65”, 40”, 31.5”, 70”, 60” and 75”), which represented 78 percent unit share, the 65” and 70” segments grew the fastest at 263 percent and 103 percent (respectively) year-over-year growth rates, implying larger screen sizes are needed and desired in the B2B space. The NPD Group believes the trend will continue to outpace overall business-to-business spending for myriad reasons.

First, as you may have noticed, brick-and-mortar retail is doing what they can to keep customers engaged in their stores. These retailers are integrating better acoustics and graphics, as well as arming sales staff with tablets and headphones to better serve customers. Digital signage is also a key piece of this engagement platform; it is not uncommon to see revolving promotions at different times in a day to attract different demographic segments that enter the store. In addition, many stores have added multi-lingual boards to address the needs of customers whose native language may not be English.

Second, in segments such as quick-service restaurants (QSR) or hotels, digital signage is being used to guide customers towards higher-margin ancillary services. In a hotel, for example, a customer is lured into the building via digital signage that entices guests with “add-ons” such as gift shops, golf courses, spas, restaurants and more. Research conducted by The NPD Group saw 22 percent year-over-year unit growth in the touchscreen segment, which has become a key feature for hotels that provide business travelers with interactive maps of conference room locations, restaurants, or business services. From a QSR perspective, many restaurants account for a majority of their revenue via the drive-thru, where they typically have just a few minutes to get the interaction right.

Advances in digital signage help to speed transactions, maximize revenue, and accurately process orders. Inside the restaurant, digital menu boards must also be easy to read, and update, while also giving the customer a sense that they are not at a fast food restaurant.

And it’s not only brick-and-mortar retail and restaurant institutions that are adding digital signage to up- and cross-sell higher-margin products or services. Many dentists are also adding digital signage in their waiting rooms and advertising products and services such as non-invasive Invisalign that straightens the patient’s teeth. Another opportunity for digital signage applications is in automotive shops, where signs can display available services such as tire rotations, smog checks, and other seasonal adjustments. Lastly, as we enter into an era of real-time customization or interactivity (e.g., augmented reality, facial recognition, IoT, etc.), we expect greater fusion of smart mirrors for virtually trying on clothing in retail stores, dynamic advertising and promotions targeting individuals, real-time emergency services (e.g., lost children, criminal identification, etc.), on-screen pop-up customer service representatives for language translation, and more.

In summary, we believe that digital signage will continue to be a higher growth category over the next few years as businesses are consistently looking for ways to improve customer service, drive better engagement and strengthen up- and cross-sell of higher-margin products and services. In addition, with the addition of more sensors and functionality being woven into digital signage in the future, we expect this will drive greater interactivity and new services long-term.