Digital Signage: Economics vs. Print

There are numerous studies that have been widely cited on the cost effectiveness of signage and graphics, and the important role signage and graphics have in building a business. In recent InfoTrends research over 80 percent of wide-format digital graphics print buyers reported that they find wide-format signage and graphics to be an effective way to communicate their message. According to the U.S. Small Business Association, “On-premise signage is the most effective, yet the least expensive form of advertising for small business.” The question is, is it cost-effective? Is there a more effective way to communicate that message?

Let’s consider a food-service establishment like a sandwich shop that pays $200 per month for the window graphics and point-of-purchase signage in their location. That’s $2,400 per year. The store has foot traffic of approximately 80 unique customers per day, its open six days per week, that’s 480 customers per week, and approximately 23,000 customers per year. Let’s theorize that only one out of ten customers sees and remembers the signs, that means the signage and graphics makes 2,300 impressions per year. That would be 2,300 impressions at a cost of $2,400 for a cost per impression of $0.96. Now, let’s add a digital sign to the store. A small digital signage implementation can cost as low as $3,000 (includes a commercial grade screen, computer, and content package). Let’s assume the sandwich shop has the same level of customer traffic at 23,000 customers per year, but the digital sign has a changing message, so instead of seeing one message through their visit to the store during lunch the customers see and remember two messages. Using the same ratio of impression effectiveness you’d have only one in ten customers receiving impressions, but now they receive two, so instead of 2,300 impressions you now have 4,600. The $3,000 investment can now be divided by the 4,600 impressions and you get a cost per impression of $0.65. In this scenario, the addition of a digital signage system has provided a reduced cost-per-impression of 32% for this sandwich shop. This simple calculation ignores some of the other benefits of digital signage systems such as the ability to vary a message more often and the proven perception of customers that their wait time is reduced when they have something to watch. The ability to convey widget information such as weather, news, traffic, sports scores, and amber alerts is yet another benefit to the store’s customers. What is particularly compelling is the ability to focus digital signage advertising on certain high-margin products that the sandwich shop wants to sell such as the daily specials or fountain sodas. There have been some great examples of companies using digital signage systems combined with mobile games, so that shoppers interact with the digital sign using their mobile device.

Let’s look at the economics from the standpoint of the signage and graphics producer. The sandwich shop was buying $200 worth of signs per month which, according to InfoTrends research may be selling at a profit of 15%. That puts $30 worth of profit into the PSP’s pocket. Now, the digital sign system, if it were sold by the sign company probably doesn’t have much more than a 3-5% mark-up in today’s market, so let’s say that the sale of the $3,000 system nets $120 in profits – that alone is worth 4 months of profit in the printed signage and graphics market. Now the signage and graphics producer should be selling a service to design and manage the content for that digital signage system, which is at the low-end of the market on average about $50 per month or $600 per year. Clearly, at that level the content has to be easy to make and manage because if the signage and graphics shop has to spend a lot of time on that aspect of the systems this is where profits will be lost. Signage and graphics companies should focus on this area from a management standpoint, because InfoTrends research in the printed signage and graphics market indicates that prepress and file prep, and the simple back-and-forth between customers, is often the biggest bottleneck in the wide-format graphics production workflow. So, since time is money, it is important to simplify and streamline the development of digital signage messaging as much as possible. For small signage and graphics producers InfoTrends would recommend development of a content calendar and some customer-centric processes that push as much of the responsibility for content such as product photos, logos, pricing, and nutritional information onto the customer as possible. For larger shops, or shops that have strong IT capabilities, the management of all of that kind of information could be added as an extra service which would increase that $50 per month fee. 

InfoTrends believes that we’re moving toward a world where retailers, restaurants, and shopping centers want to know more about who comes into their stores, what they do when they are in there, and how in-store messaging impacts buying decisions. As such, we expect the continuous development of technologies that link in-store signage with the shopper at the most individualized level. This has to be done right though, shoppers will resist if the attempt to personalize is too obvious or too aggressive. For example, if the shopper had been on-line to purchase a certain NFL team T-shirt for their boy, they don’t want to be deluged with advertising messages suggesting that they buy another T-shirt or that everything they buy should have that team logo on it (the way Facebook does). 

We’d also like to stress that digital signage systems are not always a replacement for printed signage but often printed signage and graphics can play a role in helping to draw the viewer’s eyes toward the digital sign. Retail stores may have a series of floor graphics that attempt to lead the viewer toward certain products or positions within the store or accent walls that are covered with graphics that reinforce overall brand messaging. The economics of digital signage from a cost-per-impression standpoint make a great deal of sense as they bring real value to the shop owner. Wide-format signage and graphics producers should have an opportunity to participate in delivering that value, but they have to position themselves as more than just “the printer”, but as a partner that understands what its customers are trying to communicate and accomplish.