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Role call: sales and marketing

In the final part of his series, Bill Gerba explores the most crucial step of all - closing the sales that will allow you to monetize all those snazzy new displays.

October 23, 2005

The sales component of any digital signage firm can make or break the whole organization. From my own personal experience, and from speaking with others in the industry, it would seem that there are quite a few digital signage newcomers that don't always recognize that. It's almost as if we have a "build it and they will come" mystique surrounding our industry, and that can be a dangerous thing for those firms who don't understand the significant sales challenges that must be overcome when deploying a network of digital signs into retail venues.

While digital signage installations are still somewhat novel, and they can certainly up the wow-factor of retail venues, it takes an ongoing sales effort to make those screens profitable and keep them loaded full of eye-catching content and advertisements. Even the best content can become stale if it's not kept up to date, eventually drawing only a zombie-like stare from employees and passing customers inoculated against its repetitive messages. And without viewership, of course, there is no audience to monetize.

With this in mind, there are essentially three phases to the digital signage sales process: consignment of the screens to the retail venue (whether that involves sale or lease of the screens themselves, or renting space from the retailer), pre-sales of ads before the network is installed, and ongoing ad sales for the installed network. Each of these is critical to the successful deployment and ongoing utilization of digital signage as a significant part of a retail point-of-purchase advertising program.

I've been using the ad-supported retail model of digital signage as an example for two reasons: First, it is one of the most challenging models to implement successfully due to the numerous and complex sales arrangements that need to be completed even before the network is deployed. Second, recent experiences suggest that it is the most popular form of network being deployed these days, and there have been several high-profile successes and failures to point to. That having been said, the three segments of the sales cycle outlined below will certainly apply at least in part to other common narrowcasting models. So without further ado, let's talk about the venue sale.

The Venue Sale

The obvious start of a digital signage sales process is to locate a venue (or preferably, a chain of venues) that is willing to host the digital signs. As noted in last week's article about business and finance, there are several options for selling digital signage products and services into a retail chain. From the retailer's perspective, the most desirable setup forces the digital signage firm to take all of the financial risk by purchasing and installing the screens, players and network infrastructure at no cost to the retailer. Of course, many digital signage firms don't relish this idea, as there is a significant capital outlay involved, and the equipment is deployed in such a way that it would be costly and difficult to remove it if necessary. Consequently, digital signage firms usually prefer to share the risk with the retailer by having them lease or purchase at least some portion of the required equipment and services. This actually accomplishes two things: First, as mentioned, it offloads some of the risk from the digital signage shop. Second, in doing so, it requires the retailer to both literally and figuratively "buy in" to the program. Given this financial exposure, the retailer becomes more compelled to assist with initial deployment, ongoing operations, and perhaps even ad sales.

Pre-Deployment Ad Sales

The classic chicken-and-egg problem in the digital signage industry is this: how do you convince a retailer of a digital signage network's value without pre-selling ads on the screens, and how do you attract advertisers without having a fully deployed network? For some firms, the creation of a new network can piggyback on the success of an existing network.

Let's assume that your digital signage shop has decided that it will focus on a vertical market like grocery stores, for example. In this scenario, once you've deployed a network of signs into chain "A" and signed on advertisers, it's relatively easy to transition the same advertisers (or their competitors) onto a new network at chain "B." Of course, this is assuming that your advertisers have seen some benefits during the course of running their ads on the chain "A" network.

However, that isn't too helpful to a traditional media company starting its first network, or to any firm working in a market where the value of digital signage is still unproven. In these cases, we've seen the best success when the digital signage firm partners with another company that already has experience selling ads in the target industry. So, for example, a digital signage company preparing a nationwide network for florists might partner with a media placement agency that serves the floral industry. Alternatively, the digital signage firm could partner with one of the target industry's trade publications to gain access to its advertisers. And, of course, if the retail venue views the digital signage network as a partnership opportunity, they will hopefully be willing to help in the ad sales arena as well, either by diverting some portion of their cooperative marketing budget into digital signage content creation, or by giving the digital signage firm access to their base of product manufacturers and advertising/marketing agencies. In the latter case, even something as simple as a letter to vendors that endorses the digital signage network can make a big difference in streamlining the ad sales process.

Ongoing Ad Sales

In a perfect world, the launch of your signage network would also mean that your digital signage firm essentially becomes self-sustaining - with every ad slot pre-sold to the same advertisers over and over again. Unfortunately, it's not usually that simple. New advertisers will want to purchase space, the host location may want to run spots for its own branding and marketing purposes, existing advertisers will want to add seasonal promotions or focus their ads on certain geographic markets, and some may find that digital signage as a medium doesn't boost sales as much as they had hoped. Thus, a digital signage firm (and its partners) must continue to book and sell advertising time for the life of the network.

There are a few things that can make this labor-intensive task slightly less so. First and foremost, make sure you put together your rate card before you sell your advertising. If you plan to offer discounts or special offers (e.g. $200/ad/month, discount to $150 with 12-month purchase), clearly outline them ahead of time. Similarly, while it may be tempting to give away ad spots to fill out your network and drum up goodwill with prospective advertising clients (especially prior to deployment or during the first few months afterward) this sets a bad precedent and should also be avoided. If you must incentivize initial ad purchases with discounts, make sure that they are coupled in with additional spots at your regular price (e.g. "first two months free with 12 month commitment").

Finally, as I mentioned in last week's article, if your ad rates or commitments are predicated on a measured return on investment, clearly define how this metric is calculated, who is responsible for providing data, and who is responsible for auditing it.

In Conclusion...

Throughout the course of this series, I've written largely about the different functional units of a digital signage company as if they were self-sufficient entities, each facing its own isolated tasks and problems. But as the titles of these articles have suggested, a digital signage company, like any other organization, relies on a skilled interdisciplinary workforce and a lot of teamwork. The functional groups outlined over the past five weeks don't have black-and-white boundaries, nor can they work properly in a vacuum. Financing will affect sales. Technology will affect merchandising. And store buy-in will affect everything. So whether you're building your own team from the ground up or are looking to bolster an existing operation, be sure to put a strong infrastructure in place to foster inter-group communication and open information sharing.

I'll conclude with this final thought: Even with the success of retail networks like Wal-Mart TV and Tesco TV and new announcements from Kroger and others, there are still many retailers who have yet to deploy their first digital sign. Clearly, this opportunity is a key driver for growth in the digital signage industry, at least on paper. So regardless of which role your company might play in the value chain, assembling the right team will help you get to market faster, monetize your audience, and deliver strong ROI to advertisers and host locations. And with each successful network that is deployed, our industry gets a little bit closer to becoming an accepted medium within the larger realm of in-store marketing.

About the author

Bill Gerba is co-founder and CEO of WireSpring Technologies, a provider of software for digital signage and kiosk networks. He is very active in the self-service and narrowcasting industries, and maintains the Dynamic Digital Signage and Interactive Kiosks Journal.