“The education phase is over,” said Norman McLeod, Director, Market Research at InfoTrends, speaking on the opportunities, demand, and competitive landscape for the digital out-of-home market. InfoTrends published a landmark research report on the size and scope of the digital out-of-home market in 2004 called The North American Commercial Display Market For Networked Digital Signage. The report is often quoted today and will be updated in the second quarter of 2009.
“The Internet is the biggest competitor for advertising dollars with digital out-of-home media,” Mr. McLeod said. Other key points made during his presentation include the fact that the advertising-based business model is outperforming other network models. He pointed out that many digital out-of-home networks are falling below original projections regarding CPM rates.
According to study data, narrowcasting revenue is currently valued at $452 million. InfoTrends/CAP Ventures expects this market to experience a CAGR (Compound Annual Growth Rate) of over 20%, reaching $1.3 billion by 2009.
At the same time, however, the market sizing and forecast show that the largest single revenue component for this industry is and will continue to be external advertising revenues. An additional $161 million in advertising revenues were generated in 2004, and this amount is expected to increase at a CAGR of 40% to reach $857 million in 2009.
Figure 1: United States Narrowcasting Revenues, 2002 – 2009 ($Millions)
The Narrowcasting Advantage
Why narrowcasting? For one thing, a number of traditional channels are becoming less effective. Television audiences are fragmenting with the huge number of cable channels, and perhaps more seriously, remote controls with "mute" function and picture-in-picture capability enable more and more of the audience to skip or ignore the advertising. Daily newspaper readership is in decline, while the magazine audience is also fragmenting. Narrowcasting delivers the message to a known demographic group in a defined setting.
The most powerful of these settings is retail sites, as the message is being delivered to consumers who are in a purchasing mode. Narrowcasting systems are also found in a wide variety of settings, including:
Airports Retail bank branches Gas station forecourts ATMs Hotel, mall, and movie theatre public areas Tops of taxi cabs and interiors of buses Casinos
| - Elevators in high-rise office buildings
- Trucks and truck trailers
- Health practitioner offices
- Billboards
- Trade show signage
- Backdrops for political and stage and screen events
- Food halls and student unions in colleges
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Installation of a well-designed narrowcasting system enables reduction in the number of static printed signs. The potential savings in actual print costs are considerable in themselves, but the potential savings in deployment costs (program coordination, signage shipment, erection, compliance monitoring, and eventual dismantling and removal) are even greater. There are also compelling broad advantages to narrowcasting, such as:
Narrowcasting is sound-capable, which enhances the ability to capture the consumer's attention and deliver a memorable, high-impact message.
Narrowcasting offers a dynamic picture rather than static signage. Many studies have confirmed that moving images are far more eye-catching than static ones, and the structured survey confirms that retailers and advertisers are in full agreement with this concept.
Narrowcasting enables messages to be deployed more rapidly, changed more frequently, and managed more effectively.
Central control and monitoring has the capability (although not yet always effectively realized) to improve compliance while reducing the amount of time spent by local staff on signage/promotional deployments.
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