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Scala - Retail Signage
Scala creates digital signage solutions for all three retail network models--advertising, captive and outsourcing.
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Retail Digital Signage Models
Digital Signage Models for Retail
Retail digital signage networks have implications for both the retailer and the consumer package goods company (CPG). In certain instances, the considerations will be similar for both. For example, digital signage networks represent a new advertising medium available to retailers and the CPG industry. Digital signage networks impact upon the consumer shopping experience, the retailer's brand in-store, shopper loyalty, etc., on the other hand, represents issues that are mainly confronted by retailers. This article addresses the issues faced by both groups as advertisers as well as those considerations mainly of importance to retailers, as gatekeepers of the store. As it is the retailer who ultimately adopts or forgoes installation of digital signage networks in it stores, an understanding of the three business models being adopted by retailers is instructive.
Three different business models of digital signage networks are currently being embraced. Each has advantages and disadvantages to a retailer. These include the following:
Advertising Network Model: The generation of ad revenues is a major motivating factor for this system deployment. An incremental lift in retail sales is, of course, important as well. In this case, the system's cost, advertising sales and content creation are generally managed by a third-party on behalf of the retailer. Examples include Pharmacy TV in Warsaw, Poland and Imperial Oil (ESSO) service stations in Toronto, Canada. Ad revenue and airtime are divided between the retailer and the third-party provider. Variants on this model, such as in the case of Tesco TV and ASDA Live, reflect the retailer bearing the digital signage network's infrastructure cost, while working with third-party providers to sell advertising and produce content.- Captive Network Model: In this instance, the retail digital signage network is purchased and managed by a retailer without accepting third-party ads. Examples include Nike Town and Rabobank. A slight variant on this model, finds merchandising vendors assisting the retailer in the production of content, such as a segment on "how to", which is paid for by the CPG and may also contain brand promotional content. The generation of additional sales, control of the customer experience and of the messages delivered in-store are primary motivational factors for adopting this model of digital signage networks deployment.
- Outsource Network Model: Generation of advertising sales is not a primary motivator for retailers adopting this business model. This business model is characterized by portions of the system being controlled or managed by third-party vendors on behalf of a retailer. An example is Weis Market TV Network, where the retailer owns the system, and ad sales and content are managed by a third-party on behalf of the retailer.
With respect to digital signage networks as a new advertising medium, marketing spend decisions have been plagued by a lack of adequate methods to gauge their impact on consumer purchases. While the results from some promotional tools, such as coupons, may be easier to qualify than those of various advertising vehicles, such as advertising in newspaper and on television, the fact remains that marketing metrics have, to a great extent, failed to keep pace with technological advances. This issue is significant because of the dollars involved. Consider that for 2006, US advertising spending is projected at $280.6 billion, and worldwide spending is projected at $553.4 billion. In addition, as marketing channels continue to fragment, advertisers will seek new platforms to deliver their message.
Marketing professionals are charged with allocating communication dollars among five broad communication platforms. These include advertising, sale promotion, public relations, personal selling and direct marketing. Each of these promotional tools has a unique set of characteristics. Yet in the final analysis, the justification for such expenditures rests on having an impact on sales. However, in the majority of cases, the impact of such marketing investments is either unknown or, at best, determined at a later time. The inherent flaws in marketing measurement have been well documented in both the scholarly research and by the firms investing these marketing dollars.
An advertising medium is defined as one of the various mass media that can be employed to carry advertising messages to potential audiences or target markets for products, services, organizations, or ideas. The audience for these messages tends to be mass market in scope, with limited capabilities to segment the market. Ad-based digital signage networks are clearly capable of carrying messages, the issue is not one of being classified as a new media per se, but rather whether they are effective media for achieving targeted retail store-level marketing objectives. This is a function of whether digital signage networks can influence consumer-buying behavior in a measurable way relative to other media.
-source: Platt Retail Institute
Retail Digital Signage as a New Marketing Medium
Retail Digital Signage as a New Marketing Medium
Retail Digital Signage is defined a "the visual content displayed in a retail environment, delivered digitally through a centrally managed and controlled network". From a marketing perspective the Retail Digital Signage network must be integrated into the overall retail marketing strategy including: print, newspaper advertising, in-store printed materials, television advertising, etc. When the digital signage network is integrated into their marketing strategy the digital content displays the overall message intended for the store's products or services offerings. Considering this fundamental requirement the key benefits of Retail Digital Signage networks are summarized as follows:
- Retail Digital Signage messaging is dynamic, possessing the capability to display complex graphics and videos, resulting in attention garnering messages.
- Retail Digital Signage messages are capable of rapid deployment system-wide, store-wide or in a single store aisle, and can leverage specific regional and store conditions, such as customer demographics, weather conditions, promotions, educational content, and can further be fractionalized into day-parts.
- Retail Digital Signage can be centrally monitored, ensuring that system-wide, brand-compliant messages are deployed. This represents a major advantage over other forms of in-store communications, which are plagued with questions of store compliance.
- Retail Digital Signage can enhance customer service and improve store personnel productivity. Digital signage assists customers in locating the merchandise they are looking for in the store, and can provide in-depth information and product demonstrations to aid in the purchase decision.
- Retail Digital Signage can reduce in-store operating costs associated with graphics deployments and increase labor productivity relative to other types of signage. Retail Digital Signage eliminates the costs associated with printing, distributing and installing static signage. In addition, Retail Digital Signage may decrease store labor costs, while improving labor productivity. For example, the US Postal Service is experimenting with Retail Digital Signage to direct customers with simple service requirements to self-service options, and to educate customers while waiting in the lobby line about products and services to reduce time spent with a retail associate at the counter, thus improving its employee productivity.
- Retail Digital Signage is capable of timely and accurate measurement of a message's impact upon a consumer.
A practical illustration of these benefits, for example, is advanced by a financial institution which identified the purpose of adopting a Retail Digital Signage system as: "delivering compelling product messages to customers while creating a quick and far-reaching communication delivery source." The following objective were identified:
- Cross sell the customer while they are visiting the branch
- Decrease customer complaints regarding transaction wait times
- Improve turnaround time between conception and delivery
- Decrease printing costs of branch signage and rate fliers
- Effectively communicate bank messages and information to branch employees
- Provide turnkey marketing to branches
As a new in-store marketing medium, Retail Digital Signage possesses various key benefits:
- Retail Digital Signage eliminates the time-lag between consumer exposure to a message and the place of purchase
- Retail Digital Signage enabled technology possesses the ability to directly correlate the message to its sales impact
- The dynamic nature of Retail Digital Signage enhances its ability to make timely changes of messages in response to changing consumer and environmental factors.
--source: Platt Retail Institute
Eliminate the Time-Lag Between Consumer Message Exposure
Eliminate the Time Lag Between Consumer Message Exposure
Retail Digital Signage placement in-store eliminates the time lag between consumer exposure to a message and the ability to buy a product. As retail environments become more relevant elements in the marketing mix, Retail Digital Signage offers an advantageous method to influence consumer purchase behavior in the store.
Retail stores are being recognized as part of the marketing mix because they intersect the time and place where all elements of the sale - the consumer, the money, and the product - come together. According to Quelch and Cannon-Bonventre, marketing expenditures at the place of purchase are becoming significant because: they often prove more productive than advertising and promotion expenditures; sales support in-store is declining, which fosters greater interest by retailers in information at the place of purchase; and with changes in consumer shopping patterns and expectations, the place of purchase is becoming more important to consumer decision making. The relevance of these conclusions concerning the importance of retail in-store marketing becomes more significant when consideration is given to the fact that many consumer purchases are unplanned. The high incidence of unplanned purchases reflects the importance of in-store communications. Given the benefits of Retail Digital Signage as an in-store medium, it has the potential to dramatically affect purchase behavior.
-- source: Platt Retail Institute
Direct Correlation Between Message and Sales Impact
Direct Correlation Between Message and Sales Impact
Retail Digital Signage offers the ability to leverage technology to rapidly measure the impact of a message upon sales at the store-level. While retailers may also have an interest in measuring customer experience and customer loyalty, among other things, measurement of the correlation between the sales impact and Retail Digital Signage displayed messages can be achieved by integration into a retailer's legacy system. Contrast this to traditional mass media, where ad pricing is based upon cost per thousand, with no assurance of who is looking at the ad, and the measures are relative to the media content, such as a magazine, not the ads per se. Simply, Retail Digital Signage affords the opportunity to measure whether someone buys something after viewing and in-store message. In addition, Retail Digital Signage offers the ability to rapidly adjust in-store messages to the level of sales impact the message may or may not be exerting upon consumers. That is, if a message is not achieving its intended sales objective, it can quickly be altered. As such, Retail Digital Signage exhibits several of the same qualities associated with Internet advertising. Looking at POS data can continually assess a message's impact upon sales and, if desirable, the message can quickly be changed. Finally, Retail Digital Signage messages can rapidly adjust to other retailer specific factors, such as overstocks. Again, the effect the message is having at the store-level can rapidly be altered to achieve a desired result.
-source, Platt Retail Institute.
Enhancing the In-Store Marketing Environment
Enhancing the In-Store Marketing Environment
Past research has found a relationship between exposure to in-store marketing activities and consumer purchase behavior. From an in-store marketing perspective, a retailer may distinguish itself in a variety of ways, including product assortment, price and promotional strategy. Retail Digital Signage enhances a retailer's ability to communicate about any or all of these elements to customers in the store, as well as to day-part messages to appeal to specific customer segments and to adapt to local environmental conditions, such as changing weather patterns of the local girls' club bake sale.
For the most part, information relative to store merchandise is limited to product packaging, visual merchandising and store personnel. Retail Digital Signage offers the opportunity to expand the amount and type of information provided to a customer due to its dynamic nature. In addition, in-store promotional activities such as store coupons, graphics, displays, etc. are static in nature. Retail Digital Signage, on the other hand, is dynamic in nature, thus adaptable to changing market conditions, environmental factors, etc. Further, Retail Digital Signage messaging can be enhanced and varied to stress merchandise selection that is more susceptible to impulse purchase.
Inman, Ferraro and Winer determined that 59% of store purchases were unplanned, 30% were planned and that the remainder were either generally planned or brand switches. Expanding upon this, Inman's developmental model details the consumer in-store purchase decision-making process by identifying consumer-specific factors (i.e. deal proneness, household size, trips per week, age, compulsiveness, gender, purchase involvement, income, etc.), and shopping-specific factors, which can be affected by a retailer, were found to exert a greater average impact on in-store decision making than consumer-specific variables, which are not susceptible to retailer influence. The following factors, the order noted, most impacted the shopping-trip specific factors: number of aisles shopped, trip type, shipping party size, use of a list, and display type. According to Inman, retailers should "encourage consumers to shop as many aisles as possible and provide exposure to as many product categories and in-store displays as possible." Messages delivered by Retail Digital Signage should thus focus upon influencing shopping trip specific factors.
Accepting that significant portions of consumer purchases are impulse buys determined in the store, Retail Digital Signage delivered messages offer a compelling medium to advertisers. Further, current research supports the proposition that Retail Digital Signage influences consumer shopping behavior in the store. In the grocery store messages were found to have a 10% - 11% impact on sale over and above any other promotional activity that may have been occurring in the store during the test period.
-source: Platt Retail Institute
Retail Digital Signage Testing Methodologies
Retail Digital Signage Testing Methodologies
As mass markets continue to fragment and retail and consumer brands seek more targeted communication, the drive toward new, more precisely targeted and effective media becomes apparent. The ability to influence consumer behavior is the justification for a Retail Digital Signage network. In this section, various methods to measure the influence and to test the effectiveness of a retail digital signage system are explored.
The effectiveness of a digital signage system quantifies the extent to which the goals of the deployment are being met. The evaluation process is somewhat easier when the expected benefits are tangible. For example, in the case of an advertising network model, the network's goals may be limited to generating advertising revenue and merchandise category lift. In this instance, the measurement of advertising revenue and sales impact is relatively straightforward. In the captive business model, the expected benefits from an implementation of a retail digital signage system may include direct benefits such as product trial, brand sales and the like, as well as indirect benefits associated with communicating about the brand and store image. As with all forms of media, communications that have a direct impact on purchase behavior are much more easily evaluated, while indirect effects are more elusive.
The process to assess the performance of a program can be divided into three parts. The first part consists of understanding a retailer's business strategy and understanding how a digital signage system enhances that strategy. In the application context, retailers may adopt digital signage systems for a variety of reasons including generating revenue from the store medium, improving sales, enhancing the customer experience and/or improving customer loyalty. These objectives form the basis for establishing the metrics that will be utilized to assess the effectiveness of the digital signage system that are consistent with the communication objectives. In the event that attaining more intangible goals is desired, such as enhancing the customer experience, then measures of customer impressions, store and product education, and/or brand perception should be established. If influencing customer loyalty is a desired goal of a retail digital signage system, then measures that involve the store/brand promise, product perceptions, and customer lifetime value should be considered. Once the measures are established, the final step in the evaluation process consists of data collection and analysis to assess the impact of digital signage on the measures of interest. Data sets can be gathered from a variety of sources such as POS data, through discussion groups, visual scans, video observations, and shopper interviews. Other data gathering methods currently under investigation include customer loyalty card usage, touch screen hits (if an interactive format is adopted), store personnel interviews, etc.
Testing methodologies will, to a great extent, be dependent upon the implementation stage of a project. That is, the measurement deployed will be influenced by the stage of a project's development. During the early phases of a deployment, where issues such as screen physical placement, credibility of the application, content, play list, etc. are being refined, more robust testing may be required. Once baseline measurement standards are established, the required measurement may be less intense. Notwithstanding, measurement may be desirable to confirm that system goals are being met during various segments of a project, such as coincident with a new promotional program.
As detailed below, five data sources can be leveraged. Suggestions are advanced regarding the number of test stores, testing period, etc. that will ideally be involved in a test. The actual test parameters should, in practice, be determined on a case-by-case basis. Other methods are becoming available as well, but have not, as of yet, been subject to empirical testing.
- Sales Analysis: Sales analysis provides the link between the message and its impact upon consumer shopping behavior. Ideally, 20 stores should be involved in testing during a trial phase; 10 enabled and 10 non-enabled. Analysis should begin four weeks prior to deployment to establish baseline statistics. The purpose in establishing these pre-deployment baseline numbers is to gauge product performance prior to screen deployment to filter the effects of seasonal fluctuations, product availability, and to otherwise generate inert sales figures for use in the controlled testing phase. The test should run 24 weeks during the trial phase. The output from this testing will assist a retailer in determining the impact of Retail Digital Signage enabled stores when compared to non-enabled stores, aid in making product assortment decisions and merchandise shelf allocations, as well as assess promotional and cross-promotional impact, and lead to an understanding shopping patterns, etc.
Discussion Groups: Discussion groups are utilized to determine shopper awareness of the digital signage system and the messages; message relevance to shopper needs and expectations and message recall; and shopper utilization of content, i.e., calls to action, etc. Generally, six to eight shoppers from Retail Digital Signage enabled stores are interviewed three times during a six-month trial period to determine shopper perception of a digital signage installation. The output from these discussions will assist the retailer in determining if customers are aware of the screens, if the screen placement is accurate, and if messages displayed are significant and relevant.
- Visual Scans: Visual scans will lead to a qualitative understanding of store traffic patterns; conversion of screen observation to sales; length of exposure and number of messages viewed; and shopper field of vision. Ten to 100 shoppers should be equipped with visual cameras to determine shopper field of vision as they shop a store. This testing occurs three times during a six-month trial period. The output from this will assist a retailer in determining shopper field of vision and net ratings. That is, what is actually being viewed.
- Video Observations: Video observations produce quantitative data relative to customer shopping behavior. Five to 10 video cameras are installed in one-to-three Retail Digital Signage enabled stores, capturing data over a two to seven day period three times during a six-month trial period. The output from this will assist a retailer in determining shopping store pathways and specific counts relative to store and aisles shopped. Information produced will include the following:
The number of shoppers entering the store by time of day/day of week. - Who is entering the store - gender/age/group size.
- Number of shoppers who pass the screens in different locations.
- Number of shoppers who glance at the screens.
- Number of shoppers who stop and look at the screens.
- Shopper Interviews: Shopper interviews will lead to an understanding of screen observation and recall, as well as message impact. 100 to 300 shoppers are interviewed three times during a six-month trial period. The output from this will assist a retailer in understanding shopper perceived behavior, which can be compared with quantitative data to determine variances.
-source: Platt Retail Institute
Additional Information
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