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The North American Commercial Digital Display Market: The Narrowcasting Advantage

Introduction

In 2002, InfoTrends/CAP Ventures published Narrowcasting: The Opportunity for Networked Displays and In-Store TV, the first in-depth research report on the narrowcasting industry. Since publishing this landmark report, we have seen numerous companies entering or exiting the industry, significant advances in hardware and software, and a substantial improvement in the macro economy and advertising spending.

InfoTrends/CAP Ventures has updated and expanded the original narrowcasting study with new primary research, worldwide market forecast, and additional market segments.

The North American Commercial Digital Display Market provides technology vendors and service providers with critical information to support their product planning, marketing efforts, and ability to attract new capital investments. It contains insights and technology analysis that will be of great value to corporate IT professionals responsible for internal digital signage, displays, and related communications tools.

The study also provides retailers, other public space operators, brand managers, and advertising professionals with an in-depth understanding of the opportunities presented by this relatively new medium. In addition, it offers keys to a successful deployment as well and pitfalls to be avoided.

North American Narrowcasting Market

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:

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.

Impact on Digital Printing

In the study, InfoTrends/CAP Ventures conducted a sign audit among retailer participants. Their views are particularly important to the future of the narrowcasting and in-store TV vendors. The mean number of signs per retail location was 167; and nearly all of the signage was paper, cardboard or posterboard, wood, and metal. Printing and distributing signs is an expensive process, with mean spending of $3.2 million per year per company. At every size level, the annual cost of printed signage is a significant line item for stores.

Awareness of digital signage and what it can do has increased substantially in the past two years. The digitally printed signage market has recently slowed to approximately a 10% annual growth rate, falling from 30% in the mid-1990s. There are still many years of profitable growth for digitally printed signs, but they are unlikely to experience growth increases unless another major technology breakthrough emerges.

Narrowcasting is unique in that it can take “spending” away from traditional signage as well as other forms of media, such as television. In this respect, it has much more potential to draw from than other replacement technologies.

The preceding is an excerpt from InfoTrends/CAP Ventures’ study entitled The North American Commercial Digital Display Market. The complete document is available immediately. To learn more about the report or to make a purchase, please contact Alison Hipp at , ext. 126 or .