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Narrowcasting: The Opportunity for Digital Signage and In-Store TV Networks

Market Overview

The digital signage industry consists of four broad components:

• Out-of-home promotional and advertising signage
• Informational signage
• A/V signage and projection equipment for conference rooms and other internal uses
• Digital screens used for command, control, and security applications

InfoTrends defines narrowcasting as the digital delivery of visual content through a network of displays in an out-of-home setting that is centrally managed and controlled. Narrowcast networks can be highly targeted because the audience is tightly defined by time, place, and activity. Network content can be for promotional, customer service, entertainment, and/or operational applications.

Depending on the type of network and application, an effective digital signage solution will be:

• Visually stimulating: Displays should be eye-catching with content that holds viewers’ attention
• Targeted: Content must be relevant to the customer, geography, time, and other factors as well as delivered at the point of purchase (e.g., store, doctor’s office)
• Dynamic: Content should be able to be changed quickly
• Interactive: Customers should be able to direct the content based on their interests

Integrated: Content should be linked to other information and systems
To examine this growing market, InfoTrends has released a study entitled, Narrowcasting: The Opportunity for Digital Signage and In-Store TV Networks. This is the third major study that InfoTrends has conducted on this dynamic market. The study provides detailed research, forecasts, and analysis on the commercial market for display technology and services.

Market Forecast

After struggling in the early years of its development, the business of networked digital displays in retail and other public spaces is now on the path to sustainable growth. At the end of 2006, the narrowcasting industry was valued at $1.1 billion with an installed base of 630,000 screens at 97,000 sites. Compared to the 2004 statistics, these numbers represent a CAGR (compound annual growth rate) of 56%.

This growth marks the first time that the narrowcasting industry has exceeded previous estimations and represents a significant turning point.

Figure 1: Narrowcasting Revenues, 2006 – 2011

In an increasingly connected world, decision-makers are gradually beginning to understanding the advantages of digital networks over printed signage – although printed signage will outnumber digital screens for many years to come. InfoTrends expects overall CAGRs of 18.5% for revenues, 8.9% for sites, and 11.9% for screens between 2006 and 2011. By 2011, total revenues are expected to reach $2.59 billion.

Key Study Findings

A new InfoTrends study indicates the typical respondent is using five different types of media, and printed signage and outdoor signs are the most common. Although few respondents are actually decreasing their use of any given media, the more traditional media is most likely to experience a decrease in usage, while wireless, electronic displays, and the Internet are most likely to experience significant increases in usage.

Indicative of a high level of satisfaction, of the 51 current users of networked digital displays or in-store TV, not a single one expected their usage over the next three years to decrease, and 80% expected it to increase. The mean expected increase over the three-year period was 82%, representing a projected CAGR of 22%, which could be overly optimistic. This supports our contention that existing users will be an important source of new revenue over the forecast period.

Figure 2: Expect Usage of Media to Increase or Decrease over Next Three Years

Retailers and brand managers want their promotional programs of any type to deliver sales lift and increase traffic, and they are becoming more confident that narrowcasting systems can deliver on that goal. Securing repeat customers is their secondary goal, while attaining ad revenues from such systems is considered relatively unimportant.

Finally, compared with the survey conducted in 2004, respondents in this most recent study were much less concerned about issues such as lack of measurement of ad program effectiveness, as the body of data supporting the effectiveness of narrowcasting systems continues to grow.

The preceding is an excerpt from InfoTrends’ study entitled “Narrowcasting: The Opportunity for Digital Signage and In-Store TV Networks”. To learn more about the study or to make a purchase, please contact Scott Phinney at +1 ext. 123 or .

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