Digital Signage: Overcoming Old Habits And Repositioning For Future Success

Based on findings through the third quarter of 2009 by The Nielsen Company -the same

business that collects and compiles TV ratings- I suggested the recession and decline in ad spending should motivate ad buyers to re-exam some long-held concepts about where best to spend their shrinking ad budgets and how they could benefit from redirecting a portion of their spending towards digital signage advertising.

Last month, Nielsen released its preliminary figures for all of 2009. They reveal an overall 9 percent reduction in advertising spending, or a decline of $11.6 billion from the 2008 total of $117 billion. With the fourth quarter of 2009 accounted for, the decline becomes the sixth consecutive quarterly drop in ad spending, albeit at a pace that has slowed for the past few quarters.

The latest figures also show that for the 10 categories where ad spending is the greatest outlays for advertising declined 9.5 percent in 2009 compared to the previous year. According to The Nielsen Company statistics, the top 10 ad categories and spending in each were:

Product Category - Jan-Dec 2009 - Jan-Dec 2008 - % Change

($ millions)

Automotive ---- $8,039.1 -- $10,491. -- (-)23.4%

Pharmaceutical -- $4,504.6 -- $4,424.6 -- 1.8%

QSR Restaurant -- $4,068.5 -- $4,014.9 -- 1.3%

Department Stores-$4,066.3 -- $3,956.0 -- 2.8%

Wireless Phone----$3,386.2 -- $3,689.0 -- (-)8.2%

Motion Picture----$3,368.4 -- $3,414.0 -- (-)1.3%

Auto Dealerships--$3,227.2 -- $4,188.6 -- (-)23.0%

Direct Response---$2,465.9.-- $2,582.9 -- (-)4.5%

Restaurants ----$1,557.6 -- $1,615.0 -- (-)3.6%

Furniture Stores--$1,437.5 -- $1,553.1 -- (-)7.4%

Total Top 10 ----$36,121.2 - $39,930.5 - (-)9.5%

The Nielsen figures show both car categories -the "automotive" category representing factories and dealer associations and the auto dealership category- saw the greatest decline. That's not surprising given the high degree of apprehension among many U.S. workers, who have themselves lost jobs, taken a temp job to make ends meet, or seen friends and family furloughed and laid off. Understandably, there is a reluctance to commit to years of car payments while job anxieties are running high for millions of workers.

In this environment, perhaps the marketing executives at car companies and dealerships would do well to reconsider their advertising strategy. Rather than focusing almost entirely on getting people to walk into their showrooms through TV, radio and newspaper ads, they may be better served by reallocating a portion of their existing ad budgets to communicate via digital signage with the people who already come in on a daily basis to have their vehicles serviced.

While traditional advertising is important, I contend it's equally important to communicate directly with existing customers who have a track record of supporting the dealership or brand and are ready to spend money. Digital signage is an effective tool to accomplish this on-premise messaging because it can speak right to the needs of people in the dealership and at the same time exploit the persuasive elements of video, audio, graphics, animation and text that are the staples of television. The same could be said for most of top 10 ad categories that experienced declines in 2009.

To be clear, I am not advocating any advertiser drop traditional media. They serve an important function. However, what I am suggesting is those controlling advertising budgets give serious consideration to how they allocate their dollars. Ignoring how advertising via digital signage can benefit an enterprise simply because it doesn't' fit neatly into a pre-existing media category with a long history is unwise.

A far smarter approach is to re-evaluate existing media budgets and open one's self to new opportunities. A serious appraisal will reveal digital signage is a worthy and effective ad candidate.

by: David Little

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