Content Rules: Digital Signage Isn't About Signs
The fact that digital signage is a booming market doesn't guarantee fat margins. Companies need to embrace a turnkey business model if they're going to succeed.
Some vendors have begun providing turnkey signage packages that include content, reducing the cost and risk that their channels would incur if they had to cobble together everything on their own. For example, LG's SuperSign Premier-s package includes 14 CNN news feeds, 100 stock photos, and more than 50 templates designed for various business verticals, such as corporate communications, finance, retail, and quick-serve restaurants.
LG says Premier-s is aimed at integrators that are new to digital signage and want to sell something that's prepackaged. After the sale, Premier-s also is supported entirely by LG rather than the integrator.
"It's designed to make it extremely simple for our channel partners to go out and buy a solution that works right out of the box and represents no long-term liability for them," says Jeff Dowell, LG's vice president of digital signage. "They make a little less margin–I can't say what it is–than they would if they did all of the integration themselves and were able to charge margins for a customized solution."
LG also positions Premier-s as a way for integrators to turn a profit in the small and medium business (SMB) market. "Experience has shown that it's very difficult for value-added resellers and integrators to make money in SMB on customized solutions," Dowell says. "Typically it's an awful lot of work to get all of the content streams and all of the other things to make a turnkey experience for the SMB and still be able to charge enough to make margins."
Another important benefit of turnkey packages, including those that integrators create themselves: It's tougher for clients to haggle over the price of hardware, where margins are already anorexic.
"The displays and even players are becoming a bit of a commodity," says Faville, who never puts line items in his signage bids. "I'm selling them the magic and voodoo," he says. "If you want to get content all over your buildings, we can do that. … Let me explain how. [But] everybody's smart enough with the Web that if I put in an NEC display and you Google it, I guarantee that it's gong to be cheaper than I could ever buy."
Almo's Taylor agrees. "If an integrator is selling by line items, they're going to lose. They're stuck in the '90s and won't be around for long because you can go to the Internet and look up all of that stuff and find somebody who's selling it inexpensively."
In other words, selling digital signage isn't the same as selling digitial signs. "It needs to be a solution," Taylor says. "If the integrator can throw in some advertising revenue that will help offset that cost, they can make a really compelling story to the end user."
Tim Kridel is a freelance technology writer, industry analyst, and frequent contributor to PRO AV.