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UNIVERSITY OF EDINBURGH

Analysis of the growth and development of digital

signage and in-store TV networks

By

Ilana Taub

Dissertation presented for Honours Degree in Business Studies2007/2008

Dissertation Advisor: Ashley Lloyd

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ACKNOWLEDGEMENTS

I would like to thank Miriam Taub and Jean-Charles Figoni for sparking my interest in this newmedium and for providing a continuous source of information and encouragement throughout

this process.

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ABSTRACT

The advertising industry is one that has changed considerably in the past few decades. At

the root of this evolution lies a changing environment which has witnessed transformations in

demographics, lifestyles, consumer needs and consumer buying habits. These recent changes

have considerably altered the ways through which companies communicate with their

consumers. Marketers and advertisers have had to develop new efficient ways of reaching

increasingly less responsive consumers by adopting more targeted approaches. The last fifty

years have also seen incredible developments in the media, the technology that consumers use

daily, and in the way that they interact with them. This combination has led to advertisers and

marketers to use innovative ways in advertising products and services.

As a relatively young industry generating large profits, the digital signage industry

provides marketers and advertisers the ability to tailor specific messages to reach consumers at a

specific time in a specific location. This technology can fulfil many purposes from promoting

products and services, enhancing customer experience, presenting information and producing an

increase in sales. To examine whether this medium can efficiently meet its objectives, a review

of past research is undertaken. Studies on out of home advertising and point of purchase

advertising demonstrate that the potential of these two channels in raising brand awareness and

producing an increase in sales. An examination of examples of where digital signage networks

have been deployed is then provided to contextualise this new communication channel. The

research finds that there remain some unresolved issues for digital signage, mainly in

demonstrating how consumers interact with the medium and in providing concrete evidence of

its return on investment. Past literature and the evidence provided in the cases demonstrate the

medium’s efficiency as an advertising medium and its potential to develop into a significant

industry.

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TABLE OF CONTENTS

TITLE PAGE

ACKNOWLEDGMENTS

ABSTRACT

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION 5CHAPTER 2: DIGITAL SIGNAGE – A NEW COMMUNICATION CHANNEL 72.0 Definition 72.1 Key Market Segments 72.3 Technology Requirements 72.4 Digital Signage Applications 8CHAPTER 3: LITERATURE REVIEW 113.0 Out of Home Advertising 113.1 Point of Purchase Advertising 123.2 Growth and Development of Digital Signage 15

3.2.0 The decline of television advertising 163.2.1 Sophisticated and empowered consumers 203.2.2 Technology and media proliferation 22

3.3 Literature Review Conclusion 23CHAPTER 4: DIGITAL SIGNAGE IN PRACTICE 244.0 “The Onspot Digital Advertising Concept in Simon Malls” 244.1 Tesco and in-store TVs 274.2 Pinnington and Edlerfield’ study (2005) 29CHAPTER 5: CASE STUDY – IDKLIC 315.0 Company Overview 31

5.0.0 Business model 315.0.1 Content 32

5.1 Industry Overview 345.1.0 Pharmaceutical industry 345.2.0 Belgian advertising industry 35

5.2 iDklic’s digital signage solutions 355.3 Consumer Response to In-Store TV Networks in a Belgian Pharmacy 365.4 Pharmaceutical Companies’ Response to iDklic’s Digital Signage Networks 375.5 Conclusion 40CHAPTER 6: EVALUATION OF DIGITAL SIGNAGE AND IN-STORE TV NETWORKS 41REFERENCES 44BIBLIOGRAPHY 47APPENDICES 49

1. Digital Signage Business Models 492. Additional iDklic information 49

a. Company information 49b. Interview with Jean-Charles Figoni 49

3. Consumers response to in-store TV networks in a Belgian pharmacy 534. Pharmaceutical companies’ response to iDklic’s digital signage networks 56

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CHAPTER 1: INTRODUCTION

The advertising industry is one that has changed considerably in the past few decades. At

the root of this evolution lies a changing environment which has witnessed transformations in

demographics, lifestyles, consumer needs and consumer buying habits. This had led to marketers

having to deal with more fragmented consumers and markets, and to be increasingly precise in

targeting specific groups. The development of mass media which occurred in the past fifty years

have enabled advertising to become widespread, coming in any form and present almost

anywhere. Global advertising expenditures are expected to reach $653.8 billion in 2008,

representing a worldwide growth of 4.6% from 2007 (Coen 2007). While it is expected that the

global advertising expenditure will continue to increase with a general growing economy, the

share of investment for different media is predicted to change significantly. Today, marketers

and advertisers need to constantly adapt and develop new efficient ways of reaching increasingly

less responsive consumers. Recent figures on advertising spending demonstrate that while

television advertising remains the medium with the largest investment, marketers are

increasingly turning to other media to reach consumers (Initiative Special Report 2006;

ZenithOptimedia 2007).

Digital signage, a branch of advertising whereby digital content is displayed on in-store

TV networks, is becoming recognised as a valuable channel for marketers. As identified by the

North American Commercial Digital Display Market Study (Hayes 2004), one of the earliest

developments of digital signage present in research was seen in American airports. The CNN

airport network was created twelve years ago as a network broadcasting a “customized blend

from standard CNN programming with emphasis on breaking news, travel, sports, weather and

personal fashion.” (Hayes 2004: 30) At this day, the successful network contains around 3000

screens at 1800 gates in 39 U.S.A airports. It is has been predicted that the digital signage

industry and the point of purchase advertising industry will continue to grow and to gain

importance within marketing campaigns. Frost and Sullivan (2005) estimated that the size of the

North American Digital Signage Advertising Market based on advertising revenues from digital

signage networks reached $102.5 million in 2004 and would grow to reach $3.7 billion in 2011,

representing a compound annual growth rate of 67.12%.

This dissertation will fully assess the potential of digital signage as an advertising

medium. In order to do so, chapters two and three will examine its objectives and the factors that

encouraged its development, as well as reviewing literature out of home advertising and point of

purchase advertising. Chapter four will contextualize the growth of this industry by analyzing

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cases where digital signage networks have been deployed, accompanied by a study assessing

whether in-store TV networks can improve customer loyalty. An in-depth examination of iDklic,

a small Belgian company delivering digital signage solutions to pharmacies, will be carried out

in chapter five. The concluding chapter will evaluate the effectiveness of this new

communication channel by contrasting its aims with the evidence discussed in the previous

chapters.

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CHAPTER 2: DIGITAL SIGNAGE – A NEW COMMUNICATION CHANNEL

2.0 Definition

Digital signage is the “digital delivery of visual content through a network of displays in an out-of-home

setting that is centrally managed and controlled” (Hayes 2004: 8).

Digital signage can be used for a variety of purposes from promoting products and services, enhancing

customer experience, providing information, brand building and increasing customer loyalty.

2.1 Key Market Segments

Digital signage is present in the following market segments:

- Retail: digital signage networks have been deployed in supermarkets, shopping malls, car

dealerships, pharmacies, specialty stores – these are mostly for promotional purposes.

- Hospitality: networks have also been deployed in hotels, restaurants, cinemas to entertain

customers and provide establishment information.

- Services: financial services, health services such as doctors and nurseries – to inform

consumers.

- Other public spaces: airports, train stations, shopping malls where customers are

informed of opening times, travel times, promotions or entertained with programmes

such as weather and news channels.

2.3 Technology Requirements

Due to its extensive technology requirements, digital signage is a communication channel that

requires high initial investments. Digital signage could not have been developed without the

recent technological advances and media developments. All digital signage solutions differ as do

the business models1 used by the various players in the industry. Below are outlined the key

technology requirements for digital signage (may differ with different examples/cases):

• LCD or Plasma screen

- The amount of screens required will depend on the scale of the project. In some

establishments, one screen may prove to be sufficient whereas in more public

areas, such as supermarkets or shopping malls, a larger number of screens will be

used.

1 See appendix 1 for further explanations on the different business models in use.

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- Screens need to be placed strategically to attract the consumer’s attention.

• Display management computer/site

- Content will be broadcasted to the various screens from this display management

computer or site.

• Broadcasting software

• Decoder (depending on type of screen)

- Some screens may have an integrated decoder which will enable content to be

broadcasted; other screens will require a separate decoder (resembling a TV

decoder)

• Manager/designer computer/site

- At this station, the content is created using software such as photoshop, illustrator

and flash.

• High speed internet/ADSL internet connection

- To send content from the display management site to the screens

2.4 Digital Signage Applications

Advertising can be defined as “any paid form of non-personal presentation and

promotion ideas, goods or services by an identified sponsor. It can be a cost-effective way to

disseminate messages, whether to build brand preference or to educate people” (Kotler and

Keller 2006: 568) Falling under the promotional part of the marketing mix, advertising can have

many purposes from promoting special offers, introducing a new brand or product, to presenting

a product’s new features. Kotler and Keller (2006) identify four types of advertising. The first

type is information advertising which promotes brands, products service and strives at increasing

consumers’ knowledge of these elements. Persuasive advertising pushes to stimulate the act of

purchase by creating a preference and convincing the consumer that he/she must buy that

product or service. Reminder advertising acts as a simple reminder to the customer to trigger

purchase while reinforcement advertising aims at convincing consumers that they have made the

right decision in purchasing a particular brand. In recent years, advertising has become less

efficient at reaching consumers due to increasing amount of advertising clutter, the introduction

of new medium such as Interactive Digital TV which can enable viewers to skip commercials as

they please, and consumer’s increasing power in interacting with advertising messages. Digital

signage has the potential to accomplish all of the advertising objectives mentioned above and as

an alternative new medium, it has the potential to reach an audience in a cost efficient dynamic

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manner. There are many objectives that both advertisers and retailers/sellers aim to achieve when

investing in digital signage networks. Both for advertisers and retailers, the most prominent

objective will be to increase sales. This section will review digital signage’s various objectives

and the value this media channel can bring to marketers, retailers and consumers.

With the increasing use of internet shopping (Lawrence and Clark 2007), the

fragmentation of consumer needs and the increasing number of outlets where consumers can

obtain the products they are looking for, it is important for retailers to create a shopping

environment which stands out from competitors and which will make the consumer loyal to that

brand or establishment. In-store communications have traditionally relied on promotional and

advertising tactics but an increasing importance is being place on the brand and the experience

consumers perceive. Creating an ‘experience’ for the consumer will transmit not just information

about a product or service but will aim at portraying the brand as a whole and what is stands for.

In their paper on “Managing Media and Advertising Change with Integrated Marketing”, Calder

and Malthouse (2005) suggest that integrated marketing should “define how the consumer

experiences the product” and that an advertisement should not “merely tell consumers about the

brand” but should “vicariously let the consumer experience the brand” (2005: 357). Calder and

Malthouse see media not just “as a passing vehicle” but as a “media context” (2005: 358) which

can engage the consumer and create an experience. In-store TV networks aim to create an

experience by engaging consumers, keeping them up to date with relevant information, and

creating a particular atmosphere in the store. Nike’s deployment of in-store TV networks in

Niketown stores has produced a store atmosphere where consumers are shown how the brand is

to be worn - the content fashions the clothes and efficiently creates a story behind the brand.

Information and persuasive advertising, two of the four types of advertising identified by Kotler

and Keller (2006), strive to promote brands, products or services and to create a preference

which will lead to particular purchase. Marketers and advertisers have long recognised the power

of advertising at the point of purchase, having done so with extensive advertising displays. The

deployment of in-store TV networks will aim to produce an increase in sales by advertising

promotions in stores or by encouraging consumers to choose a particular product or brand.

Despite digital signage being predominantly used to produce an increase in sales in retail,

it can also fulfil different purposes in non-retail environments. For instance, in public spaces or

in hospitality settings, digital signage can provide establishment information or entertain

consumers when they are waiting for something. For example, in a doctor’s waiting room, a

screen can provide health information as well as promoting certain products. Although this

cannot be considered point of purchase advertising, the screen can encourage the patient to

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discuss products with his/her doctor and ultimately influence him in future purchasing decisions.

Installing screens in train stations or airports where consumers have to wait can improve their

customers’ waiting experience by providing them relevant information and by entertaining them

with unrelated information or programmes. While these objectives are not directly linked to

producing an increase in sales, they will aim to strengthen customer loyalty thereby encouraging

customers to return to that establishment or location.

As will be discussed extensively in the literature review, consumer fragmentation has

contributed to the development of digital signage. In our increasingly fragmented consumerist

society, it is important for marketers and advertisers to efficiently target their consumers. Digital

signage aims to attain that objective by delivering specific messages in a quantifiable manner.

The technology’s components enable advertisers to target specific customers in specific locations

at specific times. The content displayed on the screen can be changed from a distant location as

often as required. For advertisers, this offers flexibility in targeting messages according to factors

relevant to the purchasing decisions. For example, in advertising medications in pharmacies, the

messages will be changed flexibly according to the time of year. The technology also allows

local targeting whereby advertising messages can be customised and adjusted for different sites.

For instance, in a post office in-store TV network, the content will be adjusted according to the

location of the post office presenting different location-specific information. As consumers are

diversifying and harder to reach, digital signage and particularly in-store TV networks allow

advertisers to target consumers at the point of purchase - thus influencing them directly at the

place where it could have the largest impact. Digital signage combines the “emotional benefits of

TV advertising while engaging consumers at a time when they are often actively seeking

inspiration and are the most pre-disposed to act on impulse” (Anstey 2006: 53). The

effectiveness of point of purchase advertising will be further discussed in the following chapters.

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CHAPTER 3: LITERATURE REVIEW

3.0 Out of Home Advertising

While out of home advertising is not a new medium - advertising that reaches consumers

out of their homes has been around for a long time - the avenues through which it is being

delivered are constantly diversifying themselves. Often called the “15 second sell” (Kotler and

Keller 2006: 23), out of home advertising can come in many shapes and forms, and can be seen

in supermarkets, on street corners, on public transportation, in doctor’s waiting rooms, in post

offices, in pharmacies and so on. As it can target consumers everywhere while they are outside

their homes, outdoor advertising offers marketers many opportunities. The out of home

advertising industry is growing: the worldwide outdoor expenditure was estimated at $25.5

billion in 2007 (ZenithOptimedia 2007). In the UK in 1998, outdoor advertising was used by

83% of the top 100 advertising agencies – this number increased to 95% by 2006. Moreover,

since 1998, the revenue generated in the UK from this type of advertising grew by 66% reaching

£932.5 million (Outdoor Advertising Association of Great Britain 2007). As the use of this

medium continues to grow, it is necessary to assess its effectiveness: does out of home

advertising work? Does it increase brand awareness or product awareness and what impact does

it have on sales? A number of studies have investigated the effectiveness of outdoor advertising

but it remains difficult to evaluate. The variety of different uses this medium has and its nature

whereby consumers experience the advertising message while they are ‘on the go’ make it hard

to measure. A billboard on the side of the road is likely to have a different impact than

advertisement displayed on a small screen in a taxi – in the latter, consumers will be much more

exposed to the media and will be more likely to welcome and notice entertainment as they are

sitting through their journey. The following section will discuss studies that have examined

outdoor advertising.

Wendell Hewett’s study (1972) investigated the effectiveness of billboard advertising by

displaying 100 billboards in a “standard statistical metropolitan area” (1972: 29) on which was

displayed the question “Who was the 23rd President?” Before the billboards were put up, only

.57% of the 340 respondents were able to answer the question. Five weeks after the billboards

were installed, 7.7% of the respondents were able to answer the question. More interestingly,

when respondents were asked how they knew the answer to the question, many said they had

seen the billboard and researched the answer. A last sample was taken two weeks later, the

billboard also having been changed to include the question and the answer – the figure went up

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to 35.6%. While this study suggests that people’s awareness of a product or service would go up

by 35% after being exposed to billboard advertising, Hewett points out limitations in the study.

Amongst other limitations, he discusses the “curiosity-creating” aspect of the question – not all

advertisements for products and services would be as intriguing thus reducing the impact they

have. Bhargava and Donthu’s study on “Sales Response to Outdoor Advertising” (1999)

presented similar results to Hewett’s study by investigating different aspects of sales response to

out of home advertising. Bhargava and Donthu used thirty billboards across a medium-size city

in North America to attract visitors to a botanical garden which had recently complained of a

decline in the number of visitors and thus of sales. The billboards were present for four weeks in

different locations in the city, some including a promotional message offering free coffee.

Bhargava and Donthu monitored the botanical garden’s sales and asked visitors to point out on a

map where they lived – doing this instead of asking if they had seen the billboard prevented any

biased recall2. The findings indicated “an average daily attendance increase of 58% from the

previous year’s level during the advertising period” (1999: 11) and a monthly average attendance

increase of 64%. Furthermore, by examining the zip codes of the customers before and after the

campaign, the study found that up to 70% of the customers came from locations where the

billboards had been put up. The advertising campaign was successful in increasing sales. Both

Hewett and Bhargava and Donthu’s studies demonstrated that outdoor advertising can increase

consumer awareness and can produce an increase in sales. Nevertheless, it is important to note

that due to the nature of both campaigns and any out of home advertising campaign, results can

be influenced by the difficult to control external factors such as word-of-mouth or multiple

exposures to the medium. Outdoor advertising provides advertisers with an opportunity to create

awareness of a certain product or service by targeting consumers as soon they leave their homes.

Point of purchase advertising is a particular type of outdoor advertising which can target the

consumer where he is most likely to purchase a product or service.

3.1 Point of Purchase Advertising

Point of Purchase advertising falls under the out of home umbrella and has recently also

regained importance within the marketing mix. Like out of home advertising, the point of

purchase industry is growing – it is a $30 billion worldwide business and is growing at a 7% rate

2 Biased recall represents the idea that some individuals may recall seeing an advertisement on a certain media

despite seeing it on another. In media recall surveys, individuals will be more likely to credit television advertising,

followed by newspapers in second place – this usually being tied to time spent per media. (Bucci, 1983 as cited in

Bhargava and Donthu, 1999)

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annually (Liljenwall 2004). In the late nineties, Point-of-Purchase Advertising international

(POPAI) conducted a global investigation where they researched the “effectiveness of retail-

level point of purchase advertising by analyzing customer behaviour” (Liljenwall 2004: 184).

The 1995 POPAI Consumer Buying Habits Study found that on average, 70% of in-store

decisions are made at the point-of-purchase. This number rose to 75% for Europeans and up to

88% for Brazilians – thus demonstrating the potential impact advertising can have on the

consumer at the point of sale. There are numerous studies investigating point of purchase

advertising delivering mixed findings. This section will review, amongst others, the following

papers: “Sales effects of in-store advertising” by Woodside and Waddle (1975), “Consumer

behaviour at the point-of-purchase” by Ogden and Ogden (2004) and “Making in-store

advertising a measured medium” by Adams (2004).

Woodside and Waddle’s study of “Sales effects of in-store advertising” (1975) examined

whether point of purchase advertising or price specials would have a greater impact on sales. The

study was carried out in four supermarkets over four consecutive weeks and studied the effects

of advertising and price reductions on the sales of instant coffee. Woodside and Waddle used a

simple hand-written sign which was attached to the shelf of the product – this simple format was

used as they felt that “it was the least effective type which could possibly be used” (1975: 30) in

order to make the hypothesis indicating that point of purchase was more effective harder to

attain. A 20% price reduction was also imposed on the product; this was deemed significant

enough by consumers and retailers. Woodside and Waddle tested three hypotheses: the first one

examined whether point of purchase advertising would be more effective than a price reduction

in increasing sales of instant coffee; the second hypothesis checked whether consumers would

“buy more of a product at a reduced price than at the normal price with point of purchase

advertising present or absent in both instances” (1975: 30); while the third hypothesis examined

whether consumers would buy more of a product at a normal price with or without the presence

of point of purchase advertising. The findings indicated that consumers were more sensitive to

point of purchase advertising than to a price fluctuation. Consumers were more likely to

purchase instant coffee when its price was reduced when no point of purchase advertising was

used to catch their attention, this figure increased when a price reduction was used alongside the

advertisement. When the price remained normal, the sales increased more when point of

purchase advertising was also used. The findings suggested that point of purchase advertising

was a greater incentive to purchase the product than a price special alone. Woodside and

Waddle’s study concluded that “when the effectiveness of a crude point of purchase advertising

device was compared to a price special, the results indicated the superiority of the point of

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purchase advertising device in producing increased product sales” (1975: 33). While Woodside

and Waddle’s study was carried out in 1975, long before the use of different digital media, it

successfully demonstrates the effect of even the simplest point of purchase advertising display in

creating an increase in sales.

As studies have demonstrated that up to 70% of purchasing decisions are made once

customers enter the store (POPAI 1995), understanding consumers’ needs, wants and habits at

the point-of-purchase is essential to efficiently create tools to influence their behaviour. While

most consumers will have certain brands preferences for particular products or service, many of

them do not always remain loyal to their preferred brands – letting other factors influence their

purchase decisions. In examining consumer behaviour at the point of sale, Ogden and Ogden

(2004) investigated one of the key elements in understanding point of purchase advertising.

Odgen and Odgen’s paper discusses marketing research which has shown that consumers’

decisions are influenced by factors such as “anxiety level, physical surroundings, and whether or

not the shopper is alone” (2004: 23). Marketers need to understand why a purchase is being

made and what decision process happens from a consumer’s perspective. As stimulating

purchase and influencing the consumer is one of point of purchase advertising’s main objectives,

it is necessary to consider what influences a consumer’s purchasing decisions – this should be

done by investigating the consumer behaviour of the target market. “The effectiveness of point

of purchase advertising depends on understanding of the customer and the customer’s in-store

behaviour. With their understanding of retailing, point of purchase specialists can motivate and

provide meaningful cues to customers, resulting in increased sales” (2004:36).

Gerwin’s “Sales Promotion Planning” paper (2004) discusses point-of-purchase

advertising in relation to sales promotion planning and how they both relate to the marketing

mix. Advertising’s objectives can be summarized into building brand awareness, product or

service awareness, stimulating purchase, and creating customer loyalty or preference. Sales

promotions aim to directly stimulate purchase, its effects are or should be instantaneous.

Although advertising’s and sales promotions’ objectives may differ, it is interesting to link the

two and understand how they can work together. One of the most valuable points Gerwin makes

in his paper presents the idea of “push” and “pull” strategies. Gerwin argues that all types of

promotions fall “under two broad classifications—trade promotions and consumer promotions”

(Gerwin 2004: 58). Trade promotions are aimed at those responsible for deciding which products

or services a retail establishment will offer. They are directed at “pushing” a product or service

into a store or to be put on display. Consumer promotions are aimed at consumers and strive to

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convince the consumer to “pull” the product from the store – to make a purchase. Gerwin claims

that point of sale advertising connects both types of promotions where the consumer makes

purchasing decisions. “The trade incentives ensure that the right products are at the right place at

the right time and the consumer incentives deliver motivated buyers to purchase the products”

(Gerwin 2004: 59). This suggests that by displaying products and services in this efficient

manner, point-of-purchase advertising can deliver an increase in sales.

Recency theory represents the idea that “advertisements are more effective the closer the

consumer is to a decision” (Adams 2004: 208). While this may seem to be self-evident, it is

crucial in understanding point of purchase advertising. Erwin Ephron’s paper on “Recency

Planning” (1997) discusses “recency” and the way in which it has challenged traditional

advertising models. Advertising was previously thought to work by repetition – “frequency

generated awareness, created interest and aroused desire, and triggered action.” (1997: 61) This

view was challenged in the early 1990s when John Philip Jones (1995, as cited in Ephron 1997)

demonstrated that in fact, a single exposure to an advertisement could be strong enough to

influence which brand is purchased. Additionally, Jones suggested that the first exposure was far

more persuading than subsequent exposures. Jones also found that the impact of a certain

advertisement will decrease rapidly after the viewer has been exposed to it. Recency theory does

not suggest that frequency is irrelevant or that one exposure is enough. Instead, it argues that “in

the short term, additional exposures are often wasteful because the recipient is not likely to be in

the market” (Ephron 1997: 63). Targeting consumers at the right time has become crucial as they

enjoy greater control in filtering which messages are relevant to them and which are not. If

Recency theory is taken to be true, point of purchase advertising will be one of the most effective

types of advertising as the consumer’s exposure to a product or service will be directly in

conjunction to the purchase.

3.2 Growth and Development of Digital signage

Frost and Sullivan (2005) estimate that the size of the North American Digital Signage

Advertising Market based on advertising revenues from digital signage networks reached $102.5

million in 2004 and would grow to reach $3.7 billion in 2011, presenting an annual compound

growth of 67.12%. As a relatively young industry generating large revenues and with a potential

to generate even larger ones, it is important to understand the key drivers responsible for the

growth of the digital signage industry. Frost and Sullivan (2005) identify a number of reasons

leading to the development of digital signage. While the factors identified focus on the North

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American market, it is fair to say that most of them also apply to other parts of the world.

Amongst others, Frost and Sullivan (2005) discuss the decline of the impact of television

advertising; technological advances and a decrease in their costs; a growing interest in improving

the consumers’ shopping experiences as they become increasingly sophisticated and fragmented;

and increasing research demonstrating that point of purchase advertising can impact consumers

and boost sales.

The advertising industry as a whole has undergone a number of changes which have

considerably altered the way in which companies communicate with their consumers. Kiely

(1993 as cited in Kim, Han, Schutz 2004: 32) identified four main changes the advertising had

come across:

• “A decrease in the effect of advertising through the mass media due to more diversified

and fragmented social change”, also decreasing the effect of television advertising.

• The proliferation of communication channels due to technological advances, seen, for

instance in “the introduction of digital communication and other diversified multimedia”.

• The increase in the number of and types of advertising agencies “due to the

diversification and specialisation of the entire area of marketing communications.”

• The increasing expectations and demands of clients to receive concrete evidence on the

return of their advertising investments.

In the context of the overall changes the industry has experienced, a number of specific factors

are believed to have significantly contributed to the digital signage industry’s development.

3.2.0 The decline of television advertising

For a long time and to some extent still today, television advertising has been considered

the most powerful advertising medium “to reach the broadest spectrum of consumers” (Kotler

and Keller 2006: 570). Reaching consumers at home, while they are concentrating on the screen,

has been thought to be one of the most efficient ways to increase product and brand awareness.

As a number of factors are leading to a decline in its impact, it is inevitable that television

advertising will lose its rank as the top medium in the marketing mix. A number of researchers

have identified Interactive Digital TV (IDTV) as one of the key factors leading to the decline to

traditional television advertising. This section will discuss the changes that television advertising

is undergoing and will evaluate how it is contributing to the growth of other less traditional

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media and more particularly digital signage. The section will focus closely on two studies:

“Opportunities and Thresholds for Advertising on Interactive Digital TV: A View from

Advertising Professionals” by Cauberghe and Pelsmacker (2006) and “Adoption of Digital

Video Recorders and Advertising: Threats or Opportunities” by Fortunato and Windels (2005).

Cauberghe and Perlsmacker’s paper (2006), which sets out to investigate the attitudes and

expectations of advertisers in respect to the introduction of IDTV in Belgium, first explores the

various aspects of IDTV and then discusses its threats and opportunities. The paper identifies

IDTV “as a group of technologies that gives users the possibility to take control over their TV

experience, enabling interactivity with the content” (2006: 23). IDTV is composed of various

technologies such as Video on Demand, a Personal Video Recorder and an Electronic Program

guide – all of which provide users with extensive control over their TV experience and the

possibility to choose what they are watching – ultimately “threatening the traditional advertising

business model”(2006: 31). Cauberghe and Perlsmacker’s study was carried out in two separate

times: first before the launch of IDTV in Belgium and then a year later. Conducting the study in

this manner enabled the authors to investigate advertisers’ perceptions of IDTV and its impact

both before and after its implementation. The research method consisted of sending out web

surveys to marketing professionals and other staff of marketing and advertising agencies. The

findings demonstrated that not many respondents were aware of this technology or of its threats

to the advertising industry. Furthermore, the study showed that most respondents’ attitudes did

not significantly change before and after IDTV’s launch. Cauberghe and Perlsmacker also

identify a number of threats and opportunities brought by the introduction of IDTV. One of the

most important threats introduced by the authors is seen in the digitalization of TV giving

viewers a much wider range of TV channels, consequently leading to “a decrease in terms of

reach per channel” (O’Connor and Galvin 2001, as cited in Cauberghe and Perlsmacker 2006:

23). Viewers are also given the ability to pause programmes, record them, and thus watch them

whenever is most convenient. This trend is dangerous for advertisers as studies have shown that

viewers do enjoy skipping commercials. Forrester’s study (2005, as cited in Cauberghe and

Perlsmacker 2006) found that viewers, who owned a device with the ability to record a

programme and watch it at another time, skipped 88% of all advertisements. Furthermore, the

study found that over 50% of all IDTV users claimed that their favourite feature was the ability

to skip commercials. Considering the amounts that are invested into television advertising, it is

inevitable that marketers will continue to search for alternatives in reaching consumers.

Fortunato and Windels’ paper (2005) is similar to Caudeberghe and Perlsmacker’s study

as it focuses on understanding the reasons behind the increasing trend to use IDTV technologies

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and sets out to discuss the threats and opportunities IDTV introduces. While it does not carry out

primary research, the paper does offer some valuable points. The challenges IDTV introduces to

advertisers are further developed by the fact that TV rates are declining anyway and that

television advertising costs are reaching peak levels. A key step in using advertising to influence

consumer behaviour is for the consumer to notice the message – without being noticed, it is

impossible for the consumer to be influenced. The main threat of IDTV is its “potential to hinder

the advertised message being noticed” (2005: 140). It is crucial for advertisers to find efficient

ways to communicate their messages to reach consumers. The development of IDTV

technologies appears to have significantly influenced the traditional advertising models and

continues to do so. As the amount of users of such technologies is set to grow and continue to

grow in the future, it is advisable that advertisers adapt to this changing environment. A survey

of the advertising industry’s leaders found that 75% of them strongly believed that IDTV

technologies would have a “significant, even dramatic effect” on the importance of television

advertising and would continue to lead to a “growth of non-traditional ad formats, if not the

outright death of the 30 second spot” (AAF Survey of Industry Leaders on Advertising Trends

2004: 2). Figure 1 illustrates the differences in the share of total advertising spending by medium

between 2005 and 2009 while figure 2 illustrates similar findings for the UK between 2000 and

2007.

Share of global advertising spending by medium 2005-2009

0

5

10

15

20

25

30

35

40

45

Newspapers

Magazines

Television

Radio

Cinema

Outdoor

Internet

Medium

&

2005

2006

2007

2008

2009

Figure 1 – Source: ZenithOptimedia Press Release 2008

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Share of advertising spending by medium 2000-2007 (UK)

0

5

10

15

20

25

30

35

40

45

Radio Newspaper Magazine Cinema Outdoor Internet TV

Medium

%

2000

2007

Figure 2 – Source: Elms 2007

Figure 1 demonstrates the global changes in advertising spending that have occurred

since 2005 and the expected changes until 2009. Newspaper, magazine and radio advertising are

seen declining while television, outdoor and internet advertising are growing. Cinema

advertising remains relatively the same. As has been discussed above, television advertising is

facing many threats and the amounts invested in it are expected to further decline – it has been

estimated that television’s share of advertising expenditure will decrease by 0.3% in North

America and 0.5% in Europe in 2008. However, figure 1 portrays television’s share of

advertising spending to increase up until 2009 – this is due to advertising trends in other parts of

the world where television advertising remains the preferred medium as those markets “are more

dependent on fast market consumer goods advertisers” (ZenithOptimedia 2006: 2). Furthermore,

TV’s global share of advertising expenditures is predicted to be positively affected by the 2008

Beijing Olympics (ZenithOptimedia 2006: 2). Figure 2 demonstrates that in the UK, outdoor

and internet advertising are experiencing the highest growth while television advertising is

clearly declining. The changes that are occurring in the allocation by marketers of their

investments per year by medium are small but portray the trends that the advertising industry is

experiencing.

While many studies suggest that IDTV and similar technologies will lead to a significant

decrease in television advertising, it is important to note that some studies also identify a key

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number of opportunities. Cauberghe and Perlsmacker (2006) argue that as IDTV provides more

channels, consumers will segment themselves enabling advertisers to target advertisements in a

more efficient manner. Additionally, they propose the introduction of new advertising formats

such as the Dedicated Advertising Location (DAL) whereby consumers watch a short

advertisement followed by the option of accessing another page with more information regarding

the particular product or service advertised in the 30 second spot. Fortunato and Windels (2005)

suggest that IDTV might, in fact, improve the TV experience and act as a “wake-up call and lead

to advertisers looking more closely on how to communicate creatively” (2005: 142). With the

steady decline of prime time viewers, the increasing costs of advertisements to reaching a

shrinking audience with the introduction of new ad-skipping technologies all leading to a decline

in the effectiveness of traditional advertising medium, out-of-home advertising and specifically

digital signage offer advertisers and marketers alternative channels to target specific consumers.

3.2.1 Sophisticated and empowered consumers

In his article on “The concept of the marketing mix”, Neil Borden (1964) identifies a

number of market forces which “govern the mixing of marketing elements” (1964: 10). The first

force Borden recognizes is consumers’ buying behaviour, which he argues, is determined by

consumers’ buying and living habits, buying power and motivations behind purchasing. All these

factors can be seen to have influenced and changed consumer behaviour. With more disposable

income and a tendency to spend it on “leisure and luxuries” (Gritten 2007: 16), consumers have

become increasingly fickle, sophisticated and more demanding in the choices they make.

Purchasing decisions are based on a number of different factors including price, value,

knowledge, trends, societal influences and convenience. This has led to businesses to target both

their products and marketing campaigns in a more efficient way. Customer orientation “underlies

all good marketing all facets of good marketing planning from the design of products and

services to pricing, distribution and communication” (Murlhen 2004). Knowing your consumer

involves understanding what consumers desire, how they consume what they desire and more

importantly how they acquire these products and services. As consumers have become

fragmented and require individual needs, growing importance has been placed on targeting

consumers with timely information and advertising being tailored to their buying patterns and

preferences. While customizing content to specific customers at specific times in specific

locations is one of they key aspects digital signage, it has also acted as one of its enablers.

Modern consumers are given an array of possibilities in which they can choose what suits them

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best. They want products and services that are personalized to their individual needs. It is thus

essential for companies to market their products and services specifically to enable consumers to

have the most accurate and suited information. Digital signage has provided businesses the

opportunity to target and tailor messages accordingly, and to change these as often as required

when consumer habits or preferences change.

In the consumerist society we live in, individuals constantly are bombarded with

advertisements and marketing campaigns. This increasing amount of advertising has left many

consumers having a negative attitude toward advertising and the marketing industry (Ogden and

Odgen 2004). Advertising clutter has been a serious issue for many years within the industry

with increasing worries that consumers will reach a saturation point whereby they completely

dismiss advertisements. Boyee and Arens’ study (1995, as cited in Ogden and Ogden 2004)

found that on a daily basis, Americans are exposed up to an average of 500 commercial

messages, while in the UK, it has been suggested that this figure could go up to as far as 4000

messages a day (McDonald, 2003). Such figures evidently illustrate why consumers may feel

invaded by marketing techniques. Elliot and Speck’s (1998) paper on consumer perceptions of

advertising clutter set out to investigate consumers’ perceptions in various medium including

television, radio, magazine and yellow pages. The article defined advertising clutter as “one’s

belief that the amount of advertising in a medium is excessive” (Elliot and Speck 1997, as cited

Elliot and Speck 1998: 30). While perceptions may be erroneous, they are extremely significant

as they can reduce the impact of individual advertisements or increase advertisement avoidance3

(Elliot and Speck 1998). As it has become imperative for marketers to devise ways to reduce

advertising clutter perceived by consumers, digital signage has offered an efficient platform to

do so. Consumers perceive clutter when they see a media as intrusive. For instance, consumers

often identify TV advertising as the one with the highest clutter – placing it higher than yellow

pages which are, in fact, 100% advertising. This perception may be due to media differences

whereby advertising in yellow pages is the desired effect whereas in TV, it may seem unjustified.

Searching for information in catalogs, consumers will voluntarily expose themselves to the

advertising thus not feeling as invaded. Furthermore, consumers may feel less harassed if the

information provided to them is pertinent to their habits and needs. One of the main objectives of

digital signage is its ability to target consumers specifically – thus potentially reducing the

perception of advertising clutter. On the other hand, it is possible that consumers will see digital

signage as yet another media adding to the commercial clutter that they face on a daily basis. It is

3 Advertisement avoidance is “defined as all actions made by media users that differentially reduce their exposure to

advertisement content” (Speck and Elliot 1997, as cited in Ogden and Ogden 2004: 31).

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thus necessary that the content displayed on digital signage networks enhance consumers’

experience and benefit them in one way or another.

3.2.2 Technology and media proliferation

The last fifty years have seen incredible developments in the media and the technology

that consumers use daily and in the way they use them. Technology and media is used regularly

for entertainment, communication, a platform for self-expression, at work and to obtain

information. Televisions are present in almost every household and perform numerous tasks

from providing entertainment through video, music and radio, to interacting with individuals

with the use of the internet. The number of mobile phone users worldwide has increased from a

mere 200 million in the late 1990s to 1.6 billion in 2007 (Gitten 2007). Whether using television,

phones, computers or blackberries, the modern consumer is constantly exposed to media giving

marketers various options to reach consumers. Advertisers have to follow the increasing trends

and relationships consumers have created with media use, and exploit the opportunities they

offer.

Digital signage is one of the many alternatives adopted by advertisers and has been made

possible by the development of more efficient technologies and the reduction in costs of these

technologies. Despite this evolution, digital signage remains an expensive channel due to its

many technical components, as deploying such a network can be up to five times more expensive

than traditional static displays – thus potentially hindering some marketers from adopting this

technology and the industry from developing to its full potential. While the investment costs

remain high, the cost reductions and technological advances have nonetheless played a role in

enabling the industry to grow. Without these developments, creating a digital signage solution

would not be possible. The price of computers has steadily declined and computers become more

powerful thus enabling advertisers to control large networks from as little as one central hub

(Hayes 2004). The improvements in high-speed Internet connections and wireless connections

are also another important enabler of digital signage as they allow messages to be broadcasted on

the various screens from one central computer. Additionally, improvements have been made

with large LCD and plasma displays. The cost of a plasma screen dropped by 50% in a single

year (Hayes 2004) while their quality and the quality at which they broadcast has improved too.

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3. 3 Literature Review Conclusion

In order to fully understand the impact of out of home advertising and point of purchase

advertising, the literature review evaluated the effectiveness of these two media by examining

previous studies. The findings reveal that both advertising channels can produce an increase in

sales by raising consumers’ awareness of products and services. While these may have positive

implications for the further use of these channels for advertisers, it cannot be ignored that an

increase in sales or brand awareness can also and usually be attributed to other influencing

factors. Consumers are fickle and enjoy a growing amount of power in how they interact not

only with brands but with advertising as well, making “their media consumption patterns and

behaviour […] more difficult to read from a market research perspective” (Gritten 2007: 16)

This explosion of media consumption, together with technological advances, have enabled the

digital signage industry to develop and is expected to further encourage its growth.

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CHAPTER 4: DIGITAL SIGNAGE IN PRACTICE

To examine the effectiveness of digital signage, it is necessary to consider examples of

where in-store TV networks have been deployed and to evaluate the results these networks have

delivered.

4.0 “The Onspot Digital Advertising Concept in Simon Malls” (Rose, B. and Williams, D,

2006)

With the decreasing impact of traditional media and the constant consumer

fragmentation, advertisers and marketers have to find innovative ways of reaching individual

consumers. The retail setting plays an important role for marketers as it often is the only place

where the two are able to meet and where the consumer is fully exposed to a brand’s own

environment. It has been estimated that the retail industry generates $3.6 trillion dollars in sales

per year in the USA alone (National Retail Federation in Liljenwall 2004) and that the industry

employs more than 20 million people. With such figures, it is not surprising that many marketers

are looking to advertise in retail settings and more particularly in shopping malls. The following

case will discuss the implementation of digital signage networks in Simon Malls4 in the USA.

Marketing and advertising in shopping malls can be very effective and provide advertisers with

an opportunity to reach billions of consumers each year. As identified in the Simon Shopper

Profile Study (2004), advertising at the mall can have surprisingly a “high effective reach”: an

estimated 2 billion consumers visit Simon malls each year. Each shopper will be exposed to the

advertisement in the mall at least three times per visit thus amounting to 6 billion (or more)

opportunities to reach consumers. Moreover, individuals who visit shopping malls do not

necessarily only go there to shop, many of them will also look to enjoy an exciting afternoon

with friends or family – shopping malls are where consumers purchase but also where consumers

socialize thus providing marketers with a different setting to reach consumers.

The digital signage network was deployed by Onspot Digital Networks – a “50/50

venture between Publicis Groupe, the world’s fourth largest communications agency and the

Simon Property Group, the largest publicly traded retail real-estate company in North America”

(2006: 3). The first screens were installed in November 2004 in Roosevelt Field Mall (Long

Island, New York) where it is estimated that an average of 17 million consumers visit each year.

4 Simon malls, which belong to the Simon Property Group (www.simon.com), comprise of 247 establishments in 37

states and account for two billion shoppers annually (Rose 2004).

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A total of 58 screens were installed in strategic locations including the entrances, food courts,

corridors and near escalators. The content displayed on the screens combined entertainment,

information and advertising content – strategically created to “build relationships with mall

visitors by providing localized, useful and entertaining content” (2006: 5). A loop lasting ten

minutes in total was split into the following percentages:

Loop Content (10 minutes)

35%

20%10%

35%

Advertising (local/national)

Movie Trailers

Mall Announcements

Fashion Show

Footage/Other

entertainment Content

Source: Rose and Williams 2006

The study was conducted through interviews on three different occasions. On the first

two occasions, in December 2004 and in February 2005, on-site interviews were carried out at

the Roosevelt Field Mall. In December, Arbitron Inc., a media and marketing research firm,

examined 188 respondents to evaluate consumers’ awareness of and attitudes to the newly added

screens. In February, 400 respondents were interviewed to study consumers’ awareness of

specific advertising and their ability to recall what they saw on the screens. On the third and last

occasion, phone interviews were conducted in February and March of the same year to compare

the results obtained from the on-site interviews. The 148 respondents who participated in this

part of the study had all watched a “specific television program” at a particular time which

contained advertisements that had also appeared in the mall. This allowed the study to effectively

contrast the impact of television advertising and digital signage advertising – providing

interesting insight into the comparison of both channels.

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The research which was conducted by Arbitron, an international media and marketing

research firm5, examined the response and attitudes of consumers who visit the Malls by

investigating “consumer awareness and acceptance of video programming in shopping malls and

its potential as an advertising medium.” (2006: 1) The first and second set of interviews which

investigated consumers’ awareness and perceptions of the new screens found up to 80% of

shoppers watched the content displays on the screens, 62% of frequent shoppers (who visited the

mall more than 10 times in the past 3 months) believed the network of screens improved the

shopping environment and 71% of them “were glad the screens were installed in the mall”

(2006: 9). By and large, consumers seemed to respond quite positively to the installation of the

new technology and perceived it as a genuine improvement to their experiences at the mall.

Furthermore, the findings indicate that 51% of shoppers who watched the content recalled seeing

a commercial on the screen and 47% of them could at least name one advertiser on an unaided

basis. Overall, six out of seven advertised brands were remembered by 40% or more of the

shoppers. These findings also depict a positive response rate to the content displayed on the

screens. When comparing consumer recall of advertising on television and at the mall, the study

found that 47% of shoppers remembered seeing any products advertised on the screens compared

to 32% of consumers who watched the television program at home. Additionally, 35% of

respondents remembered seeing a diet soda advertisement at the mall while only 14% of viewers

at home were able to recall the same advertisement. The comparison suggests that consumers

were more likely to remember advertisements when they had seen them on screens at the

Roosevelt Field Mall than at home.

The findings provide valuable insight into consumers’ attitudes of this non-traditional

advertising medium. The respondents’ perceptions of the network suggest that the screens

enhance consumers’ experience in the shopping mall – a factor that has become recognized as

largely significant in influencing consumer behaviour. In comparing television advertising and

digital signage advertising, the study suggests that the latter can produce greater brand recall and

brand awareness. These findings are valuable in understanding consumers’ opinions but do not

provide insight into purchasing behaviour or whether digital signage can, in fact, produce an

increase in sales. It is important to make a distinction between digital signage networks in

shopping malls and in-store TV networks as both will have different objectives and results.

Installing screens in the malls aim to enhance the mall’s environment but also to generate

5 Arbitron Inc. is “an international media and marketing research firm serving radio broadcasters, cable companies,

advertisers, advertising agencies and outdoor advertising companies in the US, Mexico in Europe” (Rose and

Williams 2006: 18).

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advertising revenue from companies wishing to promote their products or services. Installing

screens at the point of purchase in a particular store will ultimately aim to increase that specific

establishment’s sales, whether it is by promoting products and/or improving the shopping

experience. It is also necessary to point that consumers’ shopping behaviours are likely to differ

between shopping malls and smaller retail establishments. Consumers visit malls for far more

reasons than when entering a store to conduct a purchase – in the former, they will “shop,

socialize, seek entertainment, have a meal, catch a movie and spend money” (Rose 2004: 2). In

this leisurely environment and state-of-mind, they are more inclined to pay attention to the

content displayed on the screens, consequently influencing the study’s results.

4.1 Tesco and in-store TVs

In 2003, Tesco, the UK’s biggest retailer, announced it would launch Tesco TV, a digital

signage network advertising products in its stores. Tesco attracts an average of 15 million

shoppers a week and accounts for £1 in every £8 pounds spent in the UK (Rigby 2006), thus

having immense potential to reach a large number of consumers at the point of purchase. By

installing a digital signage network, Tesco has the opportunity to benefit from various

advantages. As well as attracting advertising revenue from advertisers, the screens provide Tesco

the ability to advertise its own products and services and to keep customers informed of

promotions and entertained during their shopping trips. Additionally, the Tesco Clubcard, the

UK’s “most popular loyalty scheme with over 11 million active cardholders”6 provides Tesco

with a large amount of information available in creating targeted and precise content for the

screens.

Installed and designed by JCDecaux, one of the world’s leading outdoor advertising

agencies, Tesco TV initially consisted of 5000 screens in 100 of Tesco’s largest stores. The

number was set to increase to 300 stores had it been successful. Similarly to other digital signage

networks, Tesco TV was a combination of Tesco’s own promotions, advertising and customer

information. At its launch, JCDecaux declared that with 100 stores, Tesco TV would have the

ability to reach 4 million shoppers per week (Ray 2004). It was reported that research

investigating the impact of Tesco TV on sales found positive results - indicating that 47 of the 62

brands advertised on Tesco TV were able to demonstrate a 10% increase on sales. Furthermore,

10 of the 62 brands were able to show a 25% increase (Ray 2004). Despite revealing positive

results, the Tesco TV project was nearly abandoned – this was mainly due to Tesco’s inability to

6 http://www.tescocorporate.com/publiclibs/tesco/CoreUK.pdf

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convince advertisers to invest in the media. The concept was relaunched when Tesco asked

Dunnhumby, a small British customer-marketing-consultancy to take care of the network’s

management. Dunnhumby and Tesco previously worked together as the consultancy is

responsible for Tesco’s incredibly successful Clubcard loyalty scheme.

The new network, renamed Tesco Screens, also comprises of 5000 screens in 100 Tesco

stores. The main differences between the two projects are in the management of the networks

and in the information displayed on the screens. The content of the new network aims to match

consumer’s needs and wants, most of the information being based on information obtained for its

loyalty scheme. Tesco TV’s content had mostly included television advertising and had not been

adapted to fit the new environment. Tesco Screens is said to be more tailored-made, displaying

product promotions, new product launches and seasonal themes. The content displayed on the

screens has been adapted to the supermarket setting where consumers do not have the time to

watch a thirty second TV advertising – the messages displayed are kept simple and straight to the

point (Joy 2007). Dunnhumby has also reduced advertising rates (Joy 2007) thus potentially

attracting more companies to promote their products on the network.

Dunnhumby has estimated that the new content produced an increase in sales ranging

from 5% to 18% (Joy 2007). While further investigation of the network’s impact on sales will

need to be carried out when the networks have been established for a longer period of time, it is

fair to say that this network has the potential to reach millions of customers. A very successful

deployment on in-store TV networks can be seen in Walmart. The American retailing giant

effectively launched Walmart TV (WMTV) with PRN, a network provider which has assisted

many of the world’s biggest retailers in deploying digital signage networks. WMTV which

initially started as a single channel now comprises of six different channels individually targeting

different departments and customer segments. The content is a combination of advertising,

entertainment, weather reports and even cooking tips7.

Tesco’s first deployment of in-store TV networks with Tesco TV portrays how easily

digital signage solutions can fail despite its large customer base and vast access to customer

information. The case illustrates the importance of targeting consumers efficiently and tailoring

messages that will be of interest and relevance to them. Tesco TV displayed television

commercials which are significantly too long for consumers who enter the supermarket to shop

and not necessarily adapted to the environment. Dunnhumby identified that shoppers desired

“information on money-saving deals and new products” as well as “assistance in choosing what

7 http://www.prn.com/networks/index.html

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to buy” and “ideas on how to use their purchases” (Joy 2007: 1). Displaying television

commercials does not present that kind of pertinent information. The case also illustrates how

many advertisers are still reluctant to invest in this type of advertising as they demand concrete

evidence of how consumers interact with the screens and the actual impact this has on sales.

Much research has investigated consumers’ perceptions and attitudes towards this medium but

fewer have actually explored its direct impact on sales.

4.2 Pinnington and Elderfield’s study (2005)

In their paper offering a “new perspective on the in-store new media debate”, Pinnington

and Elderfield (2005) set out to research whether digital signage’s objectives were, in fact,

attainable. Pinnington and Elderfield’s research tested whether in-store digital networks have the

ability to develop customer loyalty through the creation of a better in-store experience. Divided

into three sub-hypotheses, they investigated whether a consumer’s shopping experience is

enhanced by in-store TVs (hypothesis 1), whether in-store TVs ease the shopping process

(hypothesis 2), and lastly whether it communicates effectively at the point-of-purchase

subsequently generating an increase in sales (hypothesis 3). The research, which took place from

October to December 2004, consisted of three different approaches. In the first method, they

conducted 24 two hour interviews with pre-recruited respondents from the shopping population.

Prior to the interviews, the respondents had been taken to two separate establishments – one of

which had in-store TVs. The second approach consisted of interviewing senior managers in

businesses which were all involved with digital signage – this included network providers,

content providers or design agencies. The third approach involved visiting thirty sites in which

digital signage was installed and making observations on the network systems.

In the first hypothesis, the study examined two main factors: if the installation of digital

signage led to a reduction in point-of-purchase clutter and if the network engaged customers.

Neither of these seemed to deliver positive outcomes. The findings did not suggest a reduction in

clutter as traditional static displays remained present, nor did the findings suggest that customers

felt engaged by the in-store TVs. Pinnington and Elderfield propose a number of reasons as to

why the first hypothesis was not supported. Similarly to Tesco TV, the content displayed on the

screens lacked the sophistication required for digital networks and was not adapted to this media.

Many messages displayed were not relevant to the customer at the time consequently conflicting

with one digital signage’s attributes whereby messages are specifically targeted at the right

consumers at the right time. The second hypothesis examined whether in-store digital networks

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eased the shopping process. The study found that up to half of the respondents had not even

noticed the screens which had been installed in the stores for over six months. Pinnington and

Elderfield also largely attributed this to the lack of relevance of messages displayed on the

screens. Consumers will be less inclined to be attracted to the screens if the information

displayed is of no relevance to them. Despite not finding evidence supporting the idea that in-

store TVs ease the shopping process, the study recommends a different approach whereby

consumers’ needs are researched in order to create content which can fit their preferences,

leading consumers to use the screens as references during their shopping experience. This is

comparable to Dunnhumby’s approach in creating Tesco Screens. The third hypothesis, which

tested whether in-store TVs communicated effectively at the point-of-purchase and produced an

increase in sales, was partially supported. Nonetheless, Pinnigton and Elderfield emphasize that

they did not carry out a comparative study to examine whether traditional static displays would

have the same effect.

The study efficiently examines the main two digital signage’s objectives: enhancing the

customer’s shopping experience and producing an increase in sales. As growing emphasis is put

on consumers’ experience, the results do not deliver promising results. If digital signage fails to

improve the shopping environment and to ease the shopping process, it is unlikely that it will

lead to an increase in sales. Similarly to Tesco TV, this study illustrates the need to tailor content

to the targeted consumers in order to achieve positive significant results. “In-store TV is most

effective when it has a clear role within the purchase process, and the message is relevant to the

shopper” (Pinnington and Elderfield 2005: 5).

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CHAPTER 5: CASE STUDY – IDKLIC

5.0 Company Overview8

Created in 2006, iDklic is a small Belgian advertising agency delivering complete digital

signage solutions including:

- The installation and deployment of the equipment needed,

- The creation of the content broadcasted on screens,

- The sale of advertising space to advertisers, and

- The network’s management, supervision and maintenance.

iDklic specialises in pharmaceutical advertising, a niche market identified by the

founders as exceptionally lucrative due to the relatively high expenditures of pharmaceutical

companies on advertising and the low competition levels within the pharmaceutical digital

signage advertising industry. The company deployed its first network in November 2006,

initially installing five LCD screens in five pharmacies and quickly expanding to fourty-five

screens in fourty pharmacies. iDklic works on two fronts: selling advertising space to

pharmaceutical companies and deploying digital networks in pharmacies – thus acting as a

middleman between the two industries. iDklic’s largest pharmacy client is the EPC familia

group, a chain of pharmacies predominantly located in Wallonia, the French-speaking part of

Belgium. It is the second largest chain of pharmacies in Belgium owning 104 pharmacies. iDklic

signed a four year contract with EPC familia and plans to deploy in-store TV networks in sixty to

eighty of their pharmacies. iDklic generates most of its revenues from selling advertising space

to pharmaceutical companies who want to promote their products at the point of the purchase. It

currently holds contracts with companies such as Bayer, GlaxoSmithKline, Novartis and

Boerhinger-Ingelheim. In the second year since its creation, iDKlic generated a profit of !

890000 to be reinvested in the company.

5.0.0 Business Model

8 See appendix 2 for further information on the company and how it was obtained.

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The figure below illustrates the relationship between the EPC familia group and iDKlic

but is also representative of how other networks function. The pharmaceutical laboratories are

located at one end while the EPC familia group is located at the other. The content displayed on

the screens is created or edited by iDklic and broadcasted on the screens through high-speed

internet connections.

This figure is confidential and should not be reproduced or disclosed to any person without the written permission of

iDklic.

Currently, iDklic sells advertising space to all its the pharmaceutical customers at the same rate.

Advertisers pay iDklic a fixed fee per month and per number of establishments where screens are

installed. The founders preferred to start with this approach as a starting point as smaller

laboratories cannot afford to pay the bigger sums large laboratories can afford and hence ask for

short-term commitments.. In the future, iDklic hopes to offer advertisers more flexibility in the

solutions they purchase – perhaps offering fees per week as some laboratories may wish to

advertise for even shorter durations while other larger ones would prefer to sign six month to one

year agreements.

5.0.1 Content

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To create the content that is displayed on the screens, iDklic works with laboratories, doctors and

charities – for instance, it recently collaborated with an association raising the awareness of

AIDS and has also worked with other associations to promote public health. The content

displayed on the screens runs on a seven minutes loop, a duration chosen to match precisely the

average time a consumer spends in the pharmacy. The content includes a mix of advertisement,

government health campaigns, pharmacy information and general health information. It is

divided into the following percentages:

• 45% pharmaceutical advertisement provided by pharmaceutical laboratories/companies

and edited by iDklic to ensure it is properly integrated within the medium (in terms of

size resolution, length and subtitles).

Example: pharmaceutical advertisement “Colludol Spray” against sore throats.

• 15% pharmacy information providing pharmacists with a chance to display information

about the pharmacy (e.g.: opening hours); the content is entirely created by iDklic.

Example: pharmacy opening hours Example: promoting loyalty scheme

• 30% seasonal thematic information (e.g.: flu information in the winter; sun-protection

information in the summer); created by iDklic with the help of governmental

organisations.

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Example: information on how to prevent back pains.

• 10% public health information (e.g.: AIDS day campaign); created by iDklic with the

help of governmental organisations and non-profit associations.

5.1 Industry Overview

5.1.0 Pharmaceutical Industry

The worldwide consumption of medicines is increasing, global pharmaceutical spending

increased by 9% in 2004, reaching nearly $500 billion (IMS Health as cited in Encyclopaedia of

Global Industries 2006). As one of the world’s most lucrative industries in terms of sales volume

(Encyclopaedia of Global Industries 2006), the pharmaceutical industry owns large budgets for

marketing and advertising expenditures. With the increasing trend of self-diagnosis and self-

medication, pharmaceutical advertisers have a large opportunity to influence many consumers’

brand or product preference. Nonetheless, pharmaceutical advertising is highly regulated and

many drugs cannot be advertised directly to the general public. In Belgium, only over-the-

counter (OTC) drugs can be advertised under strict directives. The limitation on pharmaceutical

advertising tied with the increasing trend of consumers to self-diagnose has left a gap whereby

consumers are sometimes left unaware of the products available and the laboratories they came

from.

The Belgian pharmaceutical market grew by 5.4% in 2007 reaching a value of $5.3

billion. In the past five years, the market has grown steadily and is expected to continue doing so

in the next few years. In 2003, Belgium counted a total of 5269 pharmacies, 2719 in Flanders,

644 in Brussels and 1906 in Wallonia – this number having not recently increased due to a

moratorium on the opening of new pharmacies until 2009. Pharmacies remain important in

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Belgium as they dominate the distribution of OTC drugs. Consumers “are loyal to their

pharmacists and still need them for advice” (Euromonitor International, 2006).

5.1.1 Belgian advertising industry

The Belgian advertising industry grew by 9% in 2006 to reach a value of $609.5 million

and is forecasted to reach a value of $907.4 million by 2011 representing an increase of 48.9%

since 2006 (Datamonitor 2007). Similarly to advertisers and marketers around the world, players

in the Belgian advertising industry are “constantly adapting their approaches and methods in

order to reach fragment mass audiences, who become increasingly difficult to target due to

technological advances, and evolving consumer habits” (Datamonitor 2007: 13).

5.2 iDklic’s Digital Signage Solutions

iDklic has targeted a niche market where most of their revenues are generated from

selling advertising space to profitable pharmaceutical companies. As pharmaceutical companies

are limited in the amount and type of advertising they can create, it is necessary that they target it

efficiently - consequently making advertising directly at the pharmacy a great opportunity.

Pharmaceutical companies recognised the power of advertising at the point of purchase for a

long time – having advertised in pharmacies through static displays, posters and panels. Digital

signage offers pharmaceutical companies the opportunity to advertise their products at the point

of purchase with a new dynamic communication channel. More interestingly, digital signage

presents pharmaceutical companies broadcasting statistics allowing them to know exactly how

often their advertisements are being displayed, whereas with traditional displays, they were

unable to quantify how often their advertisements were seen by consumers. The technology

allows them to change advertising messages more frequently than before as traditional displays

remained unchanged for months at a time. This particular characteristic of the technology allows

pharmaceutical companies to target their advertising efficiently – for instance by changing which

products are advertised according to the month or time of year. Furthermore, digital signage

offers the possibility of explaining products extensively and to present consumers with pertinent

health information. Consumers require advice to understand how a product is to be used, for

example in how often a product is to be used or if to be taken regularly after the first symptom.

Between November 2006 and April 2007, iDklic investigated the impact of their digital signage

solutions in producing an increase in sales in five pharmacies. The study revealed that the largest

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increase was obtained when combining an advertising campaign both on national television and

on the in-store TV networks. The study also revealed that when a product was only advertised on

in-store TV networks, it produced an average increase of 25%.

5.3 Consumer Response to In-Store TV Networks in a Belgian Pharmacy

To fully assess the effectiveness of a new communication channel, it is necessary to

understand how consumers respond to it and how they are affected by it. The present survey was

conducted to investigate consumers’ response to this type of non-traditional advertising in the

iDklic context. Thirty consumer interviews were carried out outside one pharmacy in a

residential neighbourhood of Brussels. Customers were interviewed as they came out of the

pharmacy, after having finished their purchases. Out of the thirty customers interviewed only

two had not noticed the screen in the pharmacy and were consequently not asked the following

questions. With the exception of the first question, the percentages were calculated on the basis

of consumers who had noticed the screen. Similarly, the two sub-questions of question three

were calculated on the basis of the number of customers that had looked at the content displayed

on the screen. Table 1 below presents the findings.

Consumer response to in-store TV networks %

Yes No

Did you notice that a screen was installed in the pharmacy? 93.33 6.67

Do you think the screen improves the pharmacy’s environment? 82.14 17.86

Did you look at the content displayed on the screen?

If they answered yes, they were asked the 2 questions below. If not, they continued

to question 4.

85.71 14.29

Can you name a brand, a product or a theme that appeared on the

screen? 58.33 41.67

Do you have a positive or negative opinion on this concept/approach?70.83 29.17

Do you believe this communication channel can incite you to purchase? 42.86 57.14

Do you believe this communication channel can influence your choice of a

brand or product? 21.43 78.58

Table 1 (See appendix 3 for complete figures and results)

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The findings indicate a positive response to the new screens as 93.33% of respondents noticed it

and 82.14% believed it improved and modernised the pharmacy’s environment. 70% of

respondents who paid attention to the content had a positive opinion on the technology while

58.33% of them were able to recall a specific brand, product or theme advertised on the screen.

The last two questions looked at respondents’ attitudes towards advertising and whether they

believed it could have an impact on them. Not surprisingly, the survey found that 57.14% of

respondents did not believe digital signage could stimulate them to purchase and 78.58% of them

did not believe that digital signage could influence their choice of a brand or product.

Can you name a brand, a product or a

theme that appeared on the screen?

58%

42%

Yes

No

Do you believe this communication

channel can incite you to purchase?

43%

57%

Yes

No

Do you believe this communication

channel can influence your choice of a

brand or product?

21%

79%

Yes

No

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The findings for the last two questions are not surprising as past research has demonstrated that

individuals are often reluctant to admit that they can be influenced by advertising. O’Donohoe’s

review of research in “Attitudes to Advertising” (1995) indicates that “consumers have both

personalised and generalised attitudes toward advertising and believing themselves to be less

gullible than other” (Reid and Soley 1982, as cited in O’Donohoe 1995: 5). A similar study by

Barnes (1982) found that 78% of individuals surveyed believed that advertising is able to make

“consumers buy goods which they do not really need” but only 15% of them admitted that it

could have the same effect on them (Barnes 1982 as cited in O’Donohoe, 1995: 5).

It is important to review the limitations of the survey in order to understand the implications

which can be made from it. The sample size being quite small and restricted to one pharmacy,

the results may not accurately portray the views of Belgian customers in pharmacies.

Furthermore, located in a quiet residential area of Brussels, the pharmacy is more likely to attract

elderly people or customers that frequently visit the pharmacy thus being acquainted with the

technology and possibly its content. The number of exposures respondents may have had prior to

the survey was not accounted for thus possibly influencing the recall of the brand, product or

theme.

5.4 Pharmaceutical Companies’ Response to iDklic’s Digital Signage Networks

Two interviews9 were conducted separately with marketing managers from two

pharmaceutical companies that advertise on the iDklic network. The first interview was carried

out with Ronny Heymans, a KAM and BOS manager at Bayer while the second interview was

carried out with Marie-Caroline Sasserath, a brand manager at Boerhinger-Ingelheim. The

purpose of the interviews was to get an insight into their perceptions and opinions of this new

channel. The interviews indicated that both had quite different views of digital signage and its

potential as an advertising medium.

Bayer initially decided to invest into this technology when iDklic was the first company

to offer them the opportunity. Having not considered it before, they saw it as an opportunity to

remind customers of television advertising at the point of purchase. On the iDklic network,

Bayer mainly advertises “big brands” and products that have been advertised on television.

Boehringer-Ingelheim invested in the technology as they noticed digital signage was being

increasingly used in various establishments and was pleased with the benefits the technology

9 See appendix 4 for complete interviews

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could bring. Sasserath described digital signage as “an efficient alternative to the many and

sometimes excessive visual displays that are already present in pharmacies.” Furthermore, she

perceived digital signage as differentiating itself from other media and being efficient in

attracting consumers’ attention. Boehringer-Ingelheim advertises generic medicine and nutrients

on the screens with the objective of increasing awareness and stimulating impulsive purchases of

these products.

Both companies claim to have witnessed satisfying results since advertising on the iDklic

networks but these do not come without limitations. Heymans pointed out that while they

definitely witnessed an evolution, the impact of the advertising was not comparable to television

campaigns. On the other hand, Sasserath recognised that sales had improved when advertised on

digital signage networks and that a distinction between pharmacies with and without screens

could clearly be made. However, she stressed that the pharmacist’s advice to customers remained

crucial in influencing which products were purchased.

In terms of comparing digital signage to traditional media such as static displays,

Heymans admitted that it did not present many added opportunities. Instead, he identified digital

signage as an incredible support channel, providing reminders of television advertising. He also

identified that a better way of promoting a product at the point of purchase was by providing a

display at the counter where the customer can get a “feel” of the product, by touching it, seeing it

and discussing it with the pharmacists. On the other hand, Sasserath saw digital signage as

beneficial in that it presented the opportunity to explain the product to its customers, whether by

supplying extra information or displaying a demonstration of the product. Additionally, she

argued digital signage enabled them to diversify “their presence at the point of purchase” thus

advertising more products. However, she also held a similar opinion to Heymans in stressing that

advice from the pharmacist remained the best way of promoting products at the point of

purchase.

Both Heymans and Sasserath strongly agreed that digital signage would increasingly by

used by marketers to advertise at the point of purchase. Nevertheless, Heymans emphasized that

the technology would need “to go through a democratisation” whereby the initial deployment

costs and other costs associated with the complete solution would need to decrease. The

interviews suggest that both advertisers were satisfied with the changes digital signage has

brought about and the benefits it offered. However, both suggested that pharmacists play a key

role in the promotion of pharmaceutical products.

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5.5 Conclusion

The case study presents iDklic and its implementation of in-store TV networks in Belgian

pharmacies, providing significant insight in assessing the growth of digital signage and its

potential as an advertising medium. Targeting pharmaceutical advertising in pharmacies

presented iDklic with the opportunity to enter the digital signage industry in Belgium. While this

approach has proved to be strategically efficient in the short-term, iDklic needs to target other

markets for future expansion – whether it is by deploying digital signage in pharmacies in other

countries, expanding to other healthcare sectors (doctors and dentists’ waiting rooms,

hospitals…) or by targeting other industries within Belgium. The founders revealed that they are

currently negotiating a merger with Digiscreen, one of the company’s main competitors which

has deployed digital signage networks in 400 pharmacies and is expected to expand to another

500. Additionally, the company has recently signed a contract with Mercedes to deploy a

network of sixty screens in various car dealerships throughout Belgium.

The particular healthcare niche that iDklic has targeted is interesting to examine when

assessing the impact of in-store TV networks as it represents a small market where consumers

require greater advice than when they purchase retail goods. As identified in the interview with

Boerhinger- Ingelheim, in-store TVs provide the ability to extensively present a product to

consumers and to present more information than a traditional static display would. While the

survey carried out in Belgian pharmacies reveal mixed results as consumers are reluctant to

admit that this medium can influence them, it contrasts with the increase in sales that the

networks have produced. The case illustrates the potential use of digital signage in many

different markets and provides insight into consumers’ and advertisers’ perceptions of the

medium.

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CHAPTER 6: EVALUATION OF DIGITAL SIGNAGE AND IN-STORE TV NETWORKS

The dissertation has examined digital signage’s objectives, reviewed relevant literature

and presented examples of the deployment of in-store TV networks. As a relatively young

industry generating large revenues, digital signage has the potential to further mature and to

attract an increasing number of advertisers. This section will evaluate the potential of digital

signage as an advertising medium by assessing its effectiveness and by contrasting its objectives

with the evidence discussed in the previous chapters.

Digital signage’s main objectives have been identified as the following:

- Promotion of products and/or services (leading to a purchase),

- Enhancement of the customer experience (by entertaining, providing information and

improving consumers’ waiting times),

- Producing an increase in sales (by improving customer loyalty and inciting impulse

purchases)

To examine whether digital signage can efficiently meet its objectives, a review of past

research was undertaken. This included investigations into whether this and other media can

achieve the desired effect. Studies on out of home advertising and point of purchase advertising

demonstrated that these two channels have the potential to raise brand and product awareness as

well as producing an increase in sales (Hewett 1972; Bhargava and Donthu 1999; Woodside and

Waddle 1975). While these conclusions may imply that digital signage, a type of point of

purchase advertising, has the same effect on consumers, it cannot be ignored that many factors

influence consumer behaviour and that all communication channels affect consumers in a

different way. The impact of an advertisement will differ according to many factors including

the target market, the product or service promoted, the consumer, the content of the

advertisement and its location – consequently making it very difficult to make implications from

one medium’s research to another. In-store TVs in supermarkets produce a very different impact

than in-store TVs in pharmacies – these differences originating from the actual products sold and

consumers’ purchasing behaviours in these establishments.

It is also important to consider the many limitations of advertising research. When

studies investigate consumer behaviour by surveying consumers, it is difficult to assess the

extent to which these findings are reliable. Consumers’ perceptions and opinions do not always

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represent their actual behaviour. For instance, if a study investigates consumer’s response to in-

store TV networks by inquiring whether they have paid attention to the screen, whether it may

incite them to purchase or whether they believe it can have an impact on them, it does not

suggest that their actual behaviour is the same as what they answered in a survey. If a

respondent claims to have looked at the content displayed on a screen, does it mean she/he will

have paid close attention to the advertisement and that this will have an impact on his/her

purchasing behaviour? Similarly, when a respondent asserts that he/she plans to purchase a

product that he/she has seen advertised on the screen, it may indicate intent but not actual future

behaviour. Furthermore, studies that have investigated and successfully demonstrated that an

advertising campaign has resulted in an increase in sales have limitations as “a rise in sales or

brand awareness can always be attributed to other non-advertising causes such as seasonability,

changes in income, or random fluctuations in demand. Direct causative relationships between

advertising and other variables can never be proven beyond doubt” (Hackley 2005: 99).

In our fragmented consumerist society, growing importance is placed on the different

consumer experiences associated with each brand, product or service. Studies evaluating this

technology's ability to achieve such an objective are therefore valuable. The Onspot Digital

Networks study and the survey carried out in Belgian pharmacies indicated that consumers are

generally tolerant of the screens and often seem to think that they can improve the

establishment’s environment. Nevertheless, these fail to indicate how consumers’ perceptions

will relate to their behaviours. Improving the shopping environment may be beneficial in

improving customer loyalty of a brand, product, or establishment, but for advertisers and

retailers to further invest in this technology, a concrete link between the two is to be established.

The digital signage industry is still in development and studies examining its direct

impact on consumers and on sales are limited. As a result, many establishments and advertisers

remain reluctant to invest in this relatively expensive medium. In order for this technology to be

increasingly accepted and adopted, further research needs to investigate how consumers interact

with the screens, how they are affected by it and the ways through which this technology can

produce the largest behavioural changes. Recent developments in digital signage technologies

have created the ability to measure its impact more efficiently. Webcams, which are inserted into

the screens, record and analyse “the stream of images provided by the camera and estimates the

number of people passing in front of the media, counts how many people are actually looking at

the media and provides their dwell time, attention time and demographics.”10 This innovative

10 http://www.quividi.com/vidireports.html

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technology is capable of quantifying the amount of individuals that have looked at the screen;

distinguishing between individual’s presence in front of the screen and actually paying attention

it; determining the duration individuals pay attention to a screen and its content; and as a result,

determining which advertisements have the biggest audiences and which have the potential to

create the largest impact. If these technologies are increasingly used and are able to precisely

demonstrate how consumers are influenced by advertisements, it is likely that digital signage

will become adopted by more advertisers.

Due to the relative youth of the industry many issues are yet to be resolved. Concrete

evidence is needed to demonstrate the medium's return on investment. Despite preliminary

studies delivering promising results, the industry has also witnessed failures. The evidence

presented in the Tesco TV case illustrates the need to carefully plan digital signage solutions and

to meticulously study what consumers desire from such networks as ultimately, it is their

behaviour which will determine whether or not a network is successful. While there remain

some unresolved issues for digital signage and in-store TV networks, the evidence provided in

the literature showing that out of home advertising and point of purchase advertising can

produce an increase in sales and the evidence presented in the case studies demonstrate the

medium’s potential as an advertising tool and its ability to develop into a significant industry.

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APPENDICES

1. Digital Signage Business Models

Business models are “driven by the target market, core competency of the provider anddesire to capture market share” (Hayes 2004: 13) The North American Commercial DigitalDisplay Market Study identifies four key business models (Hayes 2004: 13):

a. “Advertising Revenue Only”: The digital signage operator pays for the installation,maintenance costs, interacts with advertisers and creates the content. The return ontotal costs is generated through advertising revenues.

b. “Adverting Revenue and Recurring Site Fee”: The operator pays for the installation,interacts with advertisers and creates content. The site where the network is deployedis responsible for maintenance costs. The return on installation costs is generatedthrough advertising revenues.

c. “Shared Installation and Operations Costs and Revenue”: The operator and the siteshare installation costs. The operator creates the content with the site’s considerableinput. The site pays the operator a regular maintenance fee. Both the site and theoperator interact with advertisers.

d. “Customized/Outsourced Network”: The site pays for both the installation andmaintenance costs, as well as paying the operator a regular fee for contentmanagement. The operator simply provides the content. They both interact withadvertisers.

2. Additional iDklic information

a. Company informationiDklic (www.idklic.com) is a small advertising agency located in Brussels, Belgium.It was founded in 2005 by Miriam Taub, Jean-Charles Figoni and Nathaniel VanParijs. To obtain information on the company, I interviewed Jean-Charlesindividually (see interview below) and spent many hours with the founders studyingthe company and what it does. Miriam Taub, my sister, is the Communication andDesign Director. She is responsible for creating the content and working withadvertisers to adapt the animations they wish display. Nathaniel Van Parijs is theSales and Technology Director. Jean-Charles Figoni is the New Business andDevelopment Director. They are responsible for deploying the technology, andinteracting with both pharmacies (or other clients) and advertisers.

Address and contact number:

iDklic106-108 rue Berthelot1190 BrusselsBelgium+ 32 (0) 2 375 01 91

b. Interview with Jean-Charles Figoni (14/08/2007)

IT: How many pharmacies do you advertise in?

JCF: 40.

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IT: How many advertisers do you have contracts with at the moment?

JCF: 7.

IT: What goals did you set yourself and have you met them?

JCF: We’d set a breakeven point in year 3 but actually reached in year 2 so it’s quitegood!

IT: Profit?

JCF: 89 000 euro.

IT: When did you install your first screen?

JCF: November 2006.

IT: Why did you decide to target pharmacies specifically (It is quite a narrow target

market…)?

JCF: We did a lot of research into point of purchase advertising and realized that a lot ofmoney is spent on advertising pharmaceuticals at the POP because pharmaceuticalcompanies have such large budgets and they don’t advertise much on TV (relatively). I’msure they could advertise products as much as yogurts or cars, they would. We alsorecognized that pop advertising give these companies a huge advantages in reachingconsumers. After all that research, we also recognized that it was best to target a nichemarket at first with less competition – it’s very precise, it’s worth more. In the short term,I think this was a good strategy but if we want to grow, we’ll have to expand the marketswe advertise in.

IT: What products are advertised on your network?

JCF: Like many other countries, Belgium has strict regulations on which products canand cannot be advertised. Here, you can only advertise OTC products, not prescriptionones. We’re also obligated to put a “pharmasmile” on commercials and to include alllegal mentions, such as if products are forbidden for certain ages groups or how manycan be taken per day.

IT: Before the introduction of digital signage, how often were traditional displays

changed?

JCF traditional displays were changed on average quarterly, every semester. Thepossibility of changing static displays is much more expensive than changing content ondigital displays. Also, pharmacists often throw out the displays so the laboratories don’tactually know if their products are being advertised or not.

IT: How often do you change the content on your screens?

JCF: We change the content every month. This might not be the most adapted solutionfor this type of media, it should probably be done every two weeks but we cannot affordto do that at the moment. It would cost us too much to hire someone to do it full timewhich is what we would need. Advertising is specific to pharmacies and locations sochanging those every two weeks while having different content for different pharmacieswould be too time-consuming for us. We hope to do that in the future though and wehope to hire people who will handle a number of a networks – so one person would be incharge of 3/4 networks.

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IT: Did advertisers communicate directly with pharmacies before? Or how did the

pharmaceutical advertising model work?

JCF: In general, pharmacies would buy products from laboratories in bulk and whendoing that, laboratories would send them displays. In exchange, they would offer them anumber of free products. However, this doesn’t mean that pharmacists would put thedisplays up, they often just let them rot at the back of the store. It wasn’t a very efficientapproach.With digital signage, advertisers can be sure that the media is communicated efficiently.We offer pharmaceutical manufacturers broadcasting statistics so they know exactly howoften their ads are being displayed and from that they can target consumers properly. Ithink this is one of the reasons that make digital signage worth it, it might be moreexpensive but at least it is efficient, everything is quantifiable.

IT: Do you decide what content goes on the screen yourself or do the laboratories or

pharmacies do this?

JCF: We work with laboratories, doctors and charities. For specific product advertising, itis obviously the laboratories who provide the content but our creative team has to edit itto make sure it fits properly (in terms of size but also content). For seasonal advice andinformation, we create most of the content but work with other governmentalorganizations to help us. For example, now, we’ll be working with a non-profitassociation which fights against AIDS to have a campaign displayed on the screen inDecember for World’s AIDS day.

IT: Let’s talk about costs. How do you deal with installation and management costs?

Who pays what?

JCF: First of all, compared to static displays costs, digital signage is obviously a lot moreexpensive. The materials and the installation obviously require a much bigger investment.Many laboratories are still reluctant to invest in digital signage as they think televisionadvertising is the most profitable. But advertising on TV is actually a lot more expensivethan digital signage and digital signage impacts the consumer when he is about topurchase a product – it’s more efficient.For the first pharmacies we worked with, we paid for the screens but not for theinstallation costs. Working with EPC pharma, where we’ve installed 30 pharmacies, theyhave paid for the installation and the screens.For management costs, we usually deal with them as we take care of problems and ofchanging content. If we have to intervene in a pharmacy because there is a problem witha screen, it’s time-consuming. We need time to develop our business instead of runningfrom one pharmacy to another. We have to make sure we invest in the right technologyso we don’t have to intervene often! We’ve arranged a deal with EPC to make them payfor management costs after the first year of our contract.

IT: Can you tell me more about the technology itself?

JCF: the first 5 screens that we bought were LCD screens with integrated computers.Plug & Play is a marketing approach we use to convince people to use this technology.Commercially, it’s easier to sell that option because it takes less space in the shop. Butafter installing them, we found that the maintenance was too expensive. If a problemarises, you need two people to come and get the screen which weighs around 30kg. It’shard to always have to need two people. Also these screens were more expensive than thesecond solution we found.

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We decided to buy LCD screens and decoder like a digibox for a TV. We install thedecoder at the back of the pharmacy and the information is transmitted through that. Ifthere’s a problem, you simply need to take the box and not the whole screen so it’s a loteasier.The information with both solutions is stored on the hard-drive so if the connection isever cut, the animations will continue to be displayed.We’ve also installed a special program which allows us to control the decoder(essentially computer) from a distance.The computers use Windows XP Embedded which is specifically made for digitalsignage. It protects the computer and the networks as digital signage is the only thing it’sable to do.

IT: What problems did you encounter with the implementation?

JCF: We had a series of problems as with any technology. With fixing the screens in thepharmacies, we had problems when deciding whether to install them on the wall or tohang them from the ceiling. What we found is that many ceiling aren’t proper so youcan’t hang a 30kg screen, it’ll fall down after a few months. Luckily, we found that outearly enough to not make that mistake or it could have cost us a lot.We had problems when connecting computers through the internet with the 30pharmacies belonging to EPC because they already have an internet network which isvery protected. We had to create a mini-network within their network and had to find asolution that allowed us to use their network. They had to open a special port in theircentral server which allowed us to connect directly to idecoder in the pharmacies.We also realized that when ordering technology equipment, there is about 10% of themthat have some manufacturing problems and at 3500euro per screen, that’s expensive.They would freeze for no reason so we had to change them, basically just manufacturingproblems. This allowed to realize that you always need expect this and be prepared.

IT: What improvements do you hope to make? Changes in the future?

JCF: We hope to change the content more often when we’re able to anyway. I hope we’llbe able to use Apple computers instead of the decoder as they have less problems, costthe same, don’t freeze and are even less prone to viruses than Windows XP Embedded.We also hope to install a program that makes advertising appear on the screen when aproduct is scanned so the advertising matches the product sold. Unfortunately thistechnology is not up to date yet.

IT: Do you perceive any problems with digital signage in pharmacies?

JCF: If I compare it to retail, then yes. First of all, there are much fewer pharmaceuticalcompanies than retailers. Secondly, there are many more opportunities to advertise inretail than in pharmaceuticals so really, there is a bigger potential to make money inretail. But like I said before, healthcare is a niche market and a good starting point for us.

IT: How do you hope to expand in the future?

JCF: We’re currently discussing merging with Digiscreen which is one of our biggestcompetitors. If that happens, we’ll be covering up to 1000 screens in Belgium. Anotherpossibility is to further expand in the healthcare sector by targeting doctors, vets,hospitals, dentists…. Eventually we’d like to expand to other countries. We’re alsodeploying 60 screens in Mercedes dealerships so we’re expanding into othermarkets/industries.

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3. Consumers response to in-store TV networks in a Belgian pharmacy (19/12/2007)

1. Did you notice that a screen was installed in the pharmacy?

Client Yes No

1 x

2 x

3 x

4 x

5 x

6 x

7 x

8 x

9 x

10 x

11 x

12 x

13 x

14 x

15 x

16 x

17 x

18 x

19 x

20 x

21 x

22 x

23 x

24 x

25 x

26 x

27 x

28 x

29 x

30 x

Total (30) 28 2

2. Do you think the screen improves the pharmacy environment?

Client Yes No

1 x

2 x

3 x

4 x

5 x

6 x

7 x

8 x

9 x

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10 x

11 x

12 x

13 x

14 x

15 x

16 x

17 x

18 x

19 x

20

21 x

22 x

23 x

24

25 x

26 x

27 x

28 x

29 x

30 x

Total (28) 23 5

3. Did you look at the content displayed on the screen?If answered yes, ask the following:a. Can you name a brand, a product or a theme that appeared on the screen?b. Do you have a positive or negative opinion on this concept/approach?

(Yes being positive, No being negative)

Client Yes No

1 X a b

2 x

3 X b a

4 X a b

5 X

6 x a b

7 X a b

8 x

9 X a b

10 x A b

11 X a b

12 X b A

13 X b a

14 X a b

15 X a b

16 x A b

17 X b A

18 X a b

19 X a b

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20

21 x a b

22 X a b

23 X A b

24

25 X b a

26 x

27 X a b

28 X a b

29 X A b

30 X a b

Total Q3 (28) 24 4

Total a (24) 14 10

Total b (24) 17 7

4. Do you believe this communication channel can incite you to purchase?

Client Yes No

1 x

2 x

3 x

4 x

5 x

6 x

7 x

8 x

9 x

10 x

11 x

12 x

13 x

14 x

15 x

16 x

17 x

18 x

19 x

20

21 x

22 x

23 x

24

25 x

26 x

27 x

28 x

29 x

30 x

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Total (28) 12 16

5. Do you believe this communication channel can influence your choice of a brand orproduct?

Client Yes No

1 x

2 x

3 x

4 x

5 x

6 x

7 x

8 x

9 x

10 x

11 x

12 x

13 x

14 x

15 x

16 x

17

18 x

19 x

20

21 x

22 x

23 x

24

25 x

26 x

27 x

28 x

29 x

30 x

Total (28) 6 22

4. Pharmaceutical companies’ response to iDklic’s digital signage networks

a. Ronny Heymans - KAM and BOS ManagerBayer Healthcare, Consumer Care

b. Marie-Caroline SasserathBrand ManagerSCS Boehringer Ingelheim Comm.V

1. Why did you decide to invest in this type of technology and to communicate with

consumers through this channel?

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a. It was the first time that this type of technology was proposed to us and it wassimply a pilot project including only 5 screens to start off with. But wedecided to invest in this technology because it acts as a good reminder oftelevision campaigns. We’re hoping more and more pharmacies will be part ofthis project so the reach will be larger.

b. L’officine increasingly uses this type of support. Digital signage is an efficientalternative to the many and sometime excessive visual displays that arealready present in pharmacies. Digital signage differentiates itself from othermaterials because it is “dynamic” and I think, attracts consumers’ attentionmore than a simple display…

2. What type of products have you advertised through the iDklic network and why?

a. Mainly big brands which are advertised on TV and then we use similarmaterial for the pharmacy. We can’t advertise anything on those screens, it’sbetter to advertise products that are advertised on TV and use it as a supportchannel.

b. Generic medicine and nutriments. The main goal is to generate awareness andto stimulate impulsive purchases by repeating a simple and clear message thatis easily accepted by a mass audience.

3. Have you noticed positive/satisfying results since your products have been advertised

on the iDklic network?

a. We’ve definitely seen an evolution but it’s only been a pilot ‘study’ so onlybroadcasting on 5 screens can only present limited results. There has been anevolution at the point of purchase but it’s not comparable to televisionadvertising which has the potential to have a much larger impact. We investmore in television advertising because the results are much more impressing.

b. We’ve been able to make a distinction between pharmacies with a dynamicscreen and with the ones that don’t. Sales have improved in establishmentswith digital signage but I have to stress that the pharmacist’s advice andopinion remains crucial!

4. What does digital signage bring you that a more traditional channel does not?

a. I don’t mean to sound negative but not much really, not more than atraditional display. It’s an incredible reminder of television advertising – asupport channel like I said earlier. It’s easier to affect consumers throughtelevision advertising; digital signage is an excellent complement.

b. I think digital signage offers the opportunity to “explain” the product ingreater detail, you can even include a demo of how to use the product – it’s ahuge advantage compared to static displays. It also allows us to diversify ourpresence on the point of sale – by advertising a variety of products.

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5. Do you believe that this technology will be increasingly used by marketers?

a. Yes, for sure. However, I think it needs to go through a democratisation: theclient base is too limited in pharmacies, clients who make their purchases areoften the same like 35/40 year old wives. I also think the content needs to bemore pertinent because it’s not always appropriate. The amount of peopleimpacted by this channel is not large enough yet and the costs are still veryhigh. With those changes, it will be much better. Again, it’s a great supportfor TV and I think if it’s used as a complement for other types of advertising itwill be used more and more.

b. Yes definitely.

6. Do you think there is a better way of advertising at the point of purchase?

a. Yes definitely. When a product is advertised with a display at the counter andthe consumer is able to see it, touch it and discuss it with the pharmacist, hecan compare the product to other products – essentially he can get a feel for it.That’s the best type of promotion.

b. Advice from the pharmacist remains critical and is still the best way tocommunicate at the point of purchase. An actual host or hostess at the point ofpurchase demonstrating the products would probably have the largest effectbut it’s not feasible, you’re not talking about the same budgets there…