Who Determines The Future Of Retail Digital Signage?

I hate it when people call Perch by Raydiant digital signage. It’s not that’s it not functionally true. It’s just that traditional digital signage to date has been the banner ad of brick-and-mortar retail. I fear for the future of retail digital signage, but there is also a tremendous amount of hope.

The big question I have is who is going to shape its vision? Will digital signage inventory be disconnected from merchandising and programmatically-bought media like early internet banner ads and digital out-of-home? Will it:

  1. Be designed to maximize value to shoppers and create sustainable retailer advantage and brand connectivity?

  2. Or will it be designed to maximize the ease, reach and value for advertisers and media buyers?

The answer is fundamental and will shape the future of retail and how we view digital within retail’s walls.

The Multi-Billion Dollar Shift Of Media Dollars In-Store

I have had a lot of talks recently with retailer groups who are looking to implement digital networks within stores. Why should it be that 1% of digital media spend happens where 85% of transactions occur - in-store?

We are in the middle of a multi-billion dollar shift in digital budgets to the front lines of shoppers everywhere. Walmart’s Media Network has rebranded as Walmart Connect to take advantage of in-store screen opportunities. Cooler Screens just raised $80 million. Walgreen’s is lighting up 5G in 9,000 stores for interactive displays and IoT. Every major grocer is investing in in-store media networks. This is just the very beginning. The IDC projects a 10x increase in IoT retail in just 4 years. 10x!!!

Where media is spent vs where customers buy

Who Will Drive The Retail Vision - Advertising Or Shopper Marketing?

We know the future of stores is digital, but will digital signage be advertising or will it be marketing? Let’s look at who is driving the vision - Media/Advertising or Merchandising/Shopper Marketing and what that means for what gets built. The difference is stark:

Digital Signage Advertising Vs Marketing

The Media and Advertising Path To Retail Digital Signage

Right now, I am seeing a lot of strategy driven by advertising, which makes sense. Large retailers are spinning off media groups specifically for this opportunity, building the DNA for media buying and measurement. Why not replicate the same advertising model that scaled the early internet and existing DOOH?

And as the old adage goes, “you ship your organization.” Advertising people will create advertising networks. And the sad thing is that the integration to physical shopping will be minimal. More interruptive marketing and promotionally driven. Like I’ve said before, traditional digital signage is the banner ad of retail - interruptive, not contextual, not interactive and easily ignored. It’s a sub-optimal experience that’s easily scaled - and thus presents dangers. As I look at Cooler Screens, it’s hard not to see the banner ad in its biggest boldest instantiation - the size of a cooler door. (To be clear, they are building some cool ad technology like eye tracking, inventory detection, AI for targeting, etc.)

The Shopper Marketing Path To Retail Digital Signage

On the other hand, shopper marketing groups and category managers don’t have the same digital expertise. Merchandising has reversed from being more art than science, but the artists still run the show. Relationships with retailers are qualitative as much as quantitative. You might be surprised how many shopper marketing groups at brands don’t know what sales lift they get from an end cap. Realistically, access to in-store shopper marketing analytics hasn’t been available to them until now.

Ask them what their highest and lowest converting products are from consideration (a shopper picks up the product) to sale, and they will look at you like you have seven heads. Is it unfair to expect them to have a digital and data-driven DNA to be successful shaping the next generation of digital in-store? Each sales team at a brand has a separate trade dollar budget and relationship, rather than centralizing budgets in marketing.

My Prediction For The Future Of Retail Digital Signage

Early Advertising Scale To Competitive Maturity

So where does that leave us? It’s early but here is my prediction. In the near-term, expect early scale to come from media buyers and ad-tech groups driven by retailer investment in-store (ex. Walmart, Walgreens, etc.). Brand ROI will be attractive as it will be new, differentiated and unproven, which means less competition. Early adopters will do well, delivering media to the frontline of shopper transactions. Budgets will pour in, leading to continued retailer investment in network buildout.

Longer-term as advertisers recognize the value of reaching shoppers closest to the point of sale, costs will increase and margins will get squeezed. Media network leaders at retailers will see higher revenues, but merchandising and exec teams will wake up years from now to digital stores that are designed to interrupt shoppers, steal attention from physical products and drive promotional competition rather than make for a wonderful shopping experience - and they will struggle how to walk back the frankenstein they have created, invested capex dollars into store transformation, and whose multi-year contracts were necessitated to subsidize the expensive equipment earning back on a CPM basis. In the effort to monetize their shoppers, they lose track of the reason shoppers come in-store.

The Rise Of Integrated Shopper Marketing

In parallel, shopper marketers at brands will see the digital dollars from media spend transferring in and claim a portion of them as their own, bundling merchandising and category captaincy opportunities in coordination with media buys. Better interactive technologies (such as Perch by Raydiant) that integrate digital into shopping and merchandising will garner premiums at key inventory space, where the battle will be between programmatic buys that are personalized by demographic/profile and those that integrate the shopper journey and merchandising. It will be the same battle between deeply contextual content marketing and advertising networks that we saw online. And long-term, the winners were those who could marry and master both context and scale.

The Brick-and-Mortar Analogs Of Facebook, Google and Amazon For Digital Signage

Longer-term several retailers will crack the code providing both context and scale. Online these are Facebook, Google and Amazon. Facebook gets to know shoppers so well it can personalize the ads on a 1:1 basis. In-store these will be the advertising screens using facial recognition to tie in your profile to your purchase history. This will be a common approach at many retailers with little sharing of proprietary identity for privacy reasons.

The analog to Google and Amazon will be product search-driven, i.e. the right product level media at the moment of product consideration at the shelf - search or shopping. We at Perch by Raydiant believe this will be when someone touches a product on the shelf, as that is the physical analog of the product search or click online. For Google, it will be a retailer agnostic network, someone who powers the search experience across retailers and thus empower brands. That is what we have now at Perch by Raydiant and why having the patent of using the signal of what products shoppers are touching and responding to relevant media is so valuable (and yes, all those secondary lift-and-learn players are in violation of the patent).

The Amazon analog will be a retailer who goes all in, with a fully proprietary experience that leverages both demographic and product interest to provide the most compelling and easy experience for product information and shopping tools at the moment of consideration. My bet is it will be Walmart or, and more likely, Target. We would like to build a world where we can make that compelling experience available to all retailers and that is what we are building at Perch by Raydiant, an open system for processing a variety of compelling signals to determine the right media or application at the right time across the store. It’s a bold vision, but will become the key to solving for the holy trinity:

  1. Differentiated experience for retailers to offer

  2. Scale and connection for advertisers

  3. Real value to the shopper

And like the Internet has shown, banner ads were just an early phase for scale that inevitably give way to this future. No more blinky text and annoying awareness ads. So shall it be true for the future of retail digital signage … It would be a shame to settle for a retail world filled with more banner ads.