Digital advertising is a sign of the times

Published:  15 October, 2008

Digital signage networks are a common sight in many of the UK's shopping centres, with advertising being a successful outlet for the generation of non-rental income. While many brands are cutting back on their advertising spend, it seems digital signage is still an area being explored during these tough times.

The Outdoor Advertising Association (OAA) has revealed that gross revenue for outdoor advertising for the second quarter of 2008 was £283,483,123 - a 1.2 per cent decrease on the same period in 2007. But revenue for digital outdoor screens has seen a massive increase.

Alan James, chief executive of the OAA says: "Given the uncertain times all industries are currently experiencing, a small decrease in the second quarter should be seen as a very acceptable result. This is especially so when taking into account the tough set of comparables we are dealing with - outdoor in the second quarter in 2007 showed a significant year-on-year growth of 8.5 per cent while all display revenue came in just below 1 per cent.

"In the second quarter of 2008, digital outdoor screens revenue increased by a whopping 62 per cent - outdoor's new format is now generating substantial revenues and looks set to keep growing at a market-beating rate."

Tim Ritson, sales and marketing director of Vision Media Group (VMG), says the figures for digital signage are very good but stresses that it's important to remember these figures are coming from a much lower base due to it being an evolving market. "I think the next 6 to 12 months will allow the digital signage sector to position itself as a core alternative to traditional media such as six-sheet posters," he comments.

VMG has recently signed contracts or heads of agreement with shopping mall owners that will more than double the size of its UK network. Terms have been settled, including agreements with two large property groups, which will add a further 33 shopping malls to the VMG estate and bring the total number of malls to 57 with 527 operating panels, of which 350 will be VMG's newly launched Iconic Pod portrait-style digital panels. The average length of the new contracts is eight years with no minimal rental guarantees.

The first phase of the roll-out will equip 16 malls with 200 Iconic Pod portrait panels ahead of the 2008 Christmas period, with further installations commencing next year.

Clear Channel Outdoor UK, which is responsible for the procurement of national advertising across the VMG shopping mall network, believes that the addition of these malls represents a significant escalation, in excess of £7m per annum, and that the enlarged VMG media inventory now represents a total gross annual advertising sales value of £25m, enabling total possible gross advertising sales to a value of circa £200m over the life of the contracts.

Ritson says it's possible to be more creative with the advertising on a digital poster than it is on a traditional static poster. "There's a likelihood in a shopping centre environment that six-sheet posters will be replaced with a full digital structure.

"VMG doesn't support the concept of landscape plasma screens broadcasting a TV-oriented content. My view is that outside the food court area the offering has to be driven by a poster that has a still message, and that's something we've focused on. We call it the 'dwell analysis'. For TV-oriented content to work you have to have dwell time so that's best lent to the food court. It's a great experience to sit in a food court and watch, say, Trafford TV, because the average dwell time is 20 minutes. But in the main body of the mall, poster sites based on rotation are the best form of communication."

As well as providing an advertising platform, the Iconic Pods offer incentives such as the dispensing of coupons, loyalty cards, recruitment and wayfinding services.

Sian Nicholls, marketing and commercialisation manager for Savills Management Resource says advertisers are continuing to explore all methods of marketing for their products and services; however, she insists the current economic climate has impacted on budgets, and advertising is one of the first areas where costs are being reduced.

"Advertisers are therefore becoming more considered in their approach and, while they're continuing to look for new locations, they're more focused on selecting the right form of advertising to appeal to key audiences and making it destination-specific," she says. "It's crucial for advertisers to maximise their budgets and create a package that's targeted."

Nicholls says Savills is continuing to explore the plasma industry, looking for plasma operators combined with third party advertising partners for this growing area.

Stephen Court, director of retail marketing and head of commercialisation for Hammerson, says the mall owner is particularly keen to take advantage of digital platforms. "Over the next year we'll begin to change the profile of our advertising platforms from analog, that is, scrolling and static six-sheets, replacing them with digital. With a digital format we can increase the amount of content we can show and may be able to reduce the number of sites elsewhere as well."

He says other benefits of digital advertising include the ability to gear the adverts to the type of shopper demographic visiting on a particular day, and provide an additional opportunity for the brand partners that currently use promotion space in the malls to advertise their forthcoming or existing promotions.

"We work closely with media partners to understand the technology and the behaviour of consumers when receiving images," says Court. "People walk past poster sites so a lot of animation is not a good idea as consumers don't take it in. Having too many adverts changing means not all advertising is legible and understood.

"Hammerson is probably more geared towards the portrait six-sheets model rather than the TV, landscape screen, because we think the digital six-sheet will more effectively carry media and information. It will be in shopper's eye-line as well, and advertisers are sensitive to ensuring shoppers can see everything on the screen."

Court says there is no evidence yet to show that the value of advertising is falling, but stresses that Hammerson is being realistic, with quite conservative growth estimates for the next 12 to 18 months as far as all forms of media advertising go.

"When looking at TV, radio and print media and the slowing growth rate of advertising on the internet, we can't be immune from a downturn in spending by brands," he says. "But I'm hopeful that brands won't stop spending per se but will instead move their spend. We want to demonstrate to brands that if they cut media from a different platform, they can migrate some or all of that spend into our space. We can be competitive in cost per thousand and we can provide proximity to retail brands. If brands like proximity to certain types of retailers and buy into the fact that shoppers coming to us are more mission driven to spend money, then it might be worth spending money on our advertising format."

PSCo is also being more innovative with its screen media. Operations director Mike Nield points to some popular products at the moment - the Infinite Plasma, which is a 42in screen without a surround that can be linked together to create a 'video wall', the Panasonic 103in high definition plasma screen, and Sharp's newly introduced 108in LCD product which is high definition, very bright and incorporates new technology.

Nield says the video walls are perfect for areas where dwell time is high, and that advertisers like the larger plasma/LCD screens that are situated on walls above walkways, as people walking along the malls can see them from a long way away.

"We've installed the 103in screens in Bluewater and a few other malls," he says. "They have a huge impact for advertisers. My experience has been that you use the small screens (42 to 50in) to send out your standard messaging such as opening times and other community messages that the owners like to send to their customers when they're in the malls, but the larger screens deliver the advertising message because they make people stop and look and it's much easier to attract people's attention with them."

Nield also points out a solution for those people who have, over the past few months, been talking about rectangular screens blending into the background and consumers not noticing them as much as they used to. He says they have been using the Infinite Plasma to create new shapes and sizes, such as the letters L or J. "That really makes people look at the screen more than they would if it was a traditional rectangular one," he says. "The technology is allowing people to use more innovation in how they deliver messages to the end user."

IT, website and photographic company mbs-services believes there are better outlets for advertisers than advertising on plasma screens. David Marsh, of mbs, says a shopping centre's website offers immense opportunities for local businesses to capture their audience. "A different approach to shopping centre websites is needed for mall income," says Marsh, who believes one way that shopping centres can generate income is by selling web links to local businesses.

"Companies are happy to give the shopping centre £1,000 to build a 'mini' website that links from the shopping centre's web page as they'll benefit from the shopping centre's hits," says Marsh, who explains they charge the centre a reduced fee to build the 'mini' websites with the profit going to the centre.

Marsh believes that fewer companies are now willing to spend their money on plasma screen advertising but says advertising through wi-fi is an area that will soon take off.

"A lot of shopping centre development companies are keen to go for wi-fi links," he says. "Signals are usually concentrated around cafés and then when customers log onto the internet - through either a free wi-fi connection or through a voucher system - they're automatically taken to the holding page where they'll be able to get discounts." By selling advertising on the holding page, the advertiser benefits from the longer dwell time.

In addition, Marsh says owners can generate further income through the centre's website by selling photographs of the local area or highlighting centre events online. "The money goes to the shopping centre," he says. "It also shows that when you choose to visit a shopping centre there's an awful lot more in the town than just a shopping centre and that opens up the power of the search engine as well as helping to increase footfall.

"For example, if someone is looking for details on the Blackpool Tower and we have a picture of the Tower on the shopping centre website, the search engine will flag up our site."

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