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How to Determine Digital Signage ROI
Pitch your clients digital signage by helping them create a business plan for these new advertising networks.

Article


Commercial integrators must help their customers quantify the business case for dynamic digital signage displays, creating calculations for ROI that justify the expense.
February 25, 2013 By Linda Hofflander

With more than 350 digital signage software providers worldwide, along with a plethora of content (original and canned) providers, managed services, and hardware manufacturers, digital signage solution scenarios are virtually limitless. This means that there is also a multitude ways to determine and maximize the return on investment (ROI) in digital signage installations.

Discussing ROI with Clients and Prospects

Integrators must share with their clients the relevant facts and data points. These include identifying vertical benchmarking scenarios, reviewing and outlining true measurement examples, and identifying how and why every digital deployment scenario differs and brings with it its own unique challenges that affect ROI. Standard solution elements, best practices, and case studies assist ROI conversations, and equations exist for creating estimated ROI models to benchmark and measure against traditional communications.

Management looks to strategy and measurement to assist in the decision- making process. As with any type of process improvement it’s hard to improve what you can’t measure, so reliable measurement methods are needed to build out the business case for dynamic digital signage when pitching potential clients. Wasted resources and failed programs are rampant, and competition for funding is fierce. Therefore, the only way dollars are justified for new or emerging technologies is to show an acceptable ROI, or at minimum a return on objective (ROO).

Defining key stakeholders and identifying who is responsible for the success of the initiative will assist in laying out the strategy, aligning the program’s dollars, and building out an ROI map. Depending on your product, service and target market, investing in technologies to communicate with your audience may actually be a “cost of doing business” moving forward – no longer an option.

The ROI Equation: ROI=Benefits/Costs

ROI is simply the ratio between benefits and costs, though there are several threats to its accuracy or usefulness:

  • 1. Does the investment meet corporate business initiatives and strategies? What are you trying to accomplish in the short term vs. long term?
  • 2. Capturing all costs associated with the investment. This is usually the easiest part of the equation. Look at the initial investment and the recurring costs.
  • 3. Capturing all benefits associated with the investment. Make sure you are capturing both short-term and long-term benefits.

Think about usage and collection of costs. What are the analytics? What is your need format and frequency? With traditional print communications as your benchmark, collect the expense associated with designing the communication, the printing, kitting, shipping and installation. With digital communication you will want to do the same.

Objective And Subjective Costs and Benefits

Start with an estimate of your current costs. How much are you paying to do your current communications? Keep the methodology and metrics constant between the current tracking and how you’ll be estimating your digital signage expense. If there are errors based on the same methodology and metrics they are relative differences, not absolute differences.

Look at your objective costs by breaking the project down into phases:

  • 1. Analysis, design and consulting
  • 2. Start-up: This includes hardware, software, installation, networking, content and training
  • 3. On-going implementation: additions, redesigns, moves, changes
  • 4. Recurring costs: content, hosting, software upgrades and maintenance
  • 5. Internal resources: Capture your internal resources cost. Many forget to include this in their ROI calculations.
About the author

Linda Hofflander, director of Vertical Marketing, Enterprise Business Division, Samsung Electronics America Ltd., will be presenting "The Business Side of Dynamic Digital Signage," at Digital Signage Expo 2013 in Las Vegas on Wednesday, February 27, 4-5pm. For more information about DSE or to register to join this or any other seminar and learn more about digital signage, go to www.DSEnow.com.
View all posts by Linda Hofflander
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