Calculating Digital Signage ROI: Managing Expectations



Calculating Digital Signage ROI: The Ground Rules

Author: Bill Gerba on 2005-03-16 23:55:33

Given the obvious benefits and proven returns of in-store marketing and POP advertising displays, a large portion of the digital signage industry is perpetually trying to up the ante by offering dynamic signage to retailers and in-store merchandisers. From new digital signage start-ups to old POP display manufacturers, everybody is looking for the next big thing that will increase revenues and improve customer satisfaction on the sales floor. Whether or not digital signage will be the next big thing still remains to be seen, as a number of challenges must be overcome before the medium is widely accepted by retailers and marketers alike. Of these, the most important (and perhaps the most difficult) is determining the return on investment of the digital signage network. Without a quick and easy way to calculate ROI, no amount of flash and sparkle is going to save our beloved plasma screens and networked media players from the scrap heap.

Because there are so many different business models that a digital signage network owner could subscribe to, it would be impossible for me to cover all of the different ways to calculate ROI. So instead, I'm going to focus on techniques for coaxing the number out of the most common kind of network: ad-driven or ad-supported retail networks. I'm also going to avoid interactive kiosks and interactive signage that have more obvious, feedback-driven methods for deriving ROI numbers for now (these will be the subject of another article). In this, the first in a series of articles covering the basics of calculating digital signage ROI metrics, I'm going to start by introducing a couple of concepts to get you in the right mindset for determining your signage network's return on investment. In subsequent articles, I will try to provide some ideas and methodologies for accumulating and analyzing your data to come up with the magic number. So, without further ado, let's get started.

First, Know Thy Metric

Do you know what you're going to try and measure? Ok, the obvious answer here is "how much did we lift sales?" But depending the focus of your project, how tightly integrated it is with the rest of the store/product/brand marketing, and the size of your data set, you might be trying to measure one of several different things. To explain, I'd like to introduce a little diagram called the retail marketing funnel:

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