Public Displays in Europe (and elsewhere)
Public displays have been slow to make inroads in many European markets, although there have been pockets of progress. It is difficult to generalize about the digital-signage market in Europe, let alone the Middle East and Africa because every country is a market unto itself, with unique economic, cultural, and regulatory requirements.
by Bob Raikes
PUBLIC DISPLAYS are a fascinating topic for those of us who love to see how markets work. These displays can be broadly divided into two groups. There are those that “inform,” such as flight or train displays. These “inform” displays have a cost for a purpose. “Promote” displays are those that may be partly or wholly funded by advertisers – the kind of display that might be seen in an airport terminal or a shopping mall displaying products or services for sale rather than time tables.
The European market is something of an enigma. At one level, it is considered a single market. However, the region has some of the countries with the highest incomes per capita, but also big countries with incomes that would be normal for a developing region. From Norway at $47,545 per capita, the region goes down to Albania at $4,090 per capita for 2012. This means a huge difference in the way that economies and advertising work.
Europe also has a wide range of cultures, which makes it much harder to develop advertising campaigns that are effective across the whole region. As soon as you put a person into a scene in an advertisement, it can evoke a wide variety of different reactions in different countries. In some regions, for example, showing computers being used in an office can lead to a surprising range of views on, for example, how and whether women are included in the scene. Of course, the sheer number of languages makes pan-European advertising and media more challenging as well.
Markets
Retailers are also broadly national. Although there are companies that have some success in a number of markets (e.g., Carrefour in grocery and Media Markt/Saturn in electronics), even those companies tend to work a bit differently in the different regions, as buying behaviors vary. Retail is the biggest market for digital signage, so the decisions in this segment have a big influence on the rest of the industry. Some of the electrical retailers such as MediaMarkt simply make use of the low-cost TVs that they sell as digital signs in their stores to draw attention to promotions and offers. High-end fashion retailers in London, Paris, Germany, or Milan often invest heavily in digital signage of different kinds to make their stores more dynamic and more easily changeable according to the season.
Projects and display networks in other markets for digital signage, such as banking/ financial services and transport, are also usually based on national boundaries. Digital out-of-home (DOOH) advertising is also a very national market because of different views on how out-of-home advertising should be used and because of different local planning restrictions and local and national government regulations. For example, the UK has a good number of large light-emitting-diode (LED) displays and video walls that are deliberately placed next to the busiest roads to catch attention, while in Sweden temporary licences for roadside signs were withdrawn as a result of research on driver distraction.
In sum total, the public-display market for Europe, whether digital signage or DOOH, is fundamentally a collection of national markets rather than one regional market.
Scale, Scale, Scale
The market, then, is very fragmented and this means that digital-signage projects are more difficult to develop. This is not connected to displays or display-related technology, but because in any application like this, the development of content is one of the most significant cost elements. When that content needs to be delivered in multiple languages, or with different visuals because of varied cultural norms, the costs and complications go up. And as costs go up, the viability of networks, especially those funded by advertising, come under pressure. Although infrastructure costs are a factor in roll-outs, it is the cost of creating and maintaining high-quality content that is the biggest challenge.
When the content costs are divided over smaller populations than those of China, the U.S., or Japan, the cost may simply be too much to support digital-signage projects. There are many that go through a “pilot” stage, but do not get to a full roll-out. A proportion of projects get as far as roll-out, but some commercial networks, hoping to raise revenue by selling advertising, have already been closed and removed because of the difficulty of making a profit. At this stage of the market, that’s a pity. In Germany alone, the networks PosterTV, Cityboomer, and CityUp have closed down. Cityboomer was a network that was set up to provide digital-signage space funded by advertising, but went from IPO to bankruptcy in less than 2 years.
At the 7th OVAB Digital Signage Conference in Munich, in September 2013, it was pointed out that a number of global multinationals that have tried to establish businesses in the region have failed to obtain scale and growth in their businesses. Part of the reason is that so much of the installation and support needs to be tailored to the local geography and that means a lot of input from partners in each country. (Interestingly, although billed as a European event, the audience was dominated by players from the German-speaking countries of Germany, Austria, and Switzerland).
NEC is developing its Vukunet platform, which it calls a “Universal Digital Place-Based Ad Server,” to try to make it easier for European advertisers to identify networks that they can use for messaging, and as a way to deliver the content for play-out quickly and easily. Vukunet, which launched in the U.S. a couple of years ago, is an automated ad delivery platform for digital out-of-home media that is designed to allow owners of screen networks located in public venues to earn revenue by showing advertisements. Vukunet claims that its web-based platform is the first universal inventory management, ad delivery, billing and payment, and reporting system to work across hundreds of operating networks. The displays themselves are primarily large liquid-crystal displays (LCDs) used singly or in groups as video walls.
Geographic Focus
The digital-signage market in Europe is strongly centered on Western Europe. Although the UK was the earliest market to develop, with a strong position in the largest market 7 or 8 years ago, the growth in that country has been somewhat more limited in recent years (although there was a good boost to installations and investment around the very successful Olympics in 2012). CBS Outdoor and Clear Channel are two of the major players.
Germany became the largest market at the end of 2008 and has kept that position, although very close to the UK in volume when it comes to displays. The transport industry in Germany has been very strong in adopting and investing in digital signage. Ströer is a large media company that has been influential in developing the German market.
France has grown steadily year on year as a market for digital signage and saw only a slight slow-down after the financial crisis in 2008. The European Soccer Championships in 2016, which will take place in 10 stadiums throughout France, should help with investments in preparation for the tournament. JC Decaux, based in France, is a strong global player in the conventional-signage business and has also been heavily involved in digital signage.
The Nordics have been developing well over recent years, and Russia, after a number of years of limited development, has seen very good growth in the last few years and most recently with the build up to the Sochi Winter Olympics. Outside the West, the Nordics, and Russia, the digital-signage market has been much slower to develop. The countries along the Mediterranean have been slow for the last several years, although there are interesting projects here and there, such as a kiosk-type display in Milan’s transport system that was developed by M-Cube with software supplier Scala using Samsung displays (Fig. 1).
Fig. 1: This interactive kiosk-type LCD is connected to Milan’s transport system and offers a touch interface for users to find information on train schedules, weather, and events.
Brands
Most of the display brands that are active in digital signage in Europe are the major global brands such as Samsung, NEC, and LG. Samsung has a very dominant position currently and both that company and LG, which is the third largest supplier, have subsidiaries in all the major countries as well as regional companies to allow a lot of local contact and management. NEC is the second largest brand and has a strong history of working closely with its resellers on projects and integration.
There are a number of small vendors locally, with most of them concentrating on national markets. However, the region also has specialist suppliers such as Conrac, which is a significant global brand in the Flight Information Display (FID) market.
Hardware
All of the brands supply global digital-signage products, as, unlike TV, there is no need to deal with regional tuner and broadcast issues. Europe was an early adopter of LCDs, and plasma-display panels (PDPs) have been much less important than in some markets, such as the U.S. LCD volume surpassed that of PDP volume in the middle of 2006, and PDP volume dropped to less than 5% of the market by 2011. Smaller stores still like to use 32-in. sets, which maintain a share of 15% or so, but 40–47-in. sets make up 60–65% of the market. 55-in. sets are the ones that have the best growth at the moment. In Eastern and Southern Europe, commercial TVs are quite regularly used for digital signage where professional-quality displays might be used in the main economies.
Hard-to-Grow Public-Display Sales
One of the frustrating factors for the major display brands is that within a project the cost of the hardware, including the display itself, is often only a relatively small portion of the total cost. Even within the hardware budget, only a portion of this goes to the display, with costs associated with installation, mounting, cabling, networks, media players, and warranty and service. This makes it quite difficult for companies that are used to driving volume by reducing prices, as has been the practice in the TV and monitor markets.
Channels
The major multinational distributors such as Ingram Micro and TechData have interests in this market; Ingram has a specialist group at the European level and TechData owns TDMaverick, a specialist subsidiary for audio-visual products. However, most A/V distributors are organized on a national basis. That means that brands need to support the distributors with national representation and support.
Software and Architectures
The Out-of-Home Video Advertising Bureau (OVAB) Europe is a trade association that is working to develop standards and has published standards for audience measurement and service levels. These standards should help the development of commercial networks that can deliver advertisements to consumers, which should drive revenue growth from advertising, a major challenge for the market. One of the challenges on a global level is that the digital-signage market has too many software packages. Although there are larger companies such as Scala, it has been suggested that there may be as many as 700 different packages available in Europe! That causes real problems in support and development and leads to complications in developing multi-national content. Software developers that want to supply products through the full area of the region have to make decisions not only about the languages that their software will support on the displays, but how many languages can be used within the software to develop the content.
This year, Samsung was the first to launch new digital-signage products based on adding “Smart TV” systems-on-chips (SoCs) to its digital-signage products. These are relatively light clients, but can be used in conjunction with software from Scala, Signagelive, and others. The company has been developing tools to help smaller resellers sell simple solutions to small- and medium-sized enterprises (SMEs). At present, it is not clear that this strategy will gain traction, but it’s an innovative and positive approach to expanding the market for digital signage, especially in SMEs.
Regulations
There are a number of extra pressures on the market in Europe, especially in the countries in the European Union. One of the simple ones is the EU Directive 90/269/EEC – which covers the manual handling of loads and effectively limits the maximum weight that can be lifted by a single individual. Environmental issues are very important in every part of the European market. The French government, among others, has environmental regulations (the Grenelle II law which came into force in July 2012) that limit advertising using digital signs.
The Middle East and Africa have many of the challenges that beset the market in Europe in culture, language, and content. In addition, the region has some particular current problems. In the Middle East, one of the most important economies is Egypt and the political situation in that area is causing a lot of multinational consumer companies to cut their advertising budgets. The effect of this drop in advertising revenue is having a “knock-on” effect on the entire region and impacting digital signage and DOOH revenues. Nevertheless, the market in EMEA is on a steady rise. Meko divides the EMEA geography into 10 regions. In Q2 2013, the MEA market represented 8% of the total market (compared to 7% for the small countries of Benelux) (Fig. 2).
Fig. 2: Digital-signage sales volumes by relative percentages show that German-speaking countries, the UK and Ireland, and the Nordics are currently the heaviest users. Source: Meko, Ltd.
An interesting project in Africa is Solar Powered Advanced Rural Communication (Sparc). In much of rural Africa, there is little TV because of the lack of electrical power. However, phones and smartphones have very high penetration.
In the Sparc project, digital-signage kiosks are being set up using solar power (Fig. 3). They communicate with the “cloud” by using mobile-phone technology, which is widely available (it’s just GPRS, but that, combined with satellite-sourced video, provides enough data for simple advertising). The terminals were developed with Amscreen, which claims to be Europe’s largest DOOH network (and has display networks in the UK, Germany, Poland, Switzerland, UAE, Oman, Kenya, Angola, and South Africa, totaling around 6,000 displays).
Fig. 3: Solar-powered digital-signage kiosks such as these are providing Internet connectivity (and digital advertising) to areas of rural Africa that are largely without electricity.
The Sparc system allows advertisers to create simple local advertising at very low cost and with detailed control of where the content plays (down to individual kiosk level). Few individual consumers can afford news-papers, and with little TV advertising this kind of advertising can have a significant impact on small businesses and local economies as well as for national brands that cannot use TV.
A Challenging Market
There are opportunities in the EMEA digital-signage market, with steady growth. However, entering the market with an aim of getting a significant share needs a commitment to developing business in multiple regions over a period of time. Products need to be built to professional standards and for long life as buyers are very demanding. It’s critical to develop relationships with the channel partners and key integrators in multiple countries to support the scale needed to be an active player over the long term. •