Signs of the Future
As in-plants move into wide-format printing to expand their services and revenue, how will this business be impacted by the growth of electronic signage? An analysis of the flat panel display market reveals a number of challenges.September 2013
It is perhaps the second reason that appears to be hampering existing installations of electronic displays, especially in shopping malls. Many of the early electronic display installations in upscale shopping malls have gone dark due to a lack of content. To gain the ROI, reportedly as many as eight to 12 advertisements are needed to rotate on a screen daily. It is also difficult to scale the number of advertisements. Additionally, it is difficult to sell many more advertisements given that advertising budgets are typically static and shared among a growing number of communication channels.
Wireless transmission of content for public display can, in some instances, be construed as broadcasting. Until lawsuits set precedent, a broadcasting license may be required to be able to transmit images for display in retail stores. More likely, over time the wavelength over which the images can be transmitted for retail advertising will become dedicated, perhaps auctioned off to the highest bidder by the Federal Communications Commission (FCC). Until this is resolved, some retailers are using USB memory sticks to manually upload information to the screens.
Computer transmission security in today's age of rogue computer programmers/hackers is never far from any IT provider's mind. Whether for profit or protest, the viral effect of potential misappropriation of electronic displays throughout shopping malls is a threat to brand owners since carefully crafted messages can be altered in an instant. While no instances are known to have occurred so far, it is a real concern for those who own the locations where these electronic displays reside.
The cost of potential vandalism is also a concern. The replacement of a printed sign is minimal. The replacement cost of a new electronic flat-panel display will run in the hundreds of dollars. The mere novelty of electronic display signs may attract unwanted attention by vandals, or perhaps even thieves who see an opportunity for a quick score.
Opportunities and Threats
With growing visibility into what many brands consider "the moment of truth," point-of-sale (POS) wide-format advertising is playing a larger role in the minds of advertisers than ever before. With increasing communication channel fragmentation, POS remains one of the most powerful marketing tools for advertisers.
As the long-term challenges to electronic display signage become clearer to retailers and shopping mall owners, the decision to invest in printed wide-format signage becomes easier. There is opportunity for wide-format printing equipment and supplies manufacturers to continue to ride on the momentum experienced by print providers that produce wide-format signage. Increasing education about the value of wide-format print and the advent of ever-more productive wide-format printing devices is creating opportunities for equipment and supplies manufacturers.
The impact of electronic technologies upon wide-format printing equipment and supplies manufacturers is among the lowest of all print applications, with only package printing being more protected from electronic substitution. Ironically the biggest potential threat may ultimately come from one of the wide-format equipment manufacturers.
Some wide-format printing equipment manufacturers are divisions of much larger conglomerates. Within those conglomerates we may find someday a desire to leverage their contacts into the wide-format signage industry to help them sell and manage service contracts to manage electronic display content. The challenge, of course, is that the wide-format printing equipment manufacturers have contacts with dealers and commercial printers, not with the brands. So the synergies may not be as strong as they may appear to the upper managers of those conglomerates.
So how should print providers respond? At the moment, there is little to respond to, aside from highlighting the benefits of print against the long-term structural challenges faced by electronic display technology for wide-format graphics applications. The opportunity is to educate the market in general about the power of print during the "moment of truth" that occurs millions of times daily in retail stores across North America. Print's proven low-cost impact among all the point of purchase (POP) advertising channel options is unsurpassed.
A Wide Open Opportunity
Digitally printed wide-format page volumes are projected to grow at 5 percent, compounded annually through 2017. Retail pricing for finished output continues to range between $2-10 per square foot, depending on substrate and job size. For typical printers with $2 million in annual revenue, who sell as little as five wide-format prints per day, wide-format printing adds nearly 4 percent to their annual profit. For many printers of that size this may well double or triple their annual profit.
Statistically, well under 10 percent of commercial printers offer wide-format printing services today. (Among in-plants that figure is closer to 59 percent, according to IPG data.) Given the near risk-free hardware acquisition cost, the real cost threat results from delaying an acquisition of a $10,000–$200,000 indoor/outdoor printing-capable inkjet printer.
The "first mover" advantage is powerful. Wide-format printer manufacturers need to educate their prospects that waiting for hardware prices to decline even further is futile. Any cost savings will have been mitigated by having to buy market share from the printers that already adopted wide-format inkjet technology.
It is not foreseeable when electronic display signs will start to impact wide-format printed signage; it will happen at some point, but for many, perhaps not in their working careers.