Tuesday, October 28, 2008

PQ, MMI say good things in store for the digital signage market

Not one but two reputable research companies have put their stamp of approval on the digital signage industry in the past week, which surely means that they both must be right, right?

First, PQ Media came out suggesting that the digital signage market will continue with double-digit growth, despite the economic slowdown expected in 2009:

While the industry's growth this year will decelerate from 24.5% in 2007, PQ Media forecasts digital OOH spending in the U.S. to grow at a compound annual rate of 12.9% from 2007 to 2012.

In the first foray into the global digital OOH market, PQ Media found that spending worldwide will grow 12.8% to $6.11 billion in 2008, slowing from 22.6% last year, but forecast to expand 14.5% from 2007 to 2012. The U.S. accounts for nearly 40% of global digital OOH spending, but its share will decline over the next several years, according to Global Digital Out-of-Home Media Forecast 2008-2012.

  • U.S. spending on video ad networks, the largest segment, is on track to expand 8.1% in 2008
  • This growth will decelerate in 2009 before returning to double-digit growth in 2010
  • Digital billboards remains the fastest-growing segment, albeit slower in 2008, posting growth of 28.2%
  • Growth for digital billboards is expected to remain in the 20% range through 2012.
  • Ambient ad platforms will grow 6.8% in 2008.
  • U.S. digital OOH spending grew 23.1% on a compound annual basis from 2002-2007, exceeding 20% growth each year of the period.
As if to further inflate market expectations, MultiMedia Intelligence, another research agency, announced that, "the digital signage market continues its growth as the market consumes 1.1 million displays in 2008... an increase in display shipments of 34% over 2007 [that by] 2012 will consume nearly 2.3 million displays."

MultiMedia Intelligence's new research also found that:
  • Current global economic weakness will sap growth between 2008 and 2009, but 2010 returns to strong double-digit growth.
  • Ethernet is by far the dominant connection interface. HDMI and cellular will become increasingly significant.
  • China overtook the USA as the top digital signage consumer, driven by preparations for the 2008 Olympics.
  • Retail, transportation and restaurants and bars are the top 3 digital signage verticals. Education and corporate communications verticals are making impressive gains.
  • Digital signage is increasingly driven by digital media adapters rather than PCs. Digital media adapters will exceed PCs in 2009.
  • Roughly 8% of digital displays have embedded TV Tuners, with ATSC, DVB and country-specific standards competing for leadership.
  • Although hard disk drives dominate the market, solid state drives are making in-roads.
Here at HQ, the first half of 2008 was fantastic -- lead volume was way up, prospect quality dramatically improved, and many long-term pilots turned into full deployments.  However, around mid-August (which is normally slow anyway), we started seeing a noticeable decline in activities that required, you know, paying for stuff. There are still plenty of entrepreneurs out there, and the number of small rollouts and pilots appears to be unaffected for the moment, but the number of large companies segmenting off a portion of their budgets to try out a new marketing program with digital signs seems to have flattened.

Cash is king right now, and there's no question that many companies are stashing it under giant corporate mattresses right now rather than actually spending it, but I personally believe that this global economic slowdown is going to have significant and protracted effects on the overall market.  Could we see double-digit growth in 2009? Yeah, but I expect it to be more in the 10-15% range than in the 20%+ range as these researchers believe.


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