There is an old adage that says follow the money. The new adage for solution providers may be to follow the marketing dollars—which increasingly means following the digital signage market.
Like the Internet before it, digital signage is an information medium that is giving businesses better ways to communicate with customers and employees and is spreading into new niches. InfoTrends estimates that digital signage sales generated about $1.5 billion in revenue in 2006, growing exponentially since 2002, when revenue totaled $388 million.
Retail has been the main driver, but sectors such as financial services, transportation and hospitality have also been quick to replace traditional signs with digital ones, according to Norman McLeod, a digital signage specialist for the market-research and consulting firm.
Even though the digital signage market is growing, it remains a specialty niche. Nearly half of the solution providers in the CRN monthly poll placed digital signage in the early adopter phase, which translates into long sales cycles, and only 6 percent of the solution providers said they were currently selling digital signage.
But that is beginning to change. Declining display costs and off-the-shelf software packages are lowering costs and barriers to entry. Solution providers say customers are now coming to them to ask about solutions, reducing sales cycles. And, according to the CRN poll, the number of solution providers offering digital signage solutions could quadruple over the next few years.
Moreover, the market offers opportunities to mine consulting services revenue and ongoing revenue streams from hosting, content management and content creation. Indeed, in the CRN poll, nearly two-thirds of respondents reported receiving a relatively hefty $1.50 to $2 in revenue for every dollar of deployment revenue within the first 12 months of a deployment. Solution providers also attributed 70 percent of their digital signage revenue to services.
Next: Getting Into The Market