Disruptive Technology

Last week, Butch Anton, the owner of Superfrog Signs and Graphics (Moorhead, MN), briefed me on an interesting theory. I heard this at a business seminar, Butch said, explaining the theory that suggests three types of people exist in any given population: followers, comprising 80% of society; troublemakers, 12%; and leaders, 8%.

The lecturer explained that followers are the hard-working people who obey rules and pay their bills. Troublemakers, he said, are the self-centered ones — four-year-olds, bullies, angry terrorists and freeway tailgaters. The leadership category included all varieties of parents, teachers, managers, clerics, magnates and presidents.

Presumably, understanding the divisions helped the attendees become leaders.

However, all theories have a flaw, and here s how Butch and I saw this one: Most of us slalom between the follower and leader tracks daily, and, indecorously, we often become troublemakers when we shouldn t. We offer opinions where none are wanted, for example, or angrily tailgate some fool who s driving slow in the fast lane.

Be wary of theories, Butch said.

Static and lifeless signs may not have the attention-grabbing appeal they need to capture and draw today s consumers, says a brochure I picked up from Media Signage Networks, a Malaysian-based company that exhibited at the recent Digital Retailing Expo (DRE), held in May, at Chicago s Navy Pier. Media Signage Networks was one of 83 companies, many of which were presenting flat-panel LCD and plasma screens to the Expo s 1,500 attendees. ST s sister magazine, VM+SD, co-sponsored DRE.

Attendees included decisionmakers from RadioShack, CompUSA, Best Buy, Sears, JCPenny, Federated Department Stores, Target, Marshall Fields, Wal-Mart, Meijer, True Value, Menard s, Checkers Drive-in, REI, Walgreens, Office Depot, Circle K, Walt Disney, Bell Canada, Advance Auto Parts, the U.S. Postal Service and Tesco.

Media Signage Networks, using flat-panel LCD and plasma displays, produces its electronic digital signs (EDS) — MediaSigns — for use in hospitals, train depots, schools, restaurants, grocery stores, airports, corporations, retail stores, malls and theaters. Its customers include Philips Electronics, Carlsberg Beer, Exxon Mobil, L Oreal Cosmetics and the 300 Kenny Rogers Roasted Chicken restaurants owned by Berjaya Group, a Malaysian investment company.

MediaSign s sign system incorporates full-motion images — video commercials — into its flat-panel display signs. Typically, these download from such common sources as centrally located computers, wire-less systems, the Internet or even satellite-narrowcast signals. The company says its features allow merchandisers to instantly push a new campaign to the displays. This, it claims, reigns over traditional, paper-based signage, which often forces inflexibility and takes time to produce and distribute.

Unfortunately, this last statement is true. Price aside, LCD or plasma screens can display electronic posters of similar quality to everyday digital prints. And, with EDS, one centrally located geek can replace numerous posters, in minutes. Further, by applying simple effects, the geek can cause the EDS to sing and dance.

Disruptive technology

If your shop is making posters or interior signage, EDS, as a disruptive technology, could hurt your business, but there s a way back. First of all, you know your shop crew can easily install televisions, er…sorry, electronic digital signs; and they can run any necessary wires to them, so don t see EDS as rocket science. You can also contact such businesses as Digital View Inc. (Morgan Hill, CA) for their technical help, advice and equipment.Digital View, Inc.

Also, content is easier to create than you think.

Content — the actual playing image — is the EDS consumable, and, believe me, excepting videos, your shop can produce content. Any designer who can master standard signmaking software can create EDS content. Visit www.macromedia.com to review Macromedia s Director

MX 2004 software. It allows you to create animated content and more. While you re there, check out the box of Macromedia Flash MX 2004 — because, if you re creating content for EDS systems, you may as well create — and sell — web graphics.

Truth is, with Macromedia s various softwares, you can create an entirely new profit center for your shop.

EDS proponents speak to their customers of action-packed, customer-inspiring content, and, equally, they compare the cost per thousand (CPM) copies — or views, to digital prints, newspaper and television ads. By their figures, the cost data favors EDS.

Here s why: Even though the display screen may cost more than, say, a framed, digitally printed poster, the cost itself isn t a factor because the buyer can write it off as an equipment, not advertising, expense. In fact, the display might qualify for the IRS Section 179 deduction — or first-year expensing, where buyers can write off 100% of the equipment cost in its first year of use.

Business advertising (content) write-off policies vary. Some accountants say you should expense advertising costs when they incur, because future benefits (from that advertising) are uncertain. This is probably true with EDS content. Others believe you should capitalize the costs, especially when attaching it to one investment, such as when selling big-ticket items.

With the equipment (display screen) costs accounted for elsewhere, EDS operational costs (measured as CPM views) fall dramatically. Additionally, in a retail environment, the product manufacturer and distributor may share content-production costs, just as they do with printed POP, and bring the CPM cost even lower.

Does EDS work?

At DRE s Impact and Measurement Analysis session, one of 12 educational courses offered at the Expo, attendees learned that ASDA (Wal-Mart s British division), to measure and influence buyer behavior, uses heat-sensing trackers to collect customer information. The tracking system creates charts that determine when customers arrive, where they go and how long they stay in any area. These charts evolve to become what ASDA describes as shopper pathway maps and footfall density maps that help its marketers determine where to place signs.

Wal-Mart bought ASDA in 1999, for $10.8 billion. ASDA employs 122,000 people in 265 stores and 19 depots across the United Kingdom. Like Wal-Mart, ASDA sells fresh food, groceries, clothing, home, leisure, automotive and entertainment goods.

Speaking alongside ASDA s Media Center director, Sarah Brookfield, at the Measurement and Impact Analysis session, was Guy Vaughan, the managing director of Retail Marketing Services (Watford Herts, England). Guy s company specializes in in-store, POP testing and analysis; its accounts include Lloyds of London.

Guy projected several videos of eye-scan images acquired by mounting miniature TV cameras on a paid shopper s eyeglasses. ASDA wanted to see what attracts a buyer s attention as he or she passes through the store. ASDA also uses in-store cameras to determine, and catalog, customer types. They know, for example, that shoppers, in average-sized groups of 2.2 people, spend an average of seven minutes in the ASDA clothing section, but less than two minutes in the store s liquor department. They re more sure of their liquor than clothing, Guy said.

Brookfield said their EDS test displays caused a 10% increase in sales of the EDS-advertised brands, more if they offered a price incentive. The gain occurred once EDS signage was placed near the offered product; it significantly declined if the screen was placed elsewhere. She added, By analyzing the states of the buying process, we conclude that [electronic] retail digital signage [their term for EDS] has the potential to substantially affect consumer shopping behavior.

Other studies show that EDS caused inquiries, but not necessarily sales, to increase by 300%.

Be wary of theories

ASDA tested its EDS premise by placing display signs in a test store and measuring the results. From what I determined, however, they didn t do a placebo test, that is, they didn t place static signs with similar offers in the same place as the EDS, and measure those results. Suppose a static, digitally printed POP sign gained two or three points less. Would the cost difference, by standard, business-accounting measures, still favor the more expensive EDS?

I asked Brookfield what the EDS test system cost. She said they were measuring effectiveness, not costs, so she couldn t say.