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Numbers Don’t Lie: The Stats Show the Cost-Effectiveness of Digital Signage

By
Denis McInerny
-
January 25, 2018
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When it comes to small businesses, the Small Business Association (SBA) names LED electronic displays to be the most effective and least expensive form of advertising. Whereas a newspaper ad might run up to $7.39 per 1000 impressions, and more than $5.00 per 1000 for a radio ad, LED signs pull in 1000 impressions for merely $0.15.[1]

This lower cost is magnified as LED signs are modular, allowing a business to easily enhance and update its content over time. Clearly, LED signage is a powerful and cost-effective tool for a business, but with a relatively higher barrier for entry has some hesitating. Let’s take a closer look at the benefits around cost that a LED sign can bring to a small business.

From bringing in new customers to increasing the amount current customers are spending, LED signs create new business at multiple levels with consistent statistics. A study of small business owners revealed that 86% of business owners who had installed new signs saw new customers coming through the door, and around the same amount (83%) saw an uptick in sales.[2]

Where do these new sales come from? An InfoTrends study showed that digital signage pushed customers to browse up to 30% longer.[3] For customers waiting in line, having interesting content to engage with and up-to-date information on which registers were available led to a 35% decrease in perceived wait time. At POS, display screen advertising led to a 30% increase in sales for advertised brands. That leaves customers satisfied with service and eager to return. At nearly every level of the transaction, LED signs enhance a customer’s experience and boost their likelihood of giving their business.

Though LED signage offers benefits within a store, their primary purpose is on the roadside where impressions are king. A study utilizing anonymous video analytics logged the ratio of people that took note of signs, digital and static. While the first day saw the highest rate of impressions, the study saw consistent numbers around that watermark for its duration.[4] In the same study, an offer was posted on both digital and static signs that a free tote bag was available inside. The study found that while only six took up the offer when it was displayed on a static sign, nearly more than 100 times the people did so when it was a digitally-displayed offer.

The power of an LED sign comes from the way it exists on the border that conventional, highly effective forms of advertising like newspapers and billboards share with modern, digital marketing like Google and Facebook ads. With the flexibility and attractive veneer of a digital screen and the concreteness of a sign, LED signs have applications ranging from drawing new customers in, to keeping them around longer and ensuring their satisfaction. The SBA concluded that LED signs are by far the most effective and least costly form of advertising for small businesses, with reported increases in business up to 150%. A University of Cincinnati study found LED signs offer an ROI as low as 3 months.[5] Businesses keep returning to the LED sign due to its effectiveness and flexibility, adjusting alongside their campaigns and other short-term needs.

These benefits are numerous and position LED signs as a maneuverable and powerful method of advertising that gives businesses more agility in a shifting marketplace. Between now and 2020, the digital signage market is forecast to grow at nearly 9% compound annual growth rate.[6] LED signs have put their best foot forward and the markets have noticed. Avoid crowded newspaper and Facebook pages where customers are eager to see their content rather than advertising. At a stoplight or while waiting in line, customers are practically grateful for something to occupy their attention in a moment of down time. That’s the true power of LED advertising: it creates impressions when a customer is actively looking, reading, and noticing. These types of impressions are arguably more valuable than those found on TV, where many viewers are checked out or fixing something in the kitchen. In fact, a Nielsen study found that more than 55% of travelers that noticed a digital sign could recall the specific message on that screen.[7]

Close to 80% of companies lease at least a portion of their equipment, with many leasing all of it, in order to not put down so much money up front. Like LED signs themselves, this leaves businesses more flexible for challenges ahead. Because leasing requires no down payment, this amounts to effectively 100% financing that is convenient enough to allow businesses upgrades and additions to their LED signs as new opportunities arise. Even better, when doing taxes this year, a leased piece of equipment is not considered a purchase by the IRS. In fact, it’s a tax-deductible overhaul expense. Finally, leasing does not appear on balance sheets as a debt or liability, making businesses more attractive to potential lenders when the need is there.

The advantages of an LED sign are wide-ranging and numerous, with business implications at nearly every level. Though the initial cost seems high, the rapid ROI and leasing options turn LED signs from a safe bet to a sure thing. In conjunction with a lease, even a relatively conservative prediction of 10% increase in sales will have a major impact on a business’s bottom line. There’s simply no arguing with numbers, and the numbers have the back of LED digital signage.


[1] http://martin-supply.com/pdf/Cirrus/Studies/SBA_Study_Value_of_LED_Displays.pdf
[2] http://www.sixteen-nine.net/2016/01/27/18-surprising-statistics-about-digital-signage/
[3] http://datatrend.com/library/DigitalSignage-SignoftheTimes-0610.pdf
[4] http://www.capitalnetworks.com/media/pdf/CapitalNetworks_OLG_Digital_Signage_Study.pdf
[5] http://www.signresearch.org/wp-content/uploads/The-Economic-Impact-of-Exterior-Electronic-Message-Boards.pdf
[6] http://www.tmcnet.com/usubmit/2014/03/12/7720094.htm
[7] https://oaaa.org/NewsEvents/PressReleases/tabid/327/id/4244/Default.aspx
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Denis McInerny
Pro AV

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