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Tuesday
Oct042011

Why Double-Dip Recession Won't Rain on the Digital Signage Parade

Short of a total economic collapse, the digital signage market is in better shape today to weather a new downturn than a few years ago.

Will Greece default on its debt, destabilizing Europe's financial markets and plunging economies around the world back into recession? Or, will the politicians and bankers, find some way to avert the crisis and pull nations back from the precipice?

Frankly, I don't have the slightest idea, and I'm not so sure anyone else does either. But one thing I am confident in is that the conditions are right for the digital signage market to pull through any double-dip in much better shape than it did the first time around during the 2008-09 recession.

Global Industry Analysts, which recently published "Digital Signage Systems: A Global Strategic Business Report," describes the impact of the last recession on digital signage thusly: "...the global digital signage systems market witnessed sizeable deceleration in growth momentum during the years 2008 and 2009, as direct fallout of narrow creativity levels in a weak economy, and credit shortages for funding new and risky ventures during the period."

But this time around -if there is to be a this time around and if the size of economic contraction is not too severe- I believe there are at least five reasons why digital signage is likely to do better.

New kid on the block no more. Even though the last contraction began just three years ago, a lot has changed on the media landscape. For my purpose, two developments bode well for digital signage. First, professionals in the advertising business no longer regard digital signage as a "risky upstart." With documented audience numbers, it's transitioned into the media mainstream. Second, when budgets are tight, companies looking to sell retail products will be more likely to want to influence shoppers with persuasive messages closer to the point of sale.

Lower costs melt from economic frost. Displays as well as digital signage hardware and software is less expense than three years ago. As Global Industry Analysts puts it: "Low hardware costs, and declining software development costs have made systems, such as, media players, and display units like LCD displays cheaper and affordable." The emergence of software-as-a-service as a digital signage business model also is tipping things in favor of those who are cost-conscious.

Flat is where it's at. It's hard to overstate the profound affect media tablets like the Apple iPad, Motorola Xoom and other multi-touch flat screens is having on the way people like to consume digital content. Digital signs, which already bore a striking resemblance to another consumer favorite -i.e. television- when the last recession struck, now have an inherent kinship with media tablets. If they're hybrid digital signs with interactive touch-screen capability, so much the better. Savvy marketers and advertisers recognize these similarities and are likely to exploit them on digital signs to gain a leg up on the competition -even more so in the heightened competitive environment of a slowdown.

Buy low. For those businesses that are flush with cash, a recession can be a golden buying opportunity, if such acquisitions or new product rollouts lead to greater market share. Many traditional media companies that learned some hard lessons about the apparent strengths of their core properties the last time around, have had time to recover. I wouldn't be surprised to see some use a double dip as an opportunity to bolster their core brand with digital signage offerings.

Emerging is verging on splurging. Even if the Greek debt crisis sets off string of economic failures in the West, that doesn't necessarily mean the rest of the world will suffer. As Global Industry Analytics puts it: "Developing countries in Asia, Latin America, and Middle East are forecast to drive future gains in the (digital signage) market. The retail boom in countries like China, Singapore, Malaysia and Thailand, UAE, Hong Kong, and India, among others, provides a strong business case for new installations of digital signage systems."

Please don't misinterpret my optimism about the digital signage market as a lack of concern about the bigger economic picture. Of course, a double-dip would be a terrible development for millions people.

That said, when I look at where the digital signage market is today, I can't help but be bullish on the future of this communications medium.

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