The Basics of Measuring Digital Signage ROI By Frank Lucer At Isnare.com Ezine Articles

Back in the days when mail order was the primary channel through which non-store sales were conducted, it was relatively easy to determine your return on investment for a given campaign. If you spent $50,000 on production, postage, and other costs, and generated $10,000 in profit, your ROI was 20%. When it comes to a digital signage network, the numbers are harder to calculate. It's often difficult to know what effect, if any, your content is having on viewers. The reason is largely due to problems in tracking and measuring their response.

For example, the purpose of your signage network may be to generate leads. But, when a lead is generated, how do you know whether your signs stimulated the action? Or, consider sales. Even if you only have a few digital screens in one venue and the goal is to lift sales for a given product, how do you know what level sales lift can be attributed to your signs?

These are a few of the challenges that are inherent with identifying your network's return on investment. Below, we'll take a brief tour through a hypothetical signage network that exists exclusively to sell advertising space. There are obviously many reasons for which you can deploy digital signs; this particular business model offers simplicity for our discussion.

Trackable Metrics

The main variable that we're going to track is the cost for every thousand people who view our hypothetical signage segment. This metric is referred to as the "CPM." Let's assume that that all of our screens are within one retail venue and our venue receives 10,000 people each day. On average, each person spends 7 minutes within our store. Our signage segment lasts for 7 minutes (for simplicity's sake) which means that each person sees it one time.

Let's further assume that we're selling ad spots on our screens for $250 for distribution throughout the week. Given these numbers, every impression of our segment has a cost of $0.025 (or, $250 divided by 10,000). Therefore, our CPM is $25. If each spot is 15 seconds, a 7-minute loop would accommodate 28 advertisers, assuming our entire segment is comprised of advertising. That means we're generating $7,000 in weekly revenue (or, 28 multiplied by $250).

If the cost of our maintaining the digital signage network - including hardware, software, staff, and support - is $3,500, our profit is $3,500. That translates into an ROI of 100%.

Other Data To Track

Admittedly, the example that we're using in this article neglects some of the finer points of determining your signage network's ROI. For example, you might not be selling advertising space on your screens. Instead, you might be designing your segments in order to lift in-store sales. Or, you may have your digital screens positioned outside the entrance of your retail stores and are trying to motivate people to enter. Or, maybe you're using your screens to not only lift sales, but to up-sell customers.

Each of these objectives requires that you track a different set of variables. Some of them are incredibly hard to measure. For example, if the goal of your signage network content is to give your brand increased exposure, how do you quantify the result? In truth, it's often impossible (or nearly so).

In a future column, we'll explore some of these points in greater detail. We'll take a closer look at some of the methods that you can use in order to track an assortment of variables, including feedback forms, sales receipts, and other data. For now, realize that calculating the ROI of your network can often be a vague science.

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