• by Bill Gerba , December 31, 2007

Life is easy; measuring the rate of media consumption in retail stores is hard. So hard, in fact, that several multinational organizations, including VNU/Nielsen and Point-of-Purchase Advertising International (POPAI), have spent more than a year simply trying to figure out what it is that they're trying to measure, as have dozens of smaller enterprises.

In part, the complexity of the task stems from the fact that many of the parties involved with marketing in retail (namely retailers, product manufacturers, product marketers and display manufacturers) have incompatible goals that require different metrics and measurement techniques. For example, while the primary goal of product manufacturers may be increased product sales upon customer exposure to a particular piece of retail marketing, retailers might be more interested in marketing's effect on overall trip time or ticket size.

Caught in the middle of this measurement madness are innumerable retail marketing companies, many of whom have paid private consultants and big research groups like ACNielsen and Arbitron large sums to figure out how well their products perform. For them, measurement is even more critical than for retailers or product manufacturers, since the very value of the products and services they offer is limited by their effectiveness. If these groups can't demonstrate a verifiable ROI for their offerings, they'll be hamstrung. Nowhere is this more apparent than in the digital signage industry, where many of the world's largest networks depend on being able to sell advertising space on screens to vendors who want to market their wares at the point of purchase.

A prime example is vJive Networks, an advertising-driven digital signage installation that spans more than 1,000 venues across the top 25 metropolitan areas in India. Considering that organized retail accounts for less than 5 percent of all retail sales in that country, in-store marketing is more likely to take the form of four-color posters and inexpensive pop displays than expensive digital signs in the places where most Indians shop. However, a burgeoning middle class and skyrocketing market for luxury goods has forced many top retailers to adopt more elaborate in-store marketing practices in order to capture a portion of the country's newfound wealth. Consequently, networks like vJive have been growing rapidly and have been faced with the challenge of solving the value proposition problem once and for all, or risk being overtaken by any of a horde of competitors eager to improve their market share.

Looking for a way to quantify the value of their screens to potential advertisers, vJive chose not to focus on measuring traffic, footfall or "opportunities to see" - the types of metrics that other companies have been tracking. Instead, they decided that the retailers themselves could supply this data, or a reasonable proxy could be taken by tracking register receipts. While this isn't too unusual in the digital signage world, what makes vJive Networks unique is the way advertising on the screens is valued. Rather than price ad slots the same across every screen in the network, vJive developed a new metric called the Screen Consumption Quotient (SCQ), an overall location value score based 70 percent on Household Potential Index data published by the Media Research Users Council, and 30 percent on the revenue and/or footfall data supplied by store managers. By design, SCQ values customer quality over quantity, using aggregate socioeconomic data like household income, education level and literacy, as well as lifestyle data like frequency of dining out and mobile phone ownership, to estimate how good of a potential customer a viewer is likely to be, and thus how valuable he or she is to potential advertisers on the network. Highly desirable scores are given an overall SCA of A, with less desirable scores translating to grades of B through E. The grades are then used to calculate prices for the ad slots available on each screen in the area (see chart at right). Thus, advertisers have a clear understanding of the screen's perceived value. If they agree with the value assessment for a given venue, purchasing screen time becomes an obvious decision.

Pricing differences for screens with different SCQ grades can be dramatic. Take, for example, the case of several different venues that host vJive's screens in Bangalore, India. Shoppers that frequent the store in Malleswaram are more than half again as financially well-off as are shoppers in HMT, and they drive more than three times the foot traffic and store revenue. Because of this, advertising slots on the company's screens in Malleswaram are nearly twice as expensive as slots at the HMH location.

The SCQ metric serves several purposes for vJive Networks. First, it justifies their ability to charge premium prices for slots in venues where advertising is most likely to be effective in increasing product sales. Second, it provides a quantitative benchmark that advertisers can use to measure ad effectiveness for target demographics. And finally, by using a simple formula and readily available information like Household Potential Index and store footfall data, they have established a standard pricing model for digital signage that other networks can adopt at their choosing. This last point is particularly noteworthy in a young market with significant fragmentation and no clear leader: By settling on an open metric, vJive's competitors will either have to adopt their methods and mimic their rate structure, or else come up with a new metric that can be used to cost-justify screen time for potential advertisers.

Whether other network owners will follow vJive's lead remains to be seen. If they do, though, expect a similar metric to start appearing in U.S. digital signage networks. Getting network owners across the country to agree on screen valuations can only be a good thing, since with standard rates and values ascribed there will be one less barrier to adoption for advertisers still hesitant to spend money on the new in-store advertising medium.

Bill Gerba is the CEO of WireSpring Technologies, a digital signage software and services company. (bill@wirespring.com)