By Brian W. Carnell, Marketing and Advertising Product Strategy Leader, Cisco Systems

This article originally appeared in the Platt Retail Institute’s Journal of Retail Analytics.

Digital out-of-home (DOOH) advertising is anticipated to grow rapidly. According to PQ Media, DOOH advertising is among the fastest growing media, with an anticipated 2010-2014 compound annual growth rate of 9.4 percent in the U.S. and 10.1 percent globally.(“1”) Another estimate, in this case based upon commercial screens to be deployed, looks for compound annual growth of 16.6 percent in North America and 22.5 percent globally during the same time period.

Notwithstanding such positive predictions, for digital signage as an advertising medium to achieve mass global scale, there must be open access that facilitates seamless interoperability (“2”) of content between the many systems that power digital displays. Today, a lack of uniform processes and procedures is inhibiting multinetwork media and advertising buys, thus increasing operating costs, and inhibiting adoption in the industry. This effect is compounded due to end-user concerns of being locked into the wrong platform, should they choose a specific technology now. While the need for digital signage networks to interact and function without restriction is apparent, the path to achieving industry-wide agreement on compatibility is complex and time consuming.

Content and system compatibility directly influence knowing where and when advertising inventory is available, and what advertisers are willing to invest. As well, it influences which firms are able to offer applications, content, and information services. In the current state, the lack of compatibility in the industry as a whole has created a highly fragmented marketplace, which has begun to stifle growth.
While this fragmentation principally exists in the provisioning of content between competing network technologies, it influences the entire industry by making the diverse systems less attractive to end users, who want a stable, easy-to-use method to reach their audience.

The ability to deliver advertising content across multiple digital signage networks requires a high degree of compatibility between the diverse software and hardware technologies. To achieve this interoperability and enhance industry growth, the digital signage industry may choose to adopt a set of open standards. The benefits that result from the implementation of compatibility standards are illustrated here. The industry standards adoption process itself is intricate, as also detailed. An alternative to open-standard acceptance is the introduction of an intermediary system that provides a modular approach to achieving open access that is quick and inexpensive, providing an effective solution to the issues surrounding industry compatibility to further DOOH growth.

Benefits of Industry Standards

An industry standard “defines a uniform set of measures, agreements, conditions, or specifications between parties (buyer-user, manufacturer-user, government industry, or government-governed, etc.).("3”) Essentially, an industry standard is an accepted system that enables a complex pattern of interactions. Standardization reduces technological uncertainty in a market and increases cross-platform coordination, enables economies of scale, and opens an industry to the availability of compatible products.

Compatibility standards make it possible to connect different components products or technologies) to establish a uniform system. Technology standards share three general characteristics: (1) they are intended to guide compatibility or interoperability related to tangible products, systems, data exchange or process standards; (2) they are created in either a regulatory fashion that enables industry coordination or by the marketplace; and (3) they are proprietary or public domain agreements to which different parties have open access in that specifications are publicly available and can be influenced through institutional process.

Industry Standards Adoption

Technology platforms can be standardized in various ways. However, the standards competition process is complex; it can take several years, involve multiple actors in related markets, and span multiple versions of evolving standards. As such, standards competition includes both the processes by which standards are created, and the mechanisms by which they achieve dominance in a market. The development of technology standards generally occurs through one of two ways: committee-based or market-based. A variation on the two, known as a hybrid based model, which is not discussed here, is also utilized. Unfortunately, the utility of the selected standard depends on the adoption decisions of the other players in the network.

A committee-based approach refers to the process in which a standard is selected by a group and then introduced into the market. That is, firms select a common standard in a collective decision-making process. This may include a permanent standard-setting body that develops, selects, or imposes a standard. Firms collaborate in this process either voluntarily (as in an industry consortium) or by law (when a government body sets standards). Key benefits associated with this ethod are the potential for increased consensus, larger economies of scale, avoidance of future anti-trust litigation and affordable product prices. Potential drawbacks associated with this centralized approach include the possibility of stifling innovation in an immature market; a static, inflexible outlook toward a dynamic market; a time-consuming approach; and the possibility of mandating an inferior standard/technology. And because they are open to a wide range of participants, such bodies are notoriously slow in setting standards.

References
”1” PQ Media Global Digital Out-of-Home Media Forecast 2009-2014.
”2” Interoperability is defined as follows: "The capability to communicate, execute programs, or transfer data among various functional units in a manner that requires the user to have little or no knowledge of the unique characteristics of those units." Institute of Electrical and Electronics Engineers. IEEE Standard Computer Dictionary: A Compilation of IEEE Standard Computer Glossaries.
”3” Standardization Essentials: Principles and Practice, page 16, 2001.

Brian W. Carnell is the product strategy leader for emerging technology initiatives in the advanced services organization at Cisco Systems, where he is responsible for setting the overall direction for product development and creating the long-term vision for new platforms. Mr. Carnell has been a digital advertising industry advocate for over 10 years. He came to Cisco in 2006 from the United States Postal Service where he architected the digital video and communications platforms and served as the Section 508 program manager responsible for creating and setting technology accessibility standards. Prior to the USPS, he served as CEO of Dzeel Clinical Healthcare and CEO of Practice Stream Media, one of the early pioneers in the digital out-of-home market. Mr. Carnell holds a BS in Management Information Systems and has completed advanced management training at Stanford University and the Wharton School.