While digital menu boards have their benefits, they also have their costs. Digital menu boards may have a high upfront cost, and the initial investment can make it difficult for stores to make the jump and switch from their static menus into the digital world. Even though stores will achieve a 5% to 15% increase in their food sales after making the switch, it can take some time to make it through the payback period of your investment. What many stores do not realize is that there is another option to put your investment to work and make back your money quickly. One way to create an easy return on investment that is often overlooked is actually selling a portion of your advertising space on the digital signage itself. There are a couple angles that stores can take to do this. Stores can either sell ad space to their vendors, or they can choose to sell to the community and more localized businesses. In this blog, I will go through an example of how a store can sell their ad space solely to their vendors and earn a healthy return on investment on their digital signage program. After we run through the calculations, I will discuss the pros and cons of selling ad space on your digital menus, as well as some of the implications that may come with certain decisions.
First, let’s look at how much exposure a store chain can get on their ads. Say a chain has 100 stores, and each store is open 24 hours a day. The playlist that their digital menus are running is a total of 6 minutes long. A standard amount of time for an ad is 10 seconds per playlist, so we will stick with this for ease of calculation. The store also has 2 screens in each store.
Now we want to look at how to calculate total exposure. 24 hours equals 1,440 minutes. A 6 minute playlist will play 240 times in a 24 hour period (1,440 mins divided by 6 mins). Since each store has 2 screens, each ad will play 480 times per day (240 times X 2 screens), which means 14,400 times in a 30 day month. Since there are 100 stores in the chain, we will multiply the 14,400 exposures X 100 stores for a total of 1.44 million total monthly exposures for the chain.
Since it is not practical to sell your whole 6 minute playlist to advertise for various reasons (more on this later), we now have to decide how much of the screen time we actually want to sell. For this calculation, let's say the store decides to sell 1 minute out of their 6 minutes (I wouldn’t sell much more than this). Ads are 10 seconds long, so that means we can sell 6 ads in that minute. Since we found in the paragraph above that each 10 second ad plays 480 times per day, we would be selling 2,880 ad exposures per day (480 exposures X 6 ads). This calculates to 86,400 ad exposures per month (2,880 X 30) in each store.
The next question we have to answer is how many vendors do you want to sell advertisements to? You have 6 time slots, but you may have more than 6 vendors that you would like to sell an ad space to. For discussion's sake, let’s decide to sell a morning ad, as well as an afternoon ad, giving us 12 different ads to run per day. We have found that retailers prefer to sell monthly time blocks, so 12 ads per day multiplied by 12 months means that stores can sell 144 ads per year.
Time to monetize this: Let’s say this retailer has an annual cost of $50,000 for running their digital signage program and is looking for vendors to pay for all of this cost through their advertising. $50,000 divided by 144 ads equals a cost of just under $350 per ad.
What does this mean for the vendor? Tens of thousands of exposures per store plus the resulting increase in sales of their advertised product. What does this mean for your store? A free digital signage program, and a 5% to 15% increase in the sales of the advertised product. Not bad!
Selling Ad Space to Vendors vs. Local Businesses
In my calculation, I gave the example of using 1 minute out of the total 6 minutes of playlist time for selling ad space. To clarify, that 1 minute you sold has a different purpose to serve than the remaining 5 minutes on the signage playlist. You held onto these 5 minutes to run ads that help you up-sell and cross-sell your most profitable products, as well as increase customer revisits. This is why you made the investment in the first place. If you would like to learn more about using digital signage, check out this white paper written by Abierto President, Rick Sales.
Once a store decides that they actually want to go ahead and sell that minute of their ad space, they have to ask the question, “Who do I actually sell it to?”. Two options come to mind, selling ads to your vendors or selling ads to people and businesses that are more local.
Local advertising can be a great way to be involved with your community. Businesses that are in your area may want to advertise their brand and services that they provide, and it is a great way for them to get their name out in the world. It doesn't just have to be businesses that advertise, people can buy ad space to market community events as well. Events such as town movie nights, fairs, farmers markets, etc. can be put on your rotating signage in order to increase awareness and attendance of these events. This type of advertising can be great for small, more localized chains because it can help them integrate with the community. However, by solely selling ad space to other local businesses, you may be doing little to benefit yourself, except for the money you receive up front. Using ad space in this way does nothing for the sale of your products like selling to vendors would. When selling to a vendor, the products they would advertise are on the shelf somewhere in the store, so customers may not even know you are actually selling the advertising space in the first place. When selling to people in the local community, the store has no control over the product being advertised because it doesn’t relate to them. The product is not located in the store, so the customer may tend to ignore the add altogether because they are only thinking about the present moment. The ad will not offer any use for the consumer at that point in time, so its upside is limited.
This brings us to our other option, which is to sell advertising space to actual vendors of the store. The biggest advantage that comes with this option is that your store is actually selling the vendor’s product, so any advertising they do to increase their sales will increase your sales as well. So in addition to the revenue you get from selling the ad space, you also get to take advantage of the increase in sales from the ad that you are getting paid for! With the revenue from the advertising and the increase in sales, you are essentially killing two birds with one stone by selling to your vendors. You can even go a step further and choose which vendor you think would benefit you the most, and decide to sell it to them. Bottled water is a popular item with the “on-the-go” crowd at convenience stores. Selling to someone like Dasani or Aquafina, especially in the summer months, will directly increase sales of your bottled beverages. Stores can also choose an item that hasn’t been as popular, and raise awareness of it by selling ad space to that particular vendor. They may want to do this because it is a highly profitable item, but they aren’t selling as much as the rest of the industry is. If other stores are selling 100 Pepsi bottles in one day, but you are only selling 50, there is potential to sell ad space to Pepsi and increase the popularity of a highly profitable product. There is a lot of flexibility to target items that you want to sell more of when you let your vendors have the ad space, so this option can be an effective way to fund the upgrade to digital signage and menus.
Selling advertising space on your new in-store digital signage screens is a great way to help cover the cost of them, however you need to be sure it is done right. One of the reasons that stores purchase digital signage is to reinforce their brand image, so you need to be sure that you are not going over the line of advertising too much and taking away from the actual content on the signage. There is a sweet spot for how much of your menu playlist should be devoted to sold advertising space, and that sweet spot will be unique for every store chain. There needs to be enough ads running to cover your investment expenses, while simultaneously growing your brand image. Each store works hard to build an image for their brand, and one of the primary goals of a digital signage program is to solidify that image. Customers need to believe that they are receiving the same services regardless of which store location they go to, so keeping that at the back of your mind will help in effectively creating a marketing and advertising strategy, without diluting any of the signage that you invested in.
Selling ad space is cheap, effective, and measurable. If you are unsure whether it is a good idea or not, don’t be afraid to test it. One of our clients that has been selling ad space to vendors actually started out by offering the ad space at no cost for 6 months. They looked at the sales before and after the 6 months of ads and were able to show concrete results to each one of their vendors that advertising on digital signage screens does, in fact, work. They decided to run an email campaign with these results, and ended up selling a year’s worth of advertising within the first 40 minutes!
With today’s digital technology, achieving your stores’ sales objectives is easier than ever, and empowering your brand with that modern look that today’s consumer is expecting is a critical requirement for marketing success. Using digital signage to advertise in-store product promotions will deliver sales increases for you and your vendors. Selling ad space on your in-store digital signage to your vendors may be the most effective way for you to reduce (or eliminate) the operational costs of your signage. A low cost and highly effective digital signage platform - now that’s something worth discussing! Are you ready to explore what digital signage can do for you? Abierto can help!