Total Cost of Ownership

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Sorting out the Total Cost of Ownership for a digital signage network, long before the first screens light up, is critical to the project’s success or failure.

Operators buy a network once, but they maintain it for the life of a project. Budgets that look great in planning can fall apart when the actual costs start coming in, because a wide spectrum of operational considerations were overlooked or ignored.

It’s tempting in planning to focus on big ticket items – like display screens – that have the most zeroes in their totals, but technology is just one factor for networks. There are a lot of downstream costs to also consider, some of them tied directly back to those initial technology choices. Cutting corners may save a few dollars at launch, but add far more to the overall cost.

In sorting out the real costs of starting and running a digital signage network, operators need to think about the costs and implications of maintenance, network operations, and feeding the ever-hungry content beast.

Maintenance

Mainstream consumer electronics are everywhere, their prices fixed in our heads from shopping trips and advertising. But big flat panel TVs that may be perfect for a man cave at home are entirely wrong for just about any digital signage network.

Consumer-grade flat panel LCDs and plasmas are designed to operate for a few hours each evening in a home. They are NOT engineered to operate around the clock or even most of a day. Professional monitors are engineered to withstand much more intense usage and environmental conditions, but they typically cost at least 20 per cent more than consumer versions. For a network planning to roll out, for example, 1,000 screens, saving that 20 per cent by using cheaper consumer LCDs could bring an initial capital expense down by $200,000 or more. But that decision will likely cost the operator far more – in service and replacement dollars, lost opportunity and credibility – through the life of a project.

When designing networks, operators should be thinking Mars Rover – choosing technology that can be deployed and managed from great distances, without ever sending anyone on site. That means hardware designed for high endurance, and with the necessary connectors and control codes that allow full, remote device management.

Consider this common scenario: a network deploys consumer HDTVs in hair salons across a country. Screens go off at shops for any number of reasons, and while salon staff notice this, they don’t do anything because it’s not their problem. The network operators don’t know there’s a problem because the PCs on site don’t know or report that screens are off.  So no alarms are raised until advertisers complain they’ve been at salons lately and seen screens were black. So the operators subcontract field services teams to go on site and turn screens back on – paying $250 a pop to “roll trucks.”

So $200 saved with the cheaper LCDs is now $50 extra spent getting those units back on, never mind those that die from overheating. Advertisers are reconsidering future buys and salon operators are questioning the value of being on the network. By using screens that allow remotely management, and better software platforms, the screens would have never stayed off.

Operations

Digital signage networks don’t manage or maintain themselves. They need care and feeding everyday, and there’s a long list of tasks that can quickly equate to one or several Full Time Equivalent (FTE) jobs. The tasks include proofing, scheduling and distributing content, generating reports and watching and troubleshooting deployed equipment.

The right software choice can mean the difference between paying a person, or a team. An easy to use, basic platform might save $25,000 in annual software costs, but actually adds $40,000 or more in annual staffing costs because it lacks all the workflow efficiencies of a more sophisticated platform. Work that needs a .5 FTE using an efficient platform might need two FTEs on another, more cumbersome platform. The same applies with network management. A well-designed network may require and automate trouble notices, while the wrong design and weak monitoring can mean a constant headache for one or even several people.

Content Production

A digital signage network is a content-hungry beast and it must be steadily fed.

The refresh rate for content on a network owes heavily to the dynamics of the venue and its viewing audience, and the duration and volume of content for a medical clinic with long wait times and limited repeat visits is very different from a grocery network with shorter times in store, but weekly visits. With each, operators must understand how much content is needed to populate programming loops and how long it can run before getting stale for viewers. Different programming based on things like geography and language can bring on even more production requirements.

There are three costs centers for feeding the beast:

• Full-time, staff creative;
• Outsourced;
• Automation.

If a network’s particular beast is a hungry one, bringing it in-house may makes the most sense. A trained, talented motion graphics specialist can probably produce 200 spots in a year, and if average pay packages in the market are, for example, $60,000, that equates to $300 per spot. Getting that same quality of work produced by third-part firms would typically double or triple in-house costs. Operators can then make a more educated decision on total content costs based on expected work volume.

Using the right software platform, at least some spots can be largely automated, using templates and scripting that dynamically populates creative with such data as retail prices.

TCO can also be massively impacted by network design and choices involving things like display shape. If a network has displays in both landscape and portrait modes, that almost always means two distinct pieces of creative, and therefore near-doubled production costs.

Final Thoughts

Total Cost of Ownership planning is essential to the business and operational modeling for a network. Done right, a network’s numbers, plans and service delivery should meet the expectations of its stakeholders. If TCO is not factored, operators can easily lose control of their operating budgets.