Digital signage is a good investment that can bring even better results, but how do you establish a value of these results? Digital signage sends waves of reactions into the world, and it can be difficult to track them. Still, you can obtain a clear vision of how profitable and beneficial this investment has been.Establishing the ROI (Return On Investment) of your digital signage is very important and also very simple. Compare the costs and the profits and you’re done, right? Well, yes. That is very simple, but you need to have accurate information first. Here are a few pointers on how to obtain concise and clear information on how to establish a clear understanding of your digital signage ROI.
What does Return On Investment entail?
The calculation of your digital signage ROI is pretty straightforward at first sight. Simply calculate the difference between the investment you’ve made in digital signage and the benefit generated from its installation.
Digital signage ROI can be calculated based on a simple equation:
On one side, you must establish a clear overview of the cost of your investment. On the other, you must accurately calculate the gain as well as saving in other areas from your digital signage investment.
Calculating the returns on your investment can be tricky given that benefits aren’t always easy to track and aren’t always viewed in numbers. For instance, if you invested in digital signage to use it internally, for employee training or communication, the benefit will be higher efficiency and a stronger internal structure. With that in mind, it becomes clear that your returns on investment is much more complex, and isn’t always quantifiable.
Digital signage ROI is often subjective and personal, and instead of determining it from a financial viewpoint, it should be determined based on established objectives.
Establish the costs of the investment
The cost of a digital signage investment includes far more than just the hardware and the software. As with most investments, people often overlook the big picture. Maintaining the technology, power usage, cost of training, content creation and management are only some of the costs. Additionally, you should view the time invested as an additional cost.
When establishing an overview of costs, you should include costs for a longer period of time, a few years in the future, as opposed to the momentary cost. This goes to show that either side of this equation isn’t as simply calculated as you may have believed at first.
Establish and track objectives appropriately
Before making the step in the right direction and investing in digital signage, you must establish the objectives you want to achieve with it. Digital signage ROI is not always a result of a direct financial transaction. In fact, it has two general viewpoints when tracking the benefit from it.
From one viewpoint, if you are using digital signage for pure advertising, a certain product of your own or selling advertising space, it directly results in a purchase. Thus, you can directly see how many people were influenced by it, as well as details of their behavior. Both interactive and classic, digital signage technologies these days provide advanced methods of tracking, such as scanning how many people stopped to observe the display, for how long, and even if it resulted in a decision or a purchase.
From a different viewpoint though, if the reasoning behind investing in digital signage is to, say, increase your overall sales by 30%, to increase traffic by 50% or to oil up the internal communications, you should specify these goals and track them accordingly. From this viewpoint, you should be focusing more on ROO (Return On Objectives) rather than ROI (Return On Investment).
The two possible calculation models: ROI and ROO
There are two business models which need to be taken into consideration when calculating the benefits from an investment: ROI (Return On Investment) and ROO (Return On Objectives).
ROI-based classic marketing model is present in the case where one sells digital signage for advertising, or does advertising which is directly responsible for an increase in profit.
ROO-based marketing model is applied when the success of the investment is measured by the objectives achieved, which can be diverse. Brand awareness, entertainment, productivity, and information sharing efficiency are only some. They cannot be tracked as directly as the number of responses based on an advertisement. Instead, they are tracked based on behavior and global changes in the business.
In conclusion, depending on what you’re trying to achieve from the investment, the way you are tracking your investment success will vary. On one side, you will track direct financial gains, and on the other, the objectives and goals within your business.
We’ve said before that it is very simple to calculate your digital signage ROI if you have the right information. Once you have it, or even if you have an estimate, you can use tools like Ultravision’s ROI calculator as a simple solution to help you see the state of your digital signage ROI.
Aside from the calculated results, there are many other ways to establish whether or not your digital signage is a healthy investment. For instance, reactions from your customers, social impressions, word-of-mouth marketing, increased productivity, etc. For example, a benefit commonly provided by digital signage is the visual appeal and a sense of modernity. This aspect greatly influences customer decisions. With this information in mind, it becomes clear that not all aspects can be assigned a crystal clear digit. Generally, more research on the subject of calculation of ROI would make it a great deal easier to establish the worth of this investment.