Corporate Digital Signage: Where the REAL Value is

Corporate Digital Signage: Where the REAL Value is

Frank Kenna III

By, Frank Kenna III on Thursday April 28, 2016

Many companies that have multiple locations start out with just one or two installations to test a proposed digital signage (DS) system. While this is a tried-and-true method for evaluating new products, it overlooks one of the big benefits of DS, the network effect.

The network effect is the phenomenon where a product becomes more valuable when more people use it. A good example is the original telephone. When Alexander Graham Bell used the first one to talk to Thomas Watson, the device’s utility was extremely limited. But once thousands of people had one, its value increased geometrically. The key is, for the end user in this case, the cost to connect their home phone is the same whether it’s connected to one – or one million – other phones. So as more phones are connected to a network, the end user’s value increases very fast.

Companies with multiple locations face similar proposition. The cost for installing DS at each location is set, but as more are added to the network, the value increases geometrically.

So when a company is testing a DS system at just one or two locations, that’s okay to make sure it functions as advertised, is easy to use, etc. But the decision makers must keep in mind that they are not experiencing perhaps its biggest value: the network effect of linking all their employees together in one communications system.

Or to get geeky about it, I paraphrase Metcalfe’s law (he was the inventor of the Ethernet card): the cost of a network is directly proportional to the installed locations, but the value of the network is proportional to the square of the number of locations.

Illustration by Derrick Coetzee