Franchises, Dealerships Present Opportunities, Challenges in Digital Signage Deployments

December 17, 2012

Franchised operations, dealerships have vast potential and specific needs.

Much has been written about best practices in the deployment of digital signage networks. Starting with content and content strategy, hardware and software choices, operations and physical deployment, there is much to consider. Many of these choices are easier to make when the network and the endpoints have a single owner, such as a corporate-owned retail network or a campus network. In an aggregated, place-based network such as those located in medical waiting rooms, public areas or bars, there is one network owner calling the shots on execution and usually multiple endpoint owners with specific needs that must be met. One segment that has vast potential and specific needs is that of franchised operations and dealerships. This article will examine the opportunities and challenges in the deployment of digital signage in franchise and dealer locations.

Ken Goldberg, CEO, Real Digital Media

According to the International Franchise Association's 2012 Franchise Business Economic Outlook, retail automotive, food, restaurant and lodging franchises represent 400,120 establishments (locations), generating $451.3 billion in revenue. Those numbers do not include the huge business services sector, which has a mixture of retail- and service-oriented businesses. They also do not include product distribution franchises such as auto and truck dealers. Clearly, retail franchise businesses represent a very large, important, and growing sector of the economy. Dealerships are also a large economic force. Automotive dealers represent the largest sector. The National Automobile Dealer Association reported that 17,700 new vehicle dealerships in the U.S. drove $512 billion in 2010 revenue. But dealerships are not limited to cars. There are also truck, sporting equipment, appliance and many other types of product distribution dealerships with established retail locations. There are nuances to understand when looking at these important markets.

Franchises and dealerships generally leverage a brand and centralized marketing to support retail locations owned and operated by business partners aligned with the franchisor or brand. The franchisees and dealers are independent business owners, and usually have the ability to make localized decisions with regard to technology and marketing beyond any obligations to fund and/or participate in centralized campaigns. Making a capital investment to deploy digital signage is a relatively straightforward process for a corporation, where a single signature can commit the resources to deploy hundreds or thousands of sites. That is not the case in a franchise environment. Franchisees and dealers are generally small businesses and typically prioritize a marketing-driven investment in digital signage lower than the franchisor or brand owner might. Given the option to spend thousands of dollars to get started, many will defer or pass altogether. In the absence of a contractually mandated deployment, which is typically difficult to achieve for capital items that are not operationally oriented, getting the buy-in to achieve a network of scale can be difficult. But it is certainly not impossible. Getting it done has similarities to the typical internal corporate process, but special steps must be taken to meet the needs of the franchisee and dealer partners.

Building the ROI story

Digital signage is a method of presenting brand messaging, location information and communicating with customers that requires investment and ongoing care and feeding. It can either augment or replace traditional signage programs already in place. As such, it is often difficult for franchisees and dealers to justify the capital expenditure in the context of their day-to-day business. If a digital signage initiative is to be accepted across a franchisee or dealer base, then it must have a strong sponsor at the franchisor/brand level, and that sponsor must demonstrate to its partners that there is a strong return on investment.

The ROI story begins with clear and measurable objectives for the initiative. This could include increased unit sales of promoted items, higher average ticket, customer satisfaction, greater frequency of customer visits, or any number of other desired outcomes. Once the objectives are clear, a pilot program with one or more willing and influential franchisees or dealers can be designed to measure results in test and control locations. In addition to producing valuable data that can be used to help the entire franchisee/dealer base to understand the value of digital signage to them, a pilot also provides an initial learning base related to content and operations. Both the data and the lessons learned can be used to iterate a continuously better product. A successful pilot can be the basis for a strong marketing campaign to the entire base.

Leveraging the brand

Most brands and franchisors have invested large amounts of capital in development of their brand messaging. Many spend big dollars on an ongoing basis to market the brand on TV, online, in print, at trade shows and much more. As a result, they have assets, people, processes and partners in place to develop and adapt content that would be appropriate for a digital signage program. Perhaps the biggest lift that a franchisor or brand can provide to its partners in the field is to assume the cost of developing and managing content. Of course, that also implies the assumption of control of the content, which is essential for consistency of message and adherence to branding standards. Brands and franchisors should not overlook their social media efforts as a source of engaging content for the digital signage network. Social media has proven to be highly engaging for customers, offering them a chance to become part of the brand's community, whether that be via Facebook, Twitter, Foursquare, or other social media channels. Providing great content, the backbone of an engaging and successful digital signage network, is the first step to making the decision to adopt the technology an easy one for franchisees.

Creating a program that makes sense

The relationship between the franchisor or brand and its franchisees and dealers can vary greatly. Not every program can be made mandatory, especially ones that involve capital expenditure as digital signage does. Therefore, the creation of a program on the foundation of a good ROI case and investment at the brand level is essential to gain buy-in from a substantial majority of the retail base. Beyond the internal marketing and co-investment, a centrally managed (and possibly subsidized) leasing program can make it easy for the franchisees and dealers to budget the investment as a monthly expense. In some cases, it can make good sense to "bundle" a digital signage program with a centrally negotiated broadband package, as broadband has become another utility and has many uses beyond the relatively low requirements of digital signage. Creating value, ROI and partnership in a digital signage marketing initiative makes good sense.

Centralizing operations without sacrificing localized control

Managing the content centrally provides control and consistency of messaging, as mentioned above. It allows the heavy lifting of programming a far-flung network to be carried out efficiently, and is generally a good idea. That said, it is critical to support some level of local control to recognize the uniqueness of each location and to allow for variations in merchandise mix, geography, and customer preference. Providing this type of local input is an excellent way to engage the franchisees and dealers in the program. One method for doing so is the use of a Web-based portal that gives local managers the ability to fine-tune their playlist from pre-approved messages, or to add custom pieces within the framework of a playlist. The two important concepts in providing local input are to essentially firewall local users from the central application and to have clear guidelines (and possibly approval procedures) for insertion of local content.

Integration with other systems

Digital signage can be a very effective tool on its own. However, its value is greatly increased when it is integrated with other systems. Price and item content can be synched with inventory and POS applications. The emerging integration point for digital signage is mobile applications. The ability to use the digital sign as an activation point to engage customers on their own devices with a branded application or Web experience is very valuable. Today such activation largely occurs via calls to action in the video content, SMS messaging and QR codes. In the not-too-distant future, we expect Near Field Communications (NFC) to be the dominant linkage between digital signage, mobile devices and POS. A customer can be attracted by a video promoting a coupon special, receive the coupon by waving his/her smartphone at an NFC hotpot, and then redeem the coupon and pay for the transaction with another wave at POS. NFC integration has the potential to be a customer marketing game-changer.

Continuous improvement and re-invention of the network

Once a digital signage network is rolled out beyond the initial pilot, it is important to continuously improve the network, its content and its effectiveness. One way to do so is to identify best practices that bubble up from the local users, and then to proliferate them to all users. Another is to learn from customers both through surveys and interviews as well as analysis of data. Testing content, promotions and messages in segments of the network before rolling them out is also a smart way to leverage the ability of digital signage systems to segment the distribution of content effectively and to very rapidly make global changes as required. The digital signage network should evolve, just as the underlying brand does. Given the powerful tools of digital media and the flexibility of digital signage platforms, there is no reason to have a network get stale. In this context, re-invention is really just a reflection of re-investment in a valuable asset.

The unique operating environment of franchised and dealer-based businesses requires a differentiated approach to the deployment of digital signage networks. While the decentralized nature of the retail presence often makes the decision to get started a more complicated matter than a typical corporate effort, engaging franchisees and dealers in a brand marketing effort can have very significant benefits for the brand and its partners.

Copyright © Platt Retail Institute 2012 and reprinted with permission. All rights reserved. See the entire PRI Resource Library at

Ken Goldberg has been the CEO of Real Digital Media since 2004, where his experience in information technology, retail systems and entrepreneurship have all been put to use.

Add new comment