Satellite technology is finding a new niche in the retail business as store owners turn to new forms of advertising such as the use of high-definition TV screens to catch the attention of shoppers.
While such screens already are in use by stores that run ads over and over by replaying DVDs or videotapes, industry officials say satellites are making it possible to change the advertising message much more frequently from a single central location.
Companies even foresee a day in the not-too-distant future where the combination of satellite, Internet and other technology will make it possible for a retailer to target TV messages in their stores to individual shoppers by using their satellite and Internet systems in conjunction with radio frequency identification (RFID) technology, small sensors that can be programmed to perform a variety of tasks.
For example, a consumer who picks up a sweater from the counter of a department store might suddenly see an advertisement or other information about that sweater on a nearby HDTV screen connected to via a satellite connection using Internet Protocol (IP) technology.
This new market is promising enough that Lindon, Utah-based Helius Inc. is counting on satellite video over IP to provide much of its near-term growth, said Nate Hatch, the company’s vice president of business development.
Helius sells the software and hardware that allows companies to take advantage of satellite services.
Most of the Helius equipment currently on the market is used in the well-established business of providing private satellite communications networks for large companies with dozens or hundreds of sites that use satellites to send data back to corporate headquarters or to receive video for conferencing or employee training programs.
The company’s clients include Detroit-based General Motors, its biggest customer which has a network with 16 full-time channels that run 16 to 17 hours per day, the New York-based pharmaceutical company Pfizer and the Atlanta-based exterminating company Orkin, Hatch said.
Hatch said the corporate communications users currently account for about 70 percent of Helius’ revenue. The remaining 30 percent comes from digital signage, or when companies use that same equipment to deliver advertising-related content.
Using Helius’ technology, one message can be sent out over one signal and delivered to a variety of digital displays simultaneously, and can be easily updated when necessary.
Digital signage comes into play in such venues as airports and stadiums, and for less corporate purposes such as in the department of motor vehicles or the post office to display educational information, Hatch said.
While video-based corporate communications and digital signage are not new applications, using satellite networks to transfer data for digital signs has become increasingly common over the past two years, experts say.
Retailers employ digital signage for a variety of purposes, Hatch said, from general advertising within their stores to applications which help a customer shop, such as companies which use the technology to allow consumers to order items online when the products are unavailable in stores.
Christopher Baugh, president of Northern Sky Research, the Cambridge, Mass.-based consulting firm, said there is no dominant business model for how digital signage is used right now. While a major grocery retailer might use it to distribute product information throughout its 1,000 stores, a diner in New Jersey might decide to install plasma screens to sell advertising to various companies.
“Advertisers are generally warming to it,” Baugh said.
Digital signage via satellite is used today at roughly 27,000 sites, Baugh said, and Northern Sky Research projects that number to double by 2010.
“It’s still a growing market, but it’s an incrementally growing market; it’s peanuts compared to the rest of the telecom industry,” Baugh said. “But for satellite players, it’s a new thing for them.”
Baugh believes the market won’t truly take off until the smaller businesses are able to use the technology.
“There are only so many Fortune 500 companies out there,” he said.
Smaller companies might be more reluctant to use digital signage because they can’t afford it or can’t see a clear justification for why the method will be effective for them, Baugh said.
“Smaller enterprises need a quicker return on their investment,” Baugh said. “I think the larger businesses will drive the business initially, and the small guys, I think, will get it in the long term.”
Helius is hoping to tap into that smaller business market. The company plans to announce a package system in the upcoming months that will appeal, cost-wise, to smaller businesses trying to break into the digital signage market. Hatch said he receives calls from many small business owners who have seen digital signage in use and want to know how they can use it to suit their needs.
In the meantime, it doesn’t hurt to sell retail customers on using satellite-based video over IP for both training-related and advertising applications, business leaders said.
Helius announced Feb. 6 that it had developed an application to combine digital signage and corporate training using the same equipment. This allows an employee with idle time during the workday to access terminals used for advertising to receive training information, Hatch said. Ned Mountain, president and chief operating officer for Wegener Communications, said satellite is not always cost-effective for small-scale operations doing corporate communications video tasks.
“The larger the network, the more advantageous satellite becomes for cost. Once you get up over 500, 1,000 sites [receiving data], satellite clearly wins in terms of cost,” Mountain said.
Duluth, Ga.-based Wegener earns between 35 and 50 percent of its business through private networks which use its technology for corporate communications, digital signage and other uses. The company also does satellite broadcasting for large-scale networks such as Fox News.
Baugh sees the ease of implementation as the top advantage for using satellite rather than terrestrial networks to do corporate training, but said that this doesn’t mean the method is consistently better than using terrestrial options.
“It depends on the cost, the audience size and how much content you’re pushing,” Baugh said. “There’s no black-and-white line where satellite is good or where terrestrial is good.”
But while the companies project the corporate communications video-training applications market to remain vibrant in the upcoming years, it is digital signage which they see as really picking up speed.
Mountain said that new technology development, particularly in the areas of chips and modulation techniques, should allow video over IP using satellite to be delivered at a much cheaper and faster rate by the close of 2006.
“There’s a significant opportunity for growth there,” Mountain said.