Feature Story

November 14, 2007

By David Barry, News@Cisco

The enterprise digital media market, based largely around the power of video, is growing rapidly. In 2006, 31 billion streams of video were served over the Internet in the U.S., according to comScore, Inc., a global Internet information provider, but in the month of May, 2007 alone, 60 billion video streams were served. IDC estimates that the use of enterprise video will grow at a compound annual growth rate (CAGR) of nearly 50 percent over the next four to five years.

"Today, we have something like the 'perfect storm' for the use of video and audio over IP networks," says Melissa Webster, program vice president, Content & Digital Media Technologies at IDC. "Networks are faster, and better at delivering rich media; storage prices have plummeted; and the price of high-quality LCD displays has come way down."

Key technologies that enterprises use to create and deliver digital media include live and on-demand desktop video, digital signage, TelePresence and videoconferencing. Enterprises are seizing on digital media to deliver more compelling internal communications, improve customer experience, enhance marketing and branding, and dramatically accelerate new product training at a fraction of the cost. And they are getting encouragement from an unlikely source: the consumer.

"The consumer video revolution is now driving the enterprise space," says Thomas Wyatt, general manager of the Digital Media Systems Business Unit at Cisco. "With the explosion of video iPods, YouTube video, and web streaming, people are becoming used to digital media at home and they want it where they work and where they do business. It is a transformational shift. Large enterprises see this demographic shift and are starting to use video to communicate and sell products and services."

Norwegian Lottery Provider Deploys Digital Signage Countrywide

Norsk Tipping AS, the government-run national lottery in Norway, is well into a major transformation of how it markets and sells lottery tickets and accepts sports bets from consumers. Once totally dependent on printing posters and other written marketing materials, and distributing this information to thousands of retail stores countrywide, Norsk Tipping has deployed high-resolution digital screens in most of these retail stores already as part of the Cisco Digital Media System (DMS) rollout. Cisco DMS is a comprehensive solution for the creation, management, and access of digital media over IP networks.

"The problem we faced before was that we had no control over whether our retailers actually displayed the posters that we mailed," says Stein Onsrud, technology advisor for Norsk Tipping. According to Onsrud, some stores left outdated marketing materials hanging in stores, which hurt sales. Norsk Tipping estimates that 60 percent of its promotional materials were never used, a statistic consistent with other retailers' experiences. In addition, printing and postage for the posters cost US$6.8 to US$8.5 million annually.

Cisco DMS is enabling Norsk Tipping to deliver timely and targeted marketing communications to all stores, helping to stimulate sales. The high graphic resolution of the digital displays helps capture customer attention in crowded retail locations. The new system also helps Norsk Tipping reduce the high costs and mailing delays of print campaigns as marketing messages can be sent directly to the screens. The organization conservatively estimates that higher sales for even just three of the company's 11 games will completely pay for the investment in five years or less.

Even more valuable, Norsk Tipping is using Cisco DMS to segment customers and target them with appropriate messages--a capability that was previously unavailable to them when it relied on analog TVs and broadcast-based teletext service to deliver lottery information to the retail stores.

"We are now segmenting the stores by whether they predominately buy lottery tickets or place sports bets," says Onsrud. "We can divide the screen and send different information or commercials depending on the segment we are targeting, which we could never do before. But this is only two segments and it is just the beginning. In the future, our plans are to segment even more, for example, by geography. We will be able to determine which stores are closest to a football team, for instance, and target lottery or sports advertisements that include the local team."

The Store is Still Where Customers Make Buying Decisions

Like Norsk Tipping, many other retail companies are studying or rolling out digital signage because it provides a powerful new way to reach buyers where the opportunity is greatest--in the store. Research from retail industry trade associations show that, even with the growth of online buying, consumers make approximately three-quarters of their buying decisions in the store. Therefore, the in-store experience represents the retailer's most important marketing opportunity to boost sales and increase inventory turns.

Another industry with great traction around digital signage is financial services. Retail banks for example, see digital signage as a way to entertain and inform customers in branches as they wait in lines or complete transactions. In the near future, a number of banks are looking to use digital signage to deploy remote loan experts so that consumers with loan questions can immediately ask questions and get information--rather than being told the loan expert is unavailable and to either return later or call an 800 number.

According to IDC's Webster, "digital signage offers retailers a powerful new medium to deliver targeted, relevant, and engaging messages that promote brand awareness; improve the consumer's experience; and influence buying behavior where the impact is greatest--at the point of purchase."

Video At the Tipping Point

While desktop video use is growing, it hasn't yet become a mainstream enterprise tool. But, according to Webster, "we're getting close. Everyone has a player (or two or three) on their desktop today. With the growing industry adoption of the H.264 video standard, which Adobe recently embraced, the desktop issue and the issue of formats are addressed. So I think the future is just about here. This should benefit Cisco, a proponent of H.264."

Webster also believes that the growing use of video for enterprise executive communications should filter down into other parts of the enterprise.

"Enterprises have told me that the ROI for using video for executive communications is a 'no-brainer' and that they believe there's no better way to communicate,'" adds Webster. "This is being driven by the leadership at the top of the corporation and will force a major change in how people think about using video at work."

Coca Cola Enterprises (CCE), the largest nonalcoholic bottler in the world serving 407 million people worldwide, decided to deploy digital media to help it deal with increasingly fragmented communications among its executives and employees globally.

"The landscape in terms of our businesses has changed dramatically," says John Downs, senior vice president of Public Affairs and Communications at CCE.

"Consumer preferences are changing. Our customers are changing in terms of what they want in a beverage. We needed a new way to communicate effectively among Coca-Cola employees and executives globally to meet these new challenges."

One use of digital media is that CCE now uses the network to broadcast video to its top 227 executives worldwide a day before it release quarterly financial information. The video broadcast prepares the executives by allowing the CEO or CFO to put a human face to the numbers. On the day of the announcement, the company then distributes VoDs across the network so that the rest of the work force can also view the quarterly information.

According to Esat Sezer, senior vice president and CIO of CCE, "we looked into our technology network infrastructure and we were using that infrastructure for our voice, for our data capabilities, but we had not really thought about leveraging the infrastructure from the standpoint of bringing live video broadcasting and video on demand types of capabilities, and use that as an enabler for true communication for our company."

The Future: Blending of Video Surveillance and Digital Signage

The future potential for innovative digital media applications that can transform both the shopping experience and the way in which enterprises market products is immense.

"I can envision in a few years where a retailer might tie video surveillance with digital signage and bring in video analytics," says Wyatt. "A customer will not only step in front of a digital sign and be able to get information on a product and whether it is in stock, but the system will be able to help retailers understand the demographics of who is watching the sign. This can then be tied back into the point-of-sale system so the company can gain greater insights into how its promotions are translating to sales and how this is driving top-line growth."

David Barry is a freelance journalist located in Princeton, NJ.