Sign of things to come

Sign of things to come

Nick Fearnley believes his digital signage company DMP has every reason to expect a rosy future. Here he tells Peter Baber why he is so optimistic about the months and years ahead.

Every electrical retailer wants to be able to able to show off the latest technology, don’t they? But at what cost? Let us imagine, for example, that you are Comet (still a Yorkshire company, at least in terms of where its headquarters is.) You want to be able to show off the latest HD televisions throughout your store, and perhaps you want to input extra information onto your HD screens that will entice your customers to buy from you.

The only thing is you want to do this at relatively little cost and preferably without ripping up the whole shop floor to put new cabling in. Retailers rarely have time in their busy schedules for such disruption, especially in rented property. And in any case, as an electrical retailer in today’s world you don’t want to commit yourself wholeheartedly to just one technology.

HD might be the latest thing today, but you never know, something new could and probably will come around the corner tomorrow. In Comet’s case the company turned to Harrogate-based Digital Media Projects (DMP). Set up by Nick Fearnley and Ian Kilner in 2005, the £2m turnover company is carving an enterprising niche in providing digital marketing and signage systems and other types of HD TV technology, largely using coaxial and other cables that companies would already be using for their IT needs. The Comet project was in fact the second time the retail chain had approached DMP about doing a job.

The first time Fearnley admits that because he and Kilner were “being geeks, and were not commercially minded”, they were sidelined out of the deal by the American distributor of one of the products they were using who happened to have a UK head office in Leeds.

But it is tantamount to the big impression they had made on the company – an impression that was also starting to attract the likes of ITV – that Comet came back for more. “Comet’s end game was to get a full media delivery platform without touching the floor,” he says. “The cost of installation would be too high otherwise. They said, ‘We want you to put something in the server room that will give us our own HD channels, but you cannot touch anything on the shop floor.’” What Fearnley claims his company was producing was effectively Freeview HD TV three years before the name was even coined.

“At that time, Freeview HD didn’t exist,” he says. “We created a system you could use on Cat5 computer cable. ITV got wind of it, and worked out that it would suit them for their projects.” And how. The system DMP now produces means that broadcasters can take raw data from filming and store it down where it can easily be available for scrutiny (something all broadcasters are required to do by Ofcom rules) without having to have enormous back-up files. It also allows you to add information or edit certain broadcasts afterwards, and carry programme guide information, all without really having to install very much new hardware.

“Our system would look at this data and select what we asked it to pick,” says Fearnley. “It became the hub of ITV’s local news service on the web. Normally systems to introduce such technology would be phenomenally expensive, but they could see that to do that with two guys and an orange box it was really cost-effective. And there wasn’t any intrusion into what they were doing either. We never saw their office – we were never even allowed in.” The success of the Comet and ITV projects has led the company on to win other big name clients as well, like BT and the BBC – clients who Fearnley modestly says we “didn’t deserve”.

It is true that digital signage wasn’t what Fearnley and Kilner had in mind when they first started. They had both been working in IT for what was then Mellon Bank (now the Bank of New York), and had initially thought of going in a completely different direction when they set up the company.

“We thought we would go and look after SME’s networks and provide them with IT,” says Fearnley. “It wasn’t a half bad idea. But we also got a request from a colleague then, now a friend, who said, ‘Do you know anything about HD TV?’ That’s how we came to work for Comet.” But the company has now got to the stage where Fearnley has even backed away from some projects because he felt they were too big.

They have installed an internal network service for DE Shaw, a US-based hedge fund, but when a larger, more well-known financial services company approached them they were less sure.

“They wanted HD channels going into every single branch and delivered to the desktop of every office in the company,” he says. “We were initially very excited to have been invited, especially when we got to the detail and realised it would have been around £27m of business. But then we looked and thought what does that do to a small company like ours? Mostly negative things.

We have a small team, with two non-executive directors who have fantastic commercial insight, and they said it was too early, would not necessarily yield a great return, and we would suddenly become slaves to an investment fund.

That won’t mean great things to anybody.” Kilner these days has become more focused on installation. A couple of years ago the company hived off its installation arm into Digital Media Installation’s, headed by Kilner. DMP still uses it for its own installation work. But Fearnley himself has become a passionate advocate of everything that digital signage – the major end use for his systems – has to offer.

If you thought digital signage was those annoying videos you might be forced to watch while, for example, standing in a queue at the post office, Fearnley thinks there is much more to it than that, and that if people have been bored with what has been out there in the past, that is only because digital markets are still learning what works.

“Digital signage still needs to be engaging,” he says. “You need to be entertained. When you think about it, TV is the ultimate digital marketing tool. We don’t sit down to watch adverts, but we still end up watching them, because we want to be entertained. So let’s take lessons learned from sitting and watching TV. With our system you can play popular programmes and almost hijack the entertainment they have there.” This might include putting personalised messages running along the bottom of the screen that relate to what your store might have on offer that day. There are intellectual property issues to doing this, and not all broadcasters are happy about their programmes being adapted in this way, but Fearnley says it’s the possibilities for personalisation that make digital signage really attractive – and the speed with which new messages can be churned out, especially when compared with old-fashioned print campaigns.

“With our system you can update daily, so if, for example, it starts raining, you can promote your umbrellas. Printing, on the other hand, takes a few weeks and there’s almost always errors. Our systems have been justified not on their merits, but on cost savings.

That might upset us a little bit but it’s true.” One high street customer, he said, which had been looking at a 27% fall in sales overall because of the economic downturn, found that stores which had trialled DMP’s system saw an 11.5% uplift instead. Such data shows that digital signage works, he says.

“Even if digital signage does nothing more than hold your financial position, it’s worth investing in it,” he says. The financial services sector, with its invisible products which require a lot of figures to explain, has become a major focus for the company, as has the hotel and leisure sector – with digital signage you can easily update your restaurant menu or your room rates without any messy crossing out or rewriting. Fashion, you might have thought, would prove more elusive, and Fearnley agrees it is, although even here there have been surprises. The company’s Spanish agent was getting all excited about a possible contract with a company Fearnley thought was called Farah. It was only when he realised this was the Spanish pronunciation for Zara that things got exciting.

“Digital signage is a real ambition of theirs,” he says, “but even at the moment I kind of don’t understand it. But they have stocking issues – they could sell a lot more, but the whole mechanism of reporting back is too slow. Our system can help that way.” Still, there are some issues with digital signage that he agrees still need to be overcome. One is making sure that the display fits in with the environment and doesn’t overwhelm it. Tesco made a mistake in the early days of digital signage, he says, by having its contractor put it far too many screens per store – so many, in fact, that customers soon grew tired of it. Digital signage needs to be subtler than that. There are technical issues too.

How often have you seen a digital sign lose its impact simply because the screen – often a plasma screen – isn’t working properly? Fearnley says that is usually because the end customer isn’t willing to approve the extra expense of installing a proper commercial screen.

“There’s a 50% increase in cost if you have a commercial TV display,” he says. ”But if you don’t install one you usually have to write your TV off in 12 months.” He absolutely denies there are any more issues with security in digital signage systems.

The opportunities for someone to break into the system remotely and rewrite your messages in an offensive way, are, he claims, actually less than they would be with a print campaign.

“Because of encryption, the only way someone could do that would be to break into your office and sit at your PC,” he says. In fact the major issue DMP is coming up with at the moment is that clients are blown away at a presentation and then expect that the company can provide all the content as well. At the moment it can’t – not fully – but it is for this reason that it has started going down the road of content production as well. Fearnley is impressed by what the company has achieved in this line so far.

“The team here is far and away better than most of the agencies we have come across,” he says. “I am a geek, not a marketer. But when you get involved with clients you think, ‘Hang on, this is not that difficult.’” Of course, a much larger marketing agency might just seek to take out the threat posed by DMP by making Fearnley an offer he can’t refuse.

He says such approaches have been made in the past. “It has happened,” he says. “Not to the point of an offer, but certainly to the point of having a conversation. But I am not sure that is the right thing to do, because it would look like a panic move. I am extremely proud here of what we have achieved. I can certainly see DMP becoming a defining force in digital marketing in the future.”