netrashetty
Netra Shetty
Digi-Key is the fourth largest electronic component distributor in North America and a broad-line distributor of board level components. It ranks as the 8th largest electronic component distributor in the world. Ronald Stordahl founded the company in 1972 and its name was derived from the digital electronic keyer kit that he developed and marketed to amateur radio enthusiasts.[1] It was called the “Digi-Keyer Kit.”
Mark Larson, who joined Digi-Key in 1976 as its general manager, has been its president since 1985. He has led the company from its initial focus on the hobbyist market to the expanded market it serves today.
In 1995, Digi-Key introduced its website that offers complete online commerce capabilities along with access to product inventory. Digi-Key currently hosts 82 websites in eight supported languages.
In only six years, Digi-Key has moved from 16th largest to fifth largest among the more than 300 electronic component distributors in North America. According to their website, in 2007 EE Times conducted a survey in which engineers rated Digi-Key “#1 for Overall Performance for the 16th Consecutive Year.”
Digi-Key is located in a single, centralized location in Thief River Falls, Minnesota, USA. Its facility measures 600,000 square feet (56,000 m2) and houses over 2,300 employees. Its product distribution center stocks over 500,000 products from over 440 manufacturers and ships to 170 countries worldwide.
igital outdoor advertising is turning old media into new media and a sluggish outdoor advertising industry into a growth industry. With digital signage becoming a growth area for traditional outdoor advertisers such as Clear Channel Outdoor and Lamar Advertising, even Google is set to get in on the action. The outdoor advertising industry, until now dominated by large roadside billboards, is experiencing a paradigm shift as static ad displays are being converted to digital - and in the process becoming much more lucrative for advertising companies. In a bygone era, billboard advertisements stayed up for one to twelve months before being manually changed. Now, converting the old vinyl displays to digital ones allows outdoor advertisers to rotate images from several different advertisers throughout the day, called "day-parting" in industry parlance.
The outdoor advertising industry stands to gain a lot from converting traditional static billboards and posters to digital signs. The Highway Beautification Act of 1965 limits the number of new billboards that can be built and makes market entry difficult.[1] While this gives current market players pricing leverage, in effect it also caps the supply of billboards in a now saturated market. This leaves outdoor advertisers two ways to stimulate profits: increase efficiency and grab market share from other media. Digital signs have the potential to help them do both.
The ability to update ad displays quickly and frequently will herald a transition from a business model based on selling display space to one based on selling time on multiple displays. It also has the potential attract more types of advertisers to outdoor advertising as well as to increase display utilization rates.
Drivers of Digital Outdoor Advertising
The success and speed of adoption of digital signage is likely to depend on the continued generation of a high return on investment due to increased operational efficiency among outdoor advertisers, while potential obstacles are legislation and capacity constraints.
Higher Revenues, Lower Costs
With initial results from digital sign installations by outdoor advertisers showing revenues increased by 6-10x, superior efficiencies for outdoor advertising companies will continue to be the most significant driver of digital sign adoption. LCD and LED digital displays allow for higher quality, faster time to market, and better customer targeting. They also promise to significantly cut costs. For a higher initial capital investment, digital displays will cut industry operating expenses by allowing outdoor advertising companies to update displays at the click of a button rather than through regular and labor-intensive on-site visits.
What Regulation Gives, Regulation May Take Away
The outdoor advertising industry owes its profits in good measure to the 1965 Highway Beautification Act, which limited billboards to major U.S. highways and industrial areas and regulates the locations of outdoor displays in the U.S. The limit on billboard placement has created large barriers for new entrants into the highly consolidated market, leading to high billboard profit margins that analysts and companies alike agree would not exist under more competitive conditions such as those seen in Europe. On the other hand, four states--Vermont, Alaska, Hawaii, and Maine--have banned billboards altogether.
The biggest potential obstacles to the widespread adoption of digital billboards remain new regulations targeting the new types of displays. A handful of jurisdictions have already placed bans on digital billboards, citing their brightness or power to distract highway drivers. Industry watchers are still waiting to see how different jurisdictions will react to new installations and results of studies about their safety.
Supply Bottlenecks
The growth spurt in digital outdoor advertising has so far been tempered by a need for greater production capacity. Daktronics (DAKT), the largest supplier of digital billboards, has a $93 million order backlog across its product lines and is in the process of doubling its factory floor space.
Many other smaller niche manufacturer are filling the void such as Unilumin out of Ontario, CA.
Outdoor Advertising Spend Sensitive to Economic Downturns
Outdoor advertising is highly correlated with and sensitive to GDP growth and decline. Small downturns in the economic performance lead to disproportionately large overall declines in ad spending, while ad spending tends to increase sharply during boom times.
In addition, revenues in the outdoor advertising industry are highly seasonal, following consumer spending trends. The third and fourth quarters typically generate the strongest performance as retailer advertising is cut back after the holiday shopping season.
As this chart demonstrates, Outdoor Advertising spending upswings and downswings are magnified compared to GDP growth and declines
Companies that Stand to Gain
Consumers of Digital Signs
Clear Channel Outdoor, CBS (through its CBS Outdoor division), and Lamar Advertising are the top three players in the outdoor advertising market and combined account for over 85% of industry revenues.
Clear Channel Communications (CCU), which owns a 90% stake in Clear Channel Outdoor, stands to gain from any boost to the outdoor advertiser.
Google (GOOG), the largest Internet advertising company, is getting into outdoor advertising as it expands its reach across other channels.
Producers of Digital Signs
The pool of static displays awaiting conversion to digital is very large and not likely to be exhausted any time soon, with only about 450 of roughly 450,000 U.S. billboards converted to digital so far.
Daktronics (DAKT) is the world's largest maker of electronic scoreboards and digital signs. Producing around half of all U.S. digital billboards, in FY 2007 DAKT's orders from outdoor advertising companies more than doubled over the previous year. The company is currently constrained by production limitations and is looking to quickly expand manufacturing capabilities.
LSI Industries (LYTS) is a producer of indoor and outdoor digital signs.
Optec Outdoor[2], a privately held company, is currently expanding it's production capacity by 5 times and looks to challenge Daktronics' dominance in the outdoor advertising market.
QST* [3], 55 million in sales in 2009, poised to challenege the market with cost-effective and innovative products such as the RGBglass which turns any window panes into a LED display.
LCD Enclosure[4], manufacturer of outdoor digital sign enclosures, protecting the hardware from the elements and vandalism.
Companies that Stand to Lose
Outdoor advertising competes for advertising dollars directly with other forms of media, such as radio, television, newspaper, and the Internet. Outdoor currently only has only about a 2% share of total domestic advertising revenues, significantly lower than in many other countries. For example, outdoor advertising comprises 12% of total advertising spending in France, 10% in the UK, and 8% in Spain.
In the U.S., outdoor advertising already boasts a substantial cost advantage over competing media. Outdoor display costs per thousand impressions (CPMs) range on average between $1.50-$5.00, while media like network TV have CPMs close to $25. With the new versatility provided by digital signs and with digital display sites already generating much more revenue than static sign sites, outdoor advertising may grab market share from other media.
Mark Larson, who joined Digi-Key in 1976 as its general manager, has been its president since 1985. He has led the company from its initial focus on the hobbyist market to the expanded market it serves today.
In 1995, Digi-Key introduced its website that offers complete online commerce capabilities along with access to product inventory. Digi-Key currently hosts 82 websites in eight supported languages.
In only six years, Digi-Key has moved from 16th largest to fifth largest among the more than 300 electronic component distributors in North America. According to their website, in 2007 EE Times conducted a survey in which engineers rated Digi-Key “#1 for Overall Performance for the 16th Consecutive Year.”
Digi-Key is located in a single, centralized location in Thief River Falls, Minnesota, USA. Its facility measures 600,000 square feet (56,000 m2) and houses over 2,300 employees. Its product distribution center stocks over 500,000 products from over 440 manufacturers and ships to 170 countries worldwide.
igital outdoor advertising is turning old media into new media and a sluggish outdoor advertising industry into a growth industry. With digital signage becoming a growth area for traditional outdoor advertisers such as Clear Channel Outdoor and Lamar Advertising, even Google is set to get in on the action. The outdoor advertising industry, until now dominated by large roadside billboards, is experiencing a paradigm shift as static ad displays are being converted to digital - and in the process becoming much more lucrative for advertising companies. In a bygone era, billboard advertisements stayed up for one to twelve months before being manually changed. Now, converting the old vinyl displays to digital ones allows outdoor advertisers to rotate images from several different advertisers throughout the day, called "day-parting" in industry parlance.
The outdoor advertising industry stands to gain a lot from converting traditional static billboards and posters to digital signs. The Highway Beautification Act of 1965 limits the number of new billboards that can be built and makes market entry difficult.[1] While this gives current market players pricing leverage, in effect it also caps the supply of billboards in a now saturated market. This leaves outdoor advertisers two ways to stimulate profits: increase efficiency and grab market share from other media. Digital signs have the potential to help them do both.
The ability to update ad displays quickly and frequently will herald a transition from a business model based on selling display space to one based on selling time on multiple displays. It also has the potential attract more types of advertisers to outdoor advertising as well as to increase display utilization rates.
Drivers of Digital Outdoor Advertising
The success and speed of adoption of digital signage is likely to depend on the continued generation of a high return on investment due to increased operational efficiency among outdoor advertisers, while potential obstacles are legislation and capacity constraints.
Higher Revenues, Lower Costs
With initial results from digital sign installations by outdoor advertisers showing revenues increased by 6-10x, superior efficiencies for outdoor advertising companies will continue to be the most significant driver of digital sign adoption. LCD and LED digital displays allow for higher quality, faster time to market, and better customer targeting. They also promise to significantly cut costs. For a higher initial capital investment, digital displays will cut industry operating expenses by allowing outdoor advertising companies to update displays at the click of a button rather than through regular and labor-intensive on-site visits.
What Regulation Gives, Regulation May Take Away
The outdoor advertising industry owes its profits in good measure to the 1965 Highway Beautification Act, which limited billboards to major U.S. highways and industrial areas and regulates the locations of outdoor displays in the U.S. The limit on billboard placement has created large barriers for new entrants into the highly consolidated market, leading to high billboard profit margins that analysts and companies alike agree would not exist under more competitive conditions such as those seen in Europe. On the other hand, four states--Vermont, Alaska, Hawaii, and Maine--have banned billboards altogether.
The biggest potential obstacles to the widespread adoption of digital billboards remain new regulations targeting the new types of displays. A handful of jurisdictions have already placed bans on digital billboards, citing their brightness or power to distract highway drivers. Industry watchers are still waiting to see how different jurisdictions will react to new installations and results of studies about their safety.
Supply Bottlenecks
The growth spurt in digital outdoor advertising has so far been tempered by a need for greater production capacity. Daktronics (DAKT), the largest supplier of digital billboards, has a $93 million order backlog across its product lines and is in the process of doubling its factory floor space.
Many other smaller niche manufacturer are filling the void such as Unilumin out of Ontario, CA.
Outdoor Advertising Spend Sensitive to Economic Downturns
Outdoor advertising is highly correlated with and sensitive to GDP growth and decline. Small downturns in the economic performance lead to disproportionately large overall declines in ad spending, while ad spending tends to increase sharply during boom times.
In addition, revenues in the outdoor advertising industry are highly seasonal, following consumer spending trends. The third and fourth quarters typically generate the strongest performance as retailer advertising is cut back after the holiday shopping season.
As this chart demonstrates, Outdoor Advertising spending upswings and downswings are magnified compared to GDP growth and declines
Companies that Stand to Gain
Consumers of Digital Signs
Clear Channel Outdoor, CBS (through its CBS Outdoor division), and Lamar Advertising are the top three players in the outdoor advertising market and combined account for over 85% of industry revenues.
Clear Channel Communications (CCU), which owns a 90% stake in Clear Channel Outdoor, stands to gain from any boost to the outdoor advertiser.
Google (GOOG), the largest Internet advertising company, is getting into outdoor advertising as it expands its reach across other channels.
Producers of Digital Signs
The pool of static displays awaiting conversion to digital is very large and not likely to be exhausted any time soon, with only about 450 of roughly 450,000 U.S. billboards converted to digital so far.
Daktronics (DAKT) is the world's largest maker of electronic scoreboards and digital signs. Producing around half of all U.S. digital billboards, in FY 2007 DAKT's orders from outdoor advertising companies more than doubled over the previous year. The company is currently constrained by production limitations and is looking to quickly expand manufacturing capabilities.
LSI Industries (LYTS) is a producer of indoor and outdoor digital signs.
Optec Outdoor[2], a privately held company, is currently expanding it's production capacity by 5 times and looks to challenge Daktronics' dominance in the outdoor advertising market.
QST* [3], 55 million in sales in 2009, poised to challenege the market with cost-effective and innovative products such as the RGBglass which turns any window panes into a LED display.
LCD Enclosure[4], manufacturer of outdoor digital sign enclosures, protecting the hardware from the elements and vandalism.
Companies that Stand to Lose
Outdoor advertising competes for advertising dollars directly with other forms of media, such as radio, television, newspaper, and the Internet. Outdoor currently only has only about a 2% share of total domestic advertising revenues, significantly lower than in many other countries. For example, outdoor advertising comprises 12% of total advertising spending in France, 10% in the UK, and 8% in Spain.
In the U.S., outdoor advertising already boasts a substantial cost advantage over competing media. Outdoor display costs per thousand impressions (CPMs) range on average between $1.50-$5.00, while media like network TV have CPMs close to $25. With the new versatility provided by digital signs and with digital display sites already generating much more revenue than static sign sites, outdoor advertising may grab market share from other media.
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