LED displays are currently facing difficulties. I read an article analyzing the development and recovery of LED displays, and I'd like to share it:
The main difficulties are as follows:
Difficulty 1: Macroeconomic Impact.
In recent years, the global macroeconomic environment has been sluggish, domestic economic growth has slowed, and economic development has entered a period of adjustment. The real economy has been impacted to some extent, and corporate marketing expenses have slowed, with some companies even drastically reducing them. Consequently, investment in the outdoor advertising market has decreased significantly, and advertising budgets allocated to LED screens have also been affected.
According to relevant data, in 2015, the growth rate of my country's outdoor advertising market was only 0.6%, and the outdoor advertising area decreased by 6.5%, a far cry from the 10%-20% growth rate of previous years. As an important carrier of outdoor advertising, LED displays, with the existing advertising space far from saturated during a sluggish advertising market, naturally experience a significant slowdown in demand for the display medium.
Difficulty 2: Inherent Defects and Weaknesses of LED Displays as Outdoor Media and Advertising Carriers.
The lack of clear value proposition, ambiguous target audience, insufficient third-party research and data monitoring, inability to conduct precise marketing, and poor interactive effects in outdoor advertising media have remained unresolved and unimproved, resulting in a persistently haphazard development of the industry. Furthermore, in today's era of advanced smartphones, the number of "smartphone addicts" is increasing, with pedestrians often looking down at their phones to pass the time. Large LED screen advertisements, which require looking up to see, are easily ignored, leading to a smaller audience and poorer advertising effectiveness. Compared to other advertising formats and media choices, outdoor advertising has lost much of its advantage.
Especially given the current constraints on advertising spending, advertisers prefer media with precise targeting, measurable data, interactive experiences, and high engagement. Currently, only the internet and mobile internet can fulfill these functions. We can see that even with the slowdown in global and Chinese advertising market spending, online advertising has maintained rapid growth. Internet giants like Google, Facebook, Tencent, and Alibaba have reaped huge profits.
Over the past five years, online advertising in my country has maintained a rapid growth rate of over 30%, surpassing television in 2015 to become the largest advertising medium. In 2015, while traditional media advertising growth declined sharply and outdoor advertising growth came to a standstill, online advertising growth still reached a high of 36%.
Dilemma Three: Strict Approval Processes and Scarce Prime Advertising Space.
The main battleground for outdoor advertising is concentrated in major cities across the country. Due to urban management and the control of light pollution, government departments have become increasingly strict in approving and managing the installation and playback of outdoor LED screens. Moreover, after more than a decade of booming LED screen installations, prime advertising space is becoming increasingly scarce, with insufficient new available spaces, which is also a significant factor in the slowdown in market demand.
Dilemma Four: Increased Overall Costs.
The continuously rising costs of raw materials, land, rent, labor, and logistics in recent years have forced many less competitive companies out of the market. This year, the 5%-15% price increase for core LED display components such as chips and LED beads, as well as various other accessories and components, has further impacted the industry, potentially triggering a new round of industry reshuffling.
Looking at the industry as a whole, the outdoor LED display market is gradually shifting from a growth market to a replacement market. Competition is now focused on the advantages of display companies in areas such as brand, channels, capital, and integrated innovation, raising the entry barriers to the market.
On the one hand, market demand is slowing down; on the other hand, various costs are constantly rising, making the already fiercely competitive market even more intense, intensifying the "red ocean" mentality. In the future, fewer companies will survive in the industry, market concentration will further increase, and the Matthew effect will become more pronounced.