Feeling the pinch: Out-of-home’s next opportunity to evolve
Broadsign's Ben Allman reflects on recent plateaus in out-of-home growth and why advertising's oldest and most resilient medium needs to evolve to remain competitive.
When the Outdoor Media Association (OMA) announced that out-of-home (OOH) growth had plateaued in the last quarter, the industry took a collective gasp. Reading up on double-digit growth is something we’d become accustomed to over many previous quarters.
Since 2012, Australia’s OOH industry has roughly doubled its revenue, solidifying its place as the only medium besides online to have enjoyed consistent revenue growth over the past decade. As a medium, we have been somewhat blessed by population growth and urbanisation at a time when most other mediums are battling audience declines and fragmentation. But it hasn’t all landed in OOH’s lap; the industry has worked hard to reinvent itself in the digital age, with digital out-of-home (DOOH) now accounting for over 50% of total OOH revenue, well above the global average of roughly 40%.
While these latest revenue figures are somewhat of an anomaly, they are in some ways expected due to a sluggish economy (I won’t mention ‘the R word’) and a strong corresponding quarter for the OOH sector. Regardless, it’s unrealistic to expect that OOH’s impressive growth trajectory wouldn’t begin to slow down sometime soon.
I’m sure many of you have heard famed American author and Chairman of General Electric, Jack Welch’s famous line; “if the rate of change on the outside exceeds the rate of change on the inside, the end is near”. While I’m certainly not suggesting the end is anywhere near for the world’s oldest and most resilient ad medium, we must continue to evolve in order to continue growing at the rate we’ve come to expect as an industry.
To identify where that next growth opportunity lies, let’s look to the $11bn ($AUD) US OOH market. OOH grew by 3.6% in the US in 2018, with most of that growth attributable to new programmatic advertisers, campaigns and revenue. While programmatic DOOH is still in its infancy in the Australian market, the opportunity is impressive, particularly when considering forecasts that 88% of all online display dollars ($81 billion) will be transacted programmatically by 2021.
DOOH is already highly lauded amongst marketers, thanks to the flexibility and creative opportunity it offers. When DOOH is traded programmatically, these benefits are amplified, while adding greater accessibility, accountability and efficiency. This is only the beginning and will inevitably see more marketers shifting their attention to the medium.
OOH has always been very complimentary in its nature, boosting the ROI of just about any other medium when used as part of a multi-channel campaign. However, what has often held OOH back is that it can be difficult to plan and buy, meaning it is often bought in a siloed fashion or even worse, excluded from the plan altogether. The ability to purchase DOOH programmatically alongside mobile, social, TV and even audio makes it easier than ever before to include DOOH as part of any multi-channel campaign.
When selling your house you want as many potential buyers at the auction as possible. It’s no different for publishers with their own real estate. When audiences and inventory are made available to be purchased programmatically, more potential buyers are reached. By tapping into new markets, advertisers and digital budgets, publishers are able to increase overall demand and improve their yield.
That said, this isn’t a case of connecting to these new demand sources and sitting back as the incremental dollars come flowing through. The publishers making the most of the programmatic opportunity are upskilling their existing sales teams and bringing in salespeople with valuable programmatic knowledge, relationships and experience.
Data is the lifeblood of the programmatic ecosystem and with more reliable, robust data comes greater flexibility, control and accountability. Programmatic DOOH will enable advertisers to connect with their target audiences with greater precision than ever before through more informed strategy, planning, implementation and optimisation. Programmatic DOOH will deliver new audiences to advertisers who may have previously avoided the medium due to a perceived lack of accountability.
The scarce, premium nature of the OOH medium, its real audiences and inherent brand safety mean DOOH will naturally avoid issues other programmatic media have experienced, such as fears of falling CPMs or a perceived loss of control over the kinds of advertising that are purchased. We can’t afford to get complacent though. A recent iab/PwC report titled “Growing Programmatic DOOH: Opportunities and Challenges” identified education as the number one driver of the future growth of programmatic DOOH.
Educating buyers (advertisers, agencies and DSPs) on the benefits of DOOH, the ways in which DOOH can be transacted programmatically and the value this can add is crucial. There is also a need to clearly communicate, the differences between online programmatic and programmatic DOOH (yes, there are differences), along with the role of each link in the supply chain and the value they bring to the table.
For a long while, just about any article, panel or podcast regarding the future of OOH has featured at the very least a mention of programmatic DOOH. The big difference now is that we’re open for business, the technology is ready, and we know that it works. Greater adoption of programmatic is key to continued growth at the rate we’ve come to expect as an industry. Embracing it will help this latest plateau become nothing more than a minor blemish in an otherwise strong growth story.
I think one of the main issue with the OOH industry is the lack of accountability and accurate statistics of who has actually seen the OOH ads. Relying on sample or geolocation data to provide a generic overview of who may have seen an ad is not very comforting when spending big dollars on advertising. Perhaps that’s why OOH is plateauing?
This issue can be easily solved though as the technology (camera analytics) is already here to provide real time insights into how many males/females of an approximate age bracket have seen an OOH ad. In fact, with programmatic OOH you can now proactively change the digital OOH ad to suit the audience coming towards the OOH sign.
That will get OOH clients excited again!
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Great piece Benno!
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“This issue can be easily solved though” – yeah, because installing and maintaining that sort of technology is cheap and doesn’t cause all sorts of privacy issues…
“Relying on sample or geolocation data” – what makes TV or Radio ratings any more reliable than OOH then? Both are taken from research conducted with relatively small samples of people but then used to represent the total population.
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Not sure if Programmatic is the answer when lots of the mediums are one to many.
Programmatic in the context of ‘Outdoor’ is a buzz word itself.
Don’t over complicate a “one to many” medium I say. It’s how you underpin your strategy with data led placements that make your dollar work harder. Naturally people will see it.
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Val Morgan Outdoor already do this, it’s called DART.
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“This issue can be easily solved though as the technology (camera analytics) is already here to provide real time insights into how many males/females of an approximate age bracket have seen an OOH ad.”
You’re not going to know who is likely to see an ad without eye tracking data. A camera seeing a face doesn’t mean the face is looking at the camera or area near it (ie the sign).
A camera could give you opportunity to see data for most but not all internal locations (at a significant data collection cost). But it will not give you age/gender in a roadside location to the same extent.
Camera’s don’t easily solve measurement, they are just another possible set of data points in the many that are needed.
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Dreamer, you’re nothing but a dreamer.
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