Digital out-of-home (DOOH) advertising is a dynamic, fragmented, and rapidly evolving space. It's one of the fastest growing media channels, with year-over-year growth pegged in the double digits through at least 2011. Total spend in "alternative OOH media" is projected to exceed $3.5 billion in 2009, with nearly $2.9 billion spent on video ad networks and digital billboards, according to PQ Media.
Beyond ad spend, network operators continue to invest in infrastructure (software, hardware, installation, and maintenance services) to the tune of $640 million in 2008. That number is projected to grow by 33 percent in 2009, despite the difficult economic conditions. By 2013, it's expected to approach $1.4 billion.
That growth is being driven by several factors:
Advertisers are getting deeper into the space as they wake up to the incredible opportunity of delivering highly targeted geo, daypart, and dynamic messages into environments where people are receptive and have a much more immediate opportunity to respond to and activate offers they are exposed to. DOOH offers a compelling platform for national and local advertisers alike. A report from Profitable Channels in August 2006 identified the 4 Cs of DOOH:
In addition, certain existing ad formats (e.g., some TV and Web creative) can be relatively easily adapted. And new varieties of consumer-facing interfaces continue to diversify and advance, especially with the broader availability of multitouch platforms and gestural interface possibilities. Most in the space are also getting serious about integrations with mobile devices, an acknowledgement that the intuitive link between the personal consumer device and the public digital experience hold immense potential for brands to engage and deliver unique experiences to individual consumers.
Still, it's a medium fighting for its life in many ways. Growth in ad spend hasn't kept pace with inventory growth, which has kept CPMs and overall publisher revenues low and has already claimed one casualty: Reactrix, one of the more unique and innovative networks.
There appear to a host of reasons for advertisers' relatively slow adoption. Chief among them:
The metrics issue stands as the single biggest challenge facing the space. Moving away from traditional opportunity-to-see measurement and toward a new eyes-on method of understanding the connection between DOOH and consumers response to it has helped, but many brands remain skeptical.
Focused studies on influence of contextual DOOH messaging impact on drive to store and sales lift are required to fully realize this channel's measurement story, and several groups are actively working on this piece of the puzzle. A critical piece of the value that brands are responding to is their ability to purchase DOOH media in similar ways to online and to repurpose online assets for use in DOOH with little incremental production costs. Where interactions are possible with DOOH screens, methods of evaluating the consumer experience similar to online (exposure, time spent/duration of interactions, page views, and clicks) are serving brand needs for ROI (define) well.
Ultimately, these issues stand between the channel and mainstream adoption by major U.S. brands. Key players in the space are getting organized and teaming up to try to resolve some of the more difficult challenges.
In particular, the formation of the Out of Home Video Advertising Bureau, an independent industry advocacy and regulatory group comprising leaders from both the vendor/network side and agency buyers and strategists, has done much to advance the pursuit of measurement and research for DOOH, in addition to raising overall awareness and forming collaborative alliances between agency players and major network operators. The OVAB agency advisory board released its audience and metric guidelines earlier this year, which have been endorsed industry-wide and are quickly becoming the gold standard for inventory standardization and metrics compliance in the space.
Jeremy is off today. This column was originally published July 13, 2009 on ClickZ.
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Jeremy Lockhorn leads the emerging media practice (EMP) at Razorfish. The team functions as a think-tank on new technologies and next-generation media, and operates as an extension of current client teams. EMP is focused on driving groundbreaking marketing solutions for clients. Jeremy is a filter, consultant, and catalyst for innovation - helping clients and internal teams to understand, evaluate, and roll out strategic pilot programs while reinventing marketing strategies to leverage the power of emerging media. Jeremy joined the agency in 1997 and is currently based in Seattle, WA. His Twitter handle is @newmediageek.
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