February 2008

2009: A Digital Out-of-Home odyssey
Despite grim statistics for other forms of marketing, total advertising spending on DOOH is still projected to be up by over nine percent in 2009. Here’s why. By Graeme Spicer

Despite the economic turmoil engulfing much of the world (and possibly even as a result of this turmoil), digital out-of-home (DOOH) advertising is poised to enter the mainstream media consciousness in 2009. Although pundits have predicted “this is the year for DOOH” every January for the past three years, there are signs of building momentum and real advertising investment in the field that could make a breakthrough more of a reality this year than in prior years.

A major milestone towards the broader adoption of DOOH media will be the industry’s ability to provide consistent, credible and understandable audience measurement.

The 2009 projections for traditional media sales are sobering. Newspapers are looking at double digit decreases in advertising revenue. Consumer magazines were down 17.4 percent in Q4 2008. Traditional out-of-home advertising (billboards, transit shelters and the like) is projecting flat revenue for the new year. As Suzanne Alicia, president of the Out-of-home Video Advertising Bureau (OVAB) puts it, “For most media, flat is the new up.”

Despite these grim statistics, total advertising spending on DOOH is still projected to be up by over nine percent in 2009 (source: PQ Media). This may not be nearly as rosy as many analysts had originally projected for DOOH, and it comes from a relatively small base, but it clearly demonstrates that advertisers and their agencies are looking to media alternatives to reach busy, on-the-go consumers.

DOOH defined
Within the retail sector, merchandising aids that provided “rich content” to shoppers first started appearing in the early 1980s, when many of the couture fashion houses were presenting videotaped coverage of their runway shows on cathode ray tube (CRT) television sets in their stores. Other retail uses of videotaped content were for product demonstration (“it slices, it dices …”) and celebrity endorsement.

However, widespread adoption of merchandising using television screens never really gathered momentum. Drawbacks included: compliance (after hearing the loop for the seventeenth time in a shift, store employees would frequently turn the television off); content creation (before the days of Flash animation and other digital tools, production was slow and cost-prohibitive); and content distribution (physically shipping VHS tapes on a regular basis to multiple locations was an expensive and inexact process).

The arrival of digital production tools and the Internet changed the viability of networked digital signs. Now, content could be more easily and inexpensively created and delivered to multiple remote screens using digital production tools and IP connectivity. Throughout this past decade, hardware costs have plummeted and bandwidth has become ubiquitous. Remember when a 42” plasma screen cost more than $15,000?

By 2005, the technical challenges of delivering rich media through a server to multiple screens spread across a wide geographic area were mostly conquered. The industry was starting to take shape, but it was being largely driven by the technical vendors – manufacturers of screens and connectivity hardware, and by the digital signage software companies. Some obvious uses of instantly updatable signage were quickly adopted – at airport terminals, for example. However, to persuade other venues (largely retailers) to adopt digital signage in their locations, new sources of capital needed to be found, as the retailers were very reluctant to fund multi-million dollar implementations from their own pockets.

And it was here that the advertising model for digital signage was born. Screens started popping up in grocery and convenience stores, restaurants and bars, health clubs, shopping malls etc. Unfortunately, as the objective of these networks was usually to self-fund their capitalization costs, little planning was put into a content strategy; determining how the digital signage network would work to support the retailer’s business strategy; or improve the shopping experience.
Which brings us to today…

The DOOH landscape
The challenging economy will lead to many changes in the DOOH landscape this year. Network consolidation is inevitable, as some networks thrive and others are challenged by lack of scale and/or clear business model that appeals to both viewers and advertisers. Look for the trend towards venue-specific versus geographically-centered networks to accelerate.

Fragmentation continues to be a major factor hampering the adoption of DOOH by media planners and buyers. The many hundreds of small networks spread across North America are impossible for the media buying organizations to manage individually. In addition, many of these networks lack the resources or sophistication to adequately service the demands of large, complex media buying agencies.

Aggregators, such as my organization, ADCENTRICITY, and others are bridging this gap through the provision of robust planning tools to allow for single source DOOH planning and buying.

Metrics
A major milestone towards the broader adoption of DOOH media will be the industry’s ability to provide consistent, credible and understandable audience measurement. DOOH audience measurement is still inconsistent at best, and a considerable hurdle when discussing large campaigns with advertisers and media agencies.

OVAB (the US-based Out-of-Home Video Advertising Bureau) in late October released a new set of metrics guidelines to provide a framework for research studies by individual DOOH networks. The newly created currency for DOOH is the AUA, or Average Unit Audience. AUAs are defined as “the number and type of people exposed to a media vehicle with an opportunity to see a unit of time equal to the typical advertising unit.”

The AUA and the rest of the OVAB metrics guidelines are a necessary first step to providing meaningful measures of DOOH success. It is hoped that most large networks will work quickly with their research vendors to produce new studies that are compliant with the OVAB guidelines and report network audience in the context of AUAs. This will require many networks that are claiming incredibly high audience figures to justify their numbers, and which will be impossible for some. For example, if a network has a sign in a busy public concourse with traffic of 100,000 people passing by in a day, no longer will they be able to claim an audience of 100,000.

While these guidelines have been well received by the agency and network communities, widespread adoption of the guidelines will require further industry advocacy and time. In addition, the OVAB guidelines are still missing a key measure – engagement. Technologies that utilize small cameras and software that track whether people are actually looking at digital screens, and for how long they hold people’s attention, are now available. These technologies will attract further attention in 2009.

Content is … (sigh)
The expression “content is king” has certainly earned the award for the most overused cliché in the DOOH business. Many (including this author) have stood at podiums speaking of the importance of a content strategy to the success of a DOOH network. In some venues, 100 percent advertising content is possible, even preferable. However, in most situations, a well considered content strategy is required to both hold the viewer’s attention and support larger, venue-wide strategic initiatives.
For example, in a retail environment, the content must support the retailer’s overall marketing strategy. It must be delivered in a tone and manner that is consistent with the retailer’s brand, and arrive at a time when the shopper is receptive to hearing the message. In 2009, look for more interactivity in digital content through touch screens and wireless connectivity with personal digital devices.

It’s a tough time to be a brand marketer (and even tougher to be an agency)!
It’s not an easy job in the new economic reality to drive growth for brands at the double-digit pace achieved in the heady first years of the new millennium. Traditional measures such as market share, awareness, and most importantly, sales objectives are ever harder to reach. What is the optimal media mix to achieve ambitious goals? In a presentation at this week’s NRF conference in New York, digital guru Mitch Joel stressed that no longer is it about “how many,” it’s about “who” and “where.” Reaching a thousand “engaged” potential customers farther down the path-to-purchase is significantly more advantageous (and efficient) than 100,000 who probably aren’t in the market for your widget.
At the ANA Masters of Marketing annual conference in Orlando this past October, presenters the likes of Jim Spegel, CMO of Procter & Gamble; BBDO CEO Andrew Robertson; and Coca Cola CMO Joe Tripodi; all shared their individual views of the economic challenge faced by all marketers and agencies. The key message: Don’t hunker down. In tough economic times, it’s especially important to take risks. Fight the urge to pull back and go with what’s comfortable. Push boundaries to keep pace.
DOOH has the ability to reach hyper-targeted audience members at many touch points during their busy day, and even as prospective customers are about to make their purchase decision. As such, DOOH has finally become an important tool in the marketer’s tool belt.

Graeme Spicer is VP of Retail and Media Partnerships, ADCENTRICITY. ADCENTRICITY delivers advertising campaigns across over 80 networks and only to the venues and screens that meet the target audience profile and, more importantly, the campaign strategy. Currently over 127,000 quality place-based screens in over 16 main venue categories and over 70 sub-categories such as, Universities, Shopping Centers, Transit, Sporting Event and Arenas, convenience stores, Restaurants / Bars, Elevators, Gas Stations, Office Buildings, ATMs, etc.