Analysts at Yahoo Finance and MediaPost’s Search Insider predict a slowdown in ad spending on traditional media. Both observers, however, are confident that the recession will not affect online advertising, which has been expanding healthily in 2007.
While traditional media is hurt by such factors as the general economic slump, the housing crisis, the writers’ strike and continuing fragmentation of its declining audience, “… the explosive growth of ad networks—firms that place advertising on websites—will make it easier for advertisers to spend money on the internet,” says the author of Five Media Trends in 2008.
According to Mark Simon of Search Insider: “Projections for overall online ad spend for 2008 remain rosy, even as every leading macroeconomic indicator points to a recession ahead. Finance alone makes up 33% of the overall $275 billion online ad spending pie (according to eMarketer.com). You can’t tell me that this sector can take a huge hit without having a big impact on both the search and display market. But online media remains so cheap that the bulk of any spending pullback will hit other channels harder, including offline and high CPM online media.”
What about digital signage? If we sum up the trends we covered in our previous posts (see the Big Picture category), we’ll see that:
- In-store media (shopper marketing) is growing faster than the Internet
- Outdoor advertising is growing almost as fast as the Internet and will be further boosted by the recent US legislation permitting digital billboards
- US consumers are spending twice as much time away from home than they did 30 years ago, and the average daily commute has doubled to about an hour
- The traditional media ad budgets started to be diverted to digital signage ad space even without waiting for the standardized metrics
- Standards and metrics for out-of-home video (aka digital signage) networks are being developed by big players such as Nielsen, Arbitron, POPAI, OVAB and others…
- Many retail chains are trying to reduce the static ad clutter by re-engineering store interiors and letting digital screens in
- There is an explosive increase in inquiries about digital signage from advertisers, media buyers, agencies and retailers
- New trade shows and portals dedicated to digital signage are popping up almost every month
- There is a steep rise in mergers, acquisitions and IPOs in the field of digital signage
All of the above factors make me believe that the digital signage trade will not be in trouble in 2008, and most probably will continue to advance, filling the void left by traditional media.
On this high note I wish everyone a great New Year and I will return from vacation on January 09.
December 28th, 2007
eMarketer forecasts that out-of-home video advertising spending in the US will total $2.25 billion in 2011, up from $1.26 billion in 2007. The growth is fuelled mainly by introduction of digital, video and wireless technologies that are redefining this “old medium”, says the latest report by eMarketer.
The report’s summary points out the following factors contributing to the rise of the out-of-home video advertising (aka digital dignage) market:
THE GROWTH
Outdoor advertising benefits from fragmentation of traditional media audiences and changing media consumption patterns, and, unlike TV or radio is “immune to channel or Web surfing”.
Due to the new technologies, “out-of-home video advertising networks will comprise the largest component of what is described as the “alternative” out-of-home advertising sector.”
According to eMarketer, US outdoor advertising revenues will rise from $6.8 billion in 2006 to $10.2 billion in 2011.
“The falling costs of flat panel LCDs, combined with the emergence of IP and wireless Internet technology” will continue to drive the out-of-home video advertising market. Another significant driver of the sector is the fact that “US consumers are spending twice as much time away from home than they did 30 years ago, and the average daily commute has doubled to about an hour” (Source: Veronis Suhler Stevenson), says the eMarketer report summary.
The growth trend is also confirmed in the Tech Sector Outlook 2008: Part 2 – a report by Standard and Poor’s. Despite “… a deceleration in U.S. growth and notable opportunities abroad,” the analysts “… also expect emerging areas of digital advertising, such as video and mobile marketing, to contribute more materially to revenues.”
NO METRICS YET
Numerous sources also state that the expansion of new media such as Internet and out of home advertising could have been faster if marketers had a set of agreed-upon reliable metrics to gauge the performance of ads.
Unlike traditional media, where each format has one main ratings provider – the Nielsen Co. for television, Arbitron Inc. for radio and so on – there are many sources of data on online audiences. And they frequently conflict, writes Seth Sutel of Associated Press. As for digital signage ad space, the metrics are even further from ideal.
“We need measurement of the audience and their use of the system that’s clear, simple and actionable for a marketer. You need comparability with other media,†said Steve Wadsworth, president of the Walt Disney Co.’s Internet group.
Although the above AP article, published by The San Diego Union Tribune, is focused the challenges of Internet advertising, most of the marketers’ concerns it describes fully apply to digital signage.
The paper quotes Bob Liodice, CEO of the Association of National Advertisers, as saying that “… corporate leaders have been ratcheting up the pressure on marketing departments to justify their ad budgets with hard proof that they are generating business.”
Advertisers seem fed up with the adage that half their ad spending seems to work; they just can’t tell which half, writes AP:
“CEOs finally said enough is enough,†Liodice said. “We have to know with greater specificity what comes out when something goes in.†— a deep statement… and true… (in relation to digital signage, I mean).
Meanwhile, deciding what exactly to measure would greatly help to determine how to measure it.
The emergence of new media caused a chaos of criteria in the whole marketing chain: from media outlets themselves to media buyers, agencies and their clients: the advertisers.
Accountability (or lack it) is listed in the Advertising Age’s “Trends to Watch in 2008“:
“GET SERIOUS ABOUT ACCOUNTABILITY
In ANA’s 2007 marketing accountability study, it was startling to find that, despite enormous efforts, 42% of marketers were dissatisfied with ROI measurements and metrics. In about half of the companies, marketing and finance don’t speak with one voice or share common metrics. Enough! Recognizing the critical importance of accountability, companies will appoint a czar — the chief accountability officer — to lead a disciplined, internally consistent approach to marketing measurements, metrics and productivity.”
Let’s hope at least part of the ROI challenges will be resolved in 2008, so we all could finally start making a lot of money working in digital signage…
Happy New Year!
December 26th, 2007