Digital Signage in Europe Keeps Traditional Out-of-home Sector Afloat

A new study released by Screen Digest predicts that, due to the revenues resulting from the continuing migration to digital technology, the out-of-home advertising sector will be the only traditional medium with positive growth in Western Europe in the next few years.

The preamble to the report says: “‘Digital signage’ networks of connected digital screens in public spaces (airports, stations, trains, supermarkets, hotels, surgeries, etc) are generating opportunities for traditional out-of-home contractors, digital specialists, technical enablers and system integrators, display manufacturers, venue owners and advertisers.” (Source: http://www.researchandmarkets.com).

The key findings of the report include:

– Digital out-of-home (DOOH) advertising revenues in Western Europe will quadruple over the next five years from 160m in 2007 to 626m by 2012. By 2012 DOOH share is expected to grow to approximately 10 per cent of total OOH ad revenues.

– Driven by the migration to digital and the incremental revenues generated from digital sites, the out-of-home sector will be the only traditional advertising media to post real revenue growth in the next five year.

– Thanks to the increasing affordability of digital displays, digital signage networks not only conquer brand new spaces for advertising (e.g. in-store point-of-sale advertising) but also upgrade static poster format sites in a growing number of locations (airports, stations, roadsides, etc.).

– Sales of displays and other hardware for digital signage generated revenues in the amount of approximately 4m in Western Europe in 2007.

– Lower maintenance costs and higher revenues, combined with reduced hardware costs, are making a profitable business case out of upgrading many existing to digital, as well as creating new sites intended to reach audiences on the move.

– The added value of digital OOH formats over traditional OOH formats (superior impact of moving image, creative and dynamic copy, booking flexibility and scalability, etc.) allows contractor to sell inventory at premium rates.

The report was produced in partnership with German research company Goldmedia and can be found here.

Add comment August 30th, 2008

Digital Out-of-home Video Is Now Among the Fastest Growing Ad-Supported Media

Digital signage advertising “will be among the fastest growing ad-supported media over the next few years, and will begin to rival traditional outdoor advertising by 2012,” writes Joe Mandese of MediaPost in today’s Digital Outsider newsletter and blog. The author reviews the results of this week’s edition of VSS’ annual Communications Industry Forecast, published by Veronis Suhler Stevenson, and consultant PQ Media.

According to the updated report, “the “alternative” out-of-home media sector will grow at a compound annual rate of 22.5% through 2012, which is considerably faster than the overall growth of the U.S. advertising marketplace, and only a slight slowdown from the 24.6% annual rate of growth the medium experienced over the past five years.

Based on those projections, VSS estimates alternative out-of-home ad spending won’t be so alternative by 2012, when it will total nearly $6 billion, and account for nearly half (46.4%) of the entire out-of-home advertising marketplace. That compares with a tepid 3.8% rate of annual growth for traditional outdoor ad spending through 2012.”

…  “While video ad networks remains the largest alternative OOH category, digital billboards and displays grew the fastest in 2007, due to the strong rollout of new at-road signs, primarily from Lamar and Clear Channel. Spending on digital billboards increased 59.7 percent in 2007 to $372.0 million,” writes the Digital Outsider, quoting the report.

The forecast “likens the digital out-of-home ad marketplace to the explosive growth of the early Internet’s, but cautions that the growth will not come without challenges, including the impact of a general economic downturn that is expected to last through next year. Despite the positive outlook, the digital out-of-home business faces challenges,” the report warns. “In the short term, the sector is untested in an economic slowdown, although it was holding up well in the first half of 2008. Second, while major brands are pressuring their agencies to take a closer look at digital OOH, agencies are demanding more and better measurement on the effectiveness of digital out-of-home advertising. This will be key to the struggle [of] digital out-of-home,” reports Joe Mandese.

The VSS reports also validates our previous predictions that digital signage has a much bigger potential for accountability than any other media: “While macro economics may be somewhat out of the control of digital outdoor media purveyors, VSS notes that the industry is taking proactive steps, including efforts by the Outdoor Video Advertising Bureau, the Traffic Audit Bureau, and individual companies, to accelerate better measurement and ROI metrics.

“Cutting-edge measurement, particularly engagement metrics such as new ‘eye-dwell’ technology, has the potential to make digital out-of-home spending a prominent component of media plans in the future,”" the analysts forecast.

“Improved metrics, and accountability, coupled with increasingly mobile consumer lifestyle patterns, and a shift away from static video advertising, meanwhile, is expected to accelerate digital out-of-home advertising’s share of the outdoor medium, as well as the overall advertising marketplace,” quotes the Digital Outsider.

Ironically, traditional agencies are still referring to network TV, radio and print as “measured” media, and put all new media, including the Internet and digital signage  into the “unmeasured” category. Ad Age’s 100 Leading National Advertisers report says : “unmeasured disciplines, primarily marketing services such as direct marketing, promotion and digital communications (including unmeasured forms of internet media such as paid search).” (Ad Age, June 23, 2008)

I understand that “unmeasured” means not measured by traditional yardsticks like TNS, Nielsen or Arbitron, but what other means of communication has more potential of being tracked and analyzed than digital, which, as we see, is already being measured in a myriad of ways?

The same publication, Ad Age, in its July 15 editorial contradicts the LNA report: “… the drive to digital is providing new ways to measure multimedia efforts and proving a catalyst that’s bringing this movement to fruition.”

It’s just a question of bringing existing but disparate data to some common denominators. Hopefully, the OVAB’s long-awaited Audience Metrics Guidelines and other research initiatives will help introduce standards, starting with their fast-expanding list of member-networks.  

While the economic slowdown is hurting the traditional “measured” media, the so-called “unmeasured” digital and Outdoor media seem to be doing great. Digital out-of-home is fitting into both categories, so we are in good shape so far…

I expect that this outdated classification will disappear from the trade lexicon in the near future, the same way as we no longer hear about “above the line” or “below the line” media any more…

In the meantime, the “unmeasured” media is running full steam ahead…

Add comment August 8th, 2008

Standardized DOOH Metrics Are Slowly Becoming a Reality

Trade media says metrics for digital signage that can be accepted by media buyers, are becoming a reality. Here is a brief overview of what the press has written on the subject in the past couple of months.

Nielsen is about to launch a new service that will provide monthly audience ratings for digital out-of-home networks in a format similar to that of TV ratings “pocketpieces” (booklets that you can fit into your pocket).

According to MediaWeek, “Nielsen has already issued its first report for Ideacast’s health club network. Sources confirmed other networks have also signed up for the service, among them Gas Station TV, Arena Media Networks and CBS Outernet.”

Katy Bachman, the author of the MediaWeek’s article, continues: “…standardized metrics could be a game changer for a medium advertisers find attractive but that lacks the metrics to give it a fair evaluation.”

“Measurement will bring some order to the whole medium,” said Jim Spaeth, president of Sequent Partners, a research consultancy hired by the Out-of-Home Video Advertising Bureau to write research standards to be released later this summer.

MediaWeek says Nielsen will issue reports free to agency clients, which it does with its cinema reports. For Ideacast, it takes the business to the next level. “Nielsen has a database of 30,000 planners and buyers, and they’re sending this to their entire database,” said Jason Brown, president, sales and marketing at Ideacast, which has already begun selling with the data. “Our business plan and internal projections are based [on these reports]. It’s now our currency.”

MediaPost wrote that, “… perhaps the most important aspect of the new pocketpieces will be Nielsen’s imprimatur, a stamp of approval that would provide legitimacy and authenticity for place-based networks calling on advertisers and agencies.”

Another advantage, according to Paul Lindsrom, Senior Vice President-Nielsen Strategic Media Research, would be “the ability to flow place-based TV audience estimates into media-planning software from firms such as Nielsen’s IMS unit, or various media and marketing mix modeling systems.

Lindstrom called the plan a “fairly simple, fairly straightforward approach” that would enable place-based TV networks to be planned and bought alongside traditional TV outlets, writes MediaPost.

MediaBuyerPlanner.com explains: “Whereas television and internet audience estimates are taken from consumer panels, Nielsen will gather data for the out-of-home video networks primarily from compiling and modeling third-party data, and combining that with Nielsen research conducted by telephone.”

MediaWeek says Nielsen already has competition in digital signage measurement: “While Nielsen is the first research firm to try to establish currency for the medium, it may not go unchallenged. Several other players, including Arbitron, Knowledge Networks, Edison Research, Peoplecount and MRI, as well as TruMedia and Quividi, have developed research and have worked with OVAB to develop guidelines.

“There are a lot of companies out there [looking to measure OOH video]—two companies may also work together,” said Suzanne Alecia, OVAB’s president. “Our guidelines are a rule book for any research provider to use,”” writes MediaWeek.

Advertising Age pointed out on June 23 that, “While out-of-home video advertising was estimated by PQ Media to take in $1.28 billion in spending in 2007, the emerging media sector did so with no standardized metrics for advertisers and agencies to buy it efficiently. The 18-month-old Out-of-Home Video Advertising Bureau is working with more than two dozen vendor and measurement partners (including Nielsen, Arbitron, Screenvision and CBS Outernet) to help create a universal measurement checklist for out-of-home media buyers. But even after the metrics receive official approval from the American Association of Advertisers and Agencies, they’re not likely to be employed until early 2009.”

My colleague Brian Dusho and I were part of several rounds of dicsussions of the OVAB’s Audience Metrics Guidelines, and I can testify that the document absorbed input from all stakeholders: the largest networks, research firms, technology providers, agencies and advertisers. Once endorsed by trade organizations and published, it will be a solid starting point for standardizing the digital signage ad space.

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Add comment August 7th, 2008