Archive for March, 2008
Spending on alternative media hit $73.43 billion in 2007, a 22% increase over the previous year, and will continue to grow, reports Ad Age, quoting PQ Media’s Alternative Media Forecast: 2008-2012, released last week. The research firm tracked 18 digital and nontraditional segments, with a combined 16.1% of total advertising and marketing dollars in 2007, up from 7.9% in 2002, yielding a compound annual growth rate of 21.7%, writes Ad Age.
The forecast predicts a 20.2% increase over the next year, to a total of $88.24 billion, and a compounded annual growth rate of 17% for 2007-2012, reaching $160.82 billion. By then, alternative media will represent 26.6% of all advertising and marketing dollars.
Digital signage, or, ‘digital out-of-home advertising’, as it is called in the report, got a special mention from PQ Media. Here’s an excerpt from Ad Age’s interview:
‘Where the money is going…’
The upswing is as much a result of the effectiveness of new media in a fragmented market as it is from a lack of confidence in traditional media, said PQ Media President Patrick Quinn. “Traditional ad budgets have been going down, but spending has remained stable. This shows where the money is going,” Mr. Quinn said.
“There is a lack of standards in these new areas,” Mr. Quinn added. “Digital out-of-home advertising is getting recall rates as high as or higher than traditional mediums, but there are few studies on this. They’re going to need more and deeper metrics: The bar is being raised across the board.”
So, researcher Patrick Quinn added his voice to the unanimous acknowledgement of the ‘lack of standards’… This is where our industry stands now. As we wrote in many of our previous posts, the money have started pouring (or rather, trickling) into digital signage advertising even before the standards and metrics are introduced. This is a good sign. However, the danger is that until the metrics are in place:
- digital out-of-home will have a hard time demonstrating its enormous potential and will not get the deserved share of budgets in the media plans soon enough, compared to other, more measured, but not necessarily more effective alternative media.
- lack of ROI measurements and disparity in buying standards may lead to a disappointment of first-time advertisers, who may choose not to repeat their campaigns. It might be hard to win them back for a while.
The ball is in the court of the OVAB and other organizations working on bridging the gap between heterogenous networks and the media buying habits (and stereotypes) of the mainstream advertising community. Rumour has it that OVAB is making good progress in high-level negotiations with advertising trade bodies to agree on the terminology and the currency for buying digital OOH space.  OVAB’s member base has grown rapidly since its launch over a year ago, and it keeps growing, judging by the news coverage.
March 31st, 2008
As of this upfront season, the US division of Starcom MediaVest Group (SMG) – one of the largest media communications companies, will only be buying media that can produce more advanced metrics.
According to MediaWeek, “Starcom USA will no longer do business with unrated networks that are not measured by companies or rating services that can offer documented data on viewership.”
“In prior years, standard industry practice has been to negotiate TV buys from unrated networks based on estimates from those networks and disparate sources,†Starcom said in a statement. “The availability of second-by-second data from companies such as TNS, in its alignment with Charter and DirecTV, allow for national performance metrics for these previously unrated networks and reveal never-before-seen insights into behaviors of those networks’ audiences.â€
The move is significant (if it had been in the 80s, I would have said: paradigm shift), as Starcom USA is probably the largest media agency, and when it sets the bar for accountability and ROI higher, others will certainly pay attention. It will also prompt the channels with less adequate metrics to try and comply in the nearest future.
Since the Internet started providing reports on referring sources, targeted impressions, click-throughs and sales conversion data (for e-commerce), it has been enjoying double-digit growth in ad revenue and, along the way, has pushed the standards for accountability for other media. This, along with traditional media fragmentation, led to advertisers’ increasing disenchantment with network TV, and budgets started gradually shifting towards online, Outdoor and now – to Digital Out-of-Home (digital signage).
It looks like Starcom is determined to break the 60-year-old advertiser-agency-media relationship system, which has been centered around network TV and newspapers, while everything else was essentially an afterthought. The TV-era wise joke: ”I don’t know which half of my ad budget works” is not amuzing to national advertisers any more, and agencies are finally hearing this, embracing the most measured medium: digital. Starcom recently discontinued a contract with Donovan Data Systems (DDS) - a near-monopoly software platform for tracking media buys and billings, citing DDS’ inability to eficiently process digital media transactions. The agency’s divorce from DDS sent shock waves throughout the advertising community and put extra pressure on DDS to catch up with its smaller rival MediaBank in introducing digital media management capabilities.
In a separate development, Advertising Age reported last week that digital services in 2007 accounted for 12.3%, or $4.7 billion of worldwide revenue for advertising’s Big Four — Omnicom, WPP, Interpublic and Publicis. “Put another way, writes Ad Age, “digital’s share of revenue at each of the top holding companies is higher than digital’s estimated share of worldwide media spending.” Or, “put another way”, as marketers shift money from TV and print, the Big Four have become more aggressive in increasing their digital spending than the industry on average. Starcom MediaVest Group is a subsidiary of Paris-based Publicis Groupe.
As organizations like OVAB, OAAA, Arbitron and Nielsen are spearheading the development of metrics for digital signage, we can expect similar budget shifts towards our field within the next couple of years. Meanwhile, TV channels are working to offset the losses and bring their own measurement instruments closer to par with the Internet. The war of metrics has begun.
March 24th, 2008
According to the recently released Arbitron study of digital billboards, the ads displayed on them drive traffic to local businesses, radio and TV stations and brand web sites, have a high recall and successfully reach the elusive and desirable 18-34 year-old consumers, among other demographics.
The study, commissioned by the Outdoor Advertising Association of America, was conducted late last year among 402 persons and seven digital billboards operating in Cleveland, Ohio.
Some significant findings of the research include:
- More than half of all Cleveland travelers notice digital billboards and the more a person commutes, the more likely they are to be aware of the displays.
- Public reaction to digital signage is positive. The billboard’s ability to display timely news, traffic, weather advisories and AMBER Alert notices makes the vast majority of commuters (over 80%) feel the digital signs provide an important community service.
- Digital billboards are an effective advertising platform. Over eight out of 10 travelers could successfully recall at least one of the ads running during the survey period and the majority of commuters agree digital billboards are a “cool way to advertise.â€
Mediaweek, MediaPost and Media Buyer Planner covered the study (click on the links to read…)
You can download some key findings of the study here:Â Digital Billboards Study by Arbitron.
March 9th, 2008
Most of the OAAA’s newsletter this week was dedicated to digital billboards. OAAA president and CEO Nancy Fletcher writes that “Digital outdoor can provide opportunities for industry growth little imagined only a decade ago.”
The Federal Highway Administration ruling last fall that digital billboards were ‘permissible’ unleashed a flurry of new installations, pilots, studies and local regulations. Nancy Fletcher summed up the recent developments in the field as follows:
“People Like Digital
Consumers and advertisers are strong advocates of digital outdoor. Arbitron just released a report saying digital billboards are noticed by most drivers and appreciated as attractive and useful, particularly with younger (and harder to reach) audiences. See page three for Arbitron highlights or download a copy at www.digitalooh.org later this week.
Traffic Safety
Separate research conducted by Tantala Associates and Virginia Tech Transportation Institute (VTTI) last year in Cleveland, OH, showed digital billboards are compatible with traffic safety. Digital billboards are safety neutral to motorists, while accident data does not link digital billboards to accidents. Analysis of accident data by state officials reached the same conclusion.
Expect more research. The Transportation Research Board (TRB) has held a workshop to discuss future needs of traffic safety. The Federal Highway Administration (FHWA) has awarded a contract to SAIC to develop a research plan concerning digital safety; the first phase is due for completion in June 2008. In addition, state highway officials (AASHTO) have initiated a worldwide literature search of traffic safety studies affecting signs that will be released this summer.
The National Alliance of Highway Beautification Agencies (NAHBA) is considering
additional research following the results of these earlier studies.
Digital Brightness is Controlled
A primary issue affecting digital billboard deployment concerns brightness and lighting levels. OAAA commissioned Dr. Ian Lewin, a principal at Lighting Sciences in Scottsdale, AZ, to recommend standards designed to minimize the risk of glare or unreasonable driver distraction. The resulting criteria followed the lighting standards established by the Illuminating Engineering Society of North America (IESNA). Details of these requirements will be released this week.
Digital is Regulated
Steadily, state statutes and regulations are being established to govern the use of changeable message signage. To date, 38 states allow digital technology and
five others allow tri-action devices. Only three states (ND, NH, and WY) are left to enable some kind of changeable message signs. While the state regulatory picture is encouraging, the real action today exists at the local level, where a number of communities are considering ordinances, regulations, and applications for digital outdoor displays. As with every regulatory issue, a well-prepared and properly informed industry can best educate policy makers about the benefits of digital outdoor.
Digital is Important The ability to change messages in real time is a benefit to advertisers and a vital public service. Millions of motorists have seen presidential primary results via digital billboards. The FBI is using digital billboards to find fugitives, while AMBER Alerts help locate abducted children.”
Overall, the Outdoor advertising seems to be in much better shape than TV, radio and print. According to the OAAA’s newsletter - total revenue for the outdoor advertising industry in 2007 grew 7% compared to the previous year. Total revenue for the industry grew 6% in the 4th quarter compared to the same period in 2006. The revenue figures are collected in aggregate each month by certified public accountants Miller, Kaplan, Arase & Co., LLP, and used by the Outdoor Advertising Association of America, in combination with other sources, to release industry revenue information on a quarterly basis. Revenue estimates include billboard, street furniture, transit, and alternative outdoor media spending.
I would still like to see the numbers for digital billboards separately and I would assume that those would reflect a much higher growth than that of the whole Outdoor segment. If anyone has access to the digital billboard stats and would like to share them, feel free to post them in a comment here…
March 3rd, 2008