Thoughts from the Digital Out-of-Home Forum: the Tipping Point Is Now

DOOH Forum by Media Post, April 23, 2008, the Yale Club of New York, NY, NY.

This was probably the most authoritative conference on DOOH. It gathered some of the best brains from the digital signage and mainstream advertising industries. The Forum was the first event on digital signage organized by Media Post, with the Wall Street Journal as the main sponsor. There was almost no tech-talk. The focus was mainly on how advertisers and agencies are changing their view of this fast-spreading medium, the barriers to its broad adoption by media buyers, and the increasingly important role DOOH is playing as an alternative to the stagnant TV. The DOOH Forum was followed the next day by the Outfront conference – reflecting on how traditional media (namely, network TV), is adapting to the changing realities.

The DOOH Forum was also the most sold out conference I have ever seen. All the seats at the tables were taken early, then the organizers had to make extra rows of chairs in the back, and when those were filled, the balcony got packed to the limit.

You can see the list of speakers and the agenda here.

Here are some highlights and observations from the discussions:

- Several speakers (including outside analysts) named DOOH as the’hottest medium’ today, and it is spreading even faster than internet in its early days, because of its ability to reach consumers when they are away from home, its unintrusive nature, and its proximity to point of purchase and point of decision.

- After a few years of soul-searching, two terms seem to have stuck to the wall to describe the industry: ‘digital out-of-home’ and ‘digital signage’. Some still insist on using the term ‘place-based media’, but Google Search doesn’t return many results on that one.

- Agencies are now under pressure from both ends – advertisers and DOOH networks – to include digital signage in the media mix, so they are finally starting to embrace it as part of an “integrated approach” to marketing strategy, or “360 degrees marketing”. The issue everybody is struggling with is the metrics currency: what is the currency unit they should use while planning, buying and reporting on campaigns. At this point it takes agencies several times more effort to allocate a few million $$ to a DOOH campaign compared to quick and easy multi-million-dollar TV buys. The issue of commission is also not resolved in favor of DOOH yet, and that makes agencies reluctant to use it overall.

- The new Audience Metrics Guidelines developed by OVAB are expected to be endorsed by the AAAA and ANA by the end of this year and adopted by networks and agencies as a common currency for negotiating DOOH buys.

- Although DOOH has an enormous potential in achieving the ultimate goal of advertising: ‘move the merchandize’, the whole traditional media planning and media buying infrastructure is built around the CPMs and GRPs that are based on Nielsen ratings – which in turn are based on elusive “impressions”. The accuracy of the current media effectiveness measurement was best described by Mr.Jack Wakshlag, Chief Research Officer of Turner Broadcasting System. On the second day, at the Outfront conference, after a few hours of detail-heavy scientific discussion of existing TV audience measurement methodologies involving Nielsen, TNS and IAG, Mr. Wakshlag exclaimed: “All I want to know is who is watching my ads. I (still) cannot get a straight answer!”.

- As for who watches TV ads: a speaker asked how many people in the audience watched a full commercial pod lately. Three raised their hands, all three turned out to be media buyers…

- Speaking about the current metrics system, OVAB’s president Suzanne Alecia said on the panel: “It took TV 50 years to come up with C3 (average commercial minute ratings, as opposed to program ratings, (NU)); it took Outdoor 100 years to come up with Eyes On (a method of determining how many passers-by actually looked at the billboards, as opposed to just passing traffic numbers (NU)); and it took us 18 months to achieve better results with our Audience Metrics Guidelines” (for the whole DOOH industry).

- Nielsen is introducing audience measurement methodologies for digital signage and conducts field studies with several DOOH networks. See details here.

- Arbitron is using its PPM device for audience measurenment in DOOH. The company is also testing the use of PPM for verifying proof of play data delivered by networks run on BroadSign Suite platform.

- Several speakers made it clear that even if the new ‘perfect’ metrics were introduced now, it would not cause agencies and national advertisers to start buying DOOH space immediately. Everybody openly agrees that “impressions” are a very deficient way of measuring a campaign, but the 70 billion-dollar TV advertising industry rests solely on them, and the inertia among traditional media buyers is still omnipresent. Therefore, in order to get to the negotiating table now, experts recommend to ‘not try and be too clever’ and to ‘dumb your offer down’ – i.e., show impressions, CPMs, reach and frequency, so you could be compared to TV or print.

- In the meantime, Nielsen’ 50-year-old monopoly on audience measurements seems to be eroding quickly – even in TV. A number of smaller companies with advanced technologies are making their way into the space. As media is going digital, including TV, measurements are increasingly based on digital technologies as well, thus becoming cheaper and providing data that is richer and more accurate. With TV in the US switching to digital in February 2009, the only analog medium left will be print.

- The old formula is: what gets measured – gets bought. However, for decades, traditional media has been able to get away with “impressions”, that provided the basis only for a semi-intelligent buying decision. These days are numbered, says Tim Hanlon of Ventures, Denuo. ‘Digital’ changes everything. No medium will escape granular metrics.

- There is a growing understanding among media buyers and planners that working in traditional silos (TV, Radio, Print) is a thing of the past. Many agencies have adopted an integrated approach (also known as 360 degrees marketing), when they carefully examine the client’s needs first and then create strategies across multiple media, including online and Outdoor/Out-of-home. The attitude towards new media is changing to more positive nowadays.

- Tip: if DOOH ad sellers want to be considered for a media plan inclusion, they should talk to everybody involved: agencies, media buyers, planners, advertisers (directly). As the whole media industry is in transition, there are no more clear-cut recipes for getting on media plans. If you can prove you can deliver a certain demographic in certain markets, you may be heard. Even better, if you allow the buyer to cherry-pick demos in addition to broad buys. Getting the attention of a strategic media planner increases your chances for success, industry insiders say.

- A lot of buyers are sitting on the fence, waiting for others to take a lead in DOOH. But, according to Tim Hanlon (Ventures, Denuo), buyers are ‘fast followers’, not pioneers by nature. Once a few major buys happen, the competitive pressure will trigger a domino effect.

- DOOH ad space aggregators like SeeSaw have a bright future as a single point of contact for buyers, as long as they manage to offer standardized buys by demographics and markets.

- The entry of big traditional media players like NBC, CBS, Viacom, Clear Channel, JC Decaux, Publicis, WPP, Omnicom, Wall Street Journal, Nielsen, Arbitron and others into DOOH makes both advertisers and buyers pay attention, brings national scale, and facilitates entry for other viable DOOH sellers. It is also a sign of a growing market maturity and consolidation.

- DOOH is doing very well in the recession.

- The lack of new, DOOH-era creative is still a big issue. Many networks have to set up their own creative shops to deliver the best value to clients. Re-purposing TV commercials is unacceptable, but most advertisers still have no clue.

- The long-awaited tipping point for digital signage is now.

Also, read Joe Mandese’s coverage of the Metrics panel discussion here. And a detailed coverage of the discussions by digitalsignageuniverse.com here.

Add comment April 28th, 2008

“Eyes On” Metric To Revolutionize Out-of-Home Ratings: MediaWeek

Last week the Traffic Audit Bureau (TAB) – the US Out-of-home media auditing organization – unveiled its new ratings system for the industry. Not only is the system a milestone for the outdoor ad business, but it also breaks new ground for media ratings as a whole, writes MediaWeek. Here are some excerpts from the article by Katy Bachman. My comments are at the end.

“Nearly five years in development, the Eyes On ratings will replace the decades-old practice of relying solely on traffic counts to put a value on outdoor ads. The ratings will, for the first time, provide discrete demographic data pertaining to around 400,000 units. The service will go a step further than TV and radio ratings to incorporate the number of persons likely to see an ad as they pass a display.

“It’s a dramatic improvement in outdoor measurement. Quite frankly, it puts us in a position of having a better measurement system than any other medium,” said Paul Meyer, president and COO of Clear Channel Outdoor.

Eyes On has broad support among outdoor media companies, agencies and advertisers, which worked closely with the TAB to design a ratings system uniquely suited to the outdoor medium.

Practically owners of the new system, media companies invested millions of dollars, effectively rejecting The Nielsen Co.’s GPS-based survey, which was tested in Chicago and Los Angeles.

The writing may be on the wall for Nielsen, but the research giant is not giving up. “We continue to talk to interested parties about our service, which offers superior results,” it said in a statement. “We think it’s the best answer for the U.S.” (Mediaweek is part of The Nielsen Co.)

The TAB is scheduled to release the first market, likely Chicago, in June, then report ratings for all 200 markets in late fall. Ratings will be issued twice a year, once to update audience estimates and the second time to take into account changes in inventory.

For outdoor, it’s a huge change that will affect every aspect of how the medium is bought and sold. Marketers will now have the kind of metrics they need to evaluate outdoor alongside other media. Planners will be able, market by market, to determine weight and take into account an outdoor mix of billboards, bus shelters and posters.

“It’s a sure thing advertisers will spend more,” said John Connolly, COO at Kinetic, the world’s largest out-of-home agency and part of WPP. “A lot of agencies use optimizers, and they’ve never been able to plug in out-of-home.”

“For a lot of clients, we’ve had to sell outdoor into the plan as a test. The new ratings could open up new categories and new advertisers to outdoor,” said Jill Nickerson, vp, director of out-of-home at Horizon Media. “Packaged goods have always wanted more validation and more measurement because they’re used to national broadcast.”

Out-of-home advertisers also will be able to aggregate local campaigns with more efficiency.
“We can promote ourselves as a national medium, particularly when you can compare CPMs across markets,” said Tony Jarvis, executive vp, global research at Clear Channel Outdoor,” reports MediaWeek.

It is not clear how Eyes On will affect measurements of digital billboards, but the elevation of OOH’s status as a whole to that of a viable and measurable medium and its broader inclusion in the media plans will certainly benefit the digital OOH segment. The introduction of Eyes On that follows the advances in measuring the effectiveness of internet advertising (notably – Google’s paid search marketing metrics) is essentially putting the TV industry on the defensive. Ironically, TV now has to play catch up with the new media, as advertisers demand at least the same level of transparency to the ad spend. The recent launch of C3 – or average commercial minute ratings for cable and network TV is regarded by many in the advertising community as an insufficient measure that would not last long. Some analysts think it will have to give way to a more modern and accurate way of tracking ad dollars.

Add comment April 21st, 2008

Outlook for Out-Of-Home Advertising and Digital OOH Amid Recession: Good

The Out-of-home media, along with internet, is doing well, despite the drop in overal ad spending. Media Life Magazine’s Diego Vasquez quotes ZenithOptimedia Worldwide, “whose most recent forecast for U.S. spending has out-of-home spending growing by 11.2 percent this year, to $7.83 billion.”

According to Vasquez, next year ZenithOptimedia expects the OOH industry to grow at a similar pace: “11.3 percent, to $8.71 billion, and in 2010 it will grow another 11.5 percent, to $9.72 billion.That’s against 3.7 percent growth this year for the entire U.S. ad economy, which is down from the 4.1 percent growth ZenithOptimedia forecast back in December. It’s forecasting even slower growth in 2009 and 2010, by 2.1 percent and 2.2 percent.ZenithOptimedia is forecasting that worldwide out-of-home spending will grow 9.4 percent this year, 8.0 percent in 2009, and 8.3 percent in 2010.ZenithOptimedia senior publications executive Anne Austin defines out-of-home as including all outdoor advertising, from billboards to bus shelters and other forms of alternative media.Just last month, the Outdoor Advertising Association of America reported that 2007 OOH spending had risen 7 percent over 2006, to $7.28 billion,” writes Diego Vasquez.The rosy view of the medium, whose growth to a large extent is driven by digital technologies (billboards, digital signage networks), was supported by TNS Media Intelligence in New York. The research company reports that spending on TV, radio and newspaper advertising fell last year, but the outdoor ad category rose 4.9 percent. Pittsburgh Post-Gazette interviewed Jeff Golimovsky of the OAAA last week, who said that the first digital billboards went up several years ago, and OAAA estimates there are now around 800 and growing, although that’s still a small portion of the nation’s 400,000 total billboards.

David W. Miller, an analyst with SMH Capital in Los Angeles told Pittsburgh Post-Gazette that Lamar Advertising claimed to have more than 600 digital billboard displays in 37 states and Canada as of December 2007, according to regulatory filings. The Baton Rouge, La., company has been, as Mr. Miller described it, among the most “evangelistic” about going digital.

Even as recessionary pressures seem to be slowing growth in the outdoor ad business in 2008, Lamar expects demand for space on its digital locations to buoy overall results, Mr. Miller said.

In a recent MediaWeek’s interview with top ad experts about the OOH evolution, Mark Kaline, global media manager for Ford, said this about the industry potential:
“Out-of-home is a sleeping giant. It is being kicked by technology. It’s being rustled by measurements. It’s being awakened in a way that’s very close to what the Internet is experiencing right now. It provides us with an event in a local market that we’re able to build launches around. It’s got the best of both worlds. It’s a national medium that can be localized in a way that allows you to geo-target. You can now tailor your ads using digital boards in a way that’s never been done before. With dayparting, there is now the opportunity to reach a certain audience while they’re traveling in close proximity to whatever it is you’re selling—it’s great. You can tell a story over time with a lot of little simple messages that add up to a big story.”

Add comment April 21st, 2008