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.

***

Add comment August 7th, 2008

Grow Your Digital Signage Business, Not Overhead

“Digital billboards and digital signage networks in retail are driving the rapid expansion of outdoor/out-of-home advertising, rivaling the Internet as the fastest-growing advertising medium. What’s fueling this growth? The ability to reach elusive consumers while they are out of home — and especially while they are shopping. The ability to customize each message to audiences at any location and even at any area within a location is another unique value for marketers. That said, a number of challenges still prevent the digital out-of-home from joining the ranks of mainstream media.

While screens are the most visible component of digital signage, the critical part of any network is the software that powers it. One of the obstacles to faster growth has been the lack of software platforms that could accommodate the necessary functionality without being cost-prohibitive to network owners,” – this is an excerpt from a MediaPost’s article based on BroadSign’s white paper on digital signage software distribution models.

You can find the full version of the white paper here. 

Add comment June 5th, 2008

Social Networks vs. TV Networks vs. Digital Out-of-Home Networks

Social networking sites are getting a lot of attention nowadays, due to their explosive growth. I agree, it’s a huge phenomenon; all of a sudden – everyone is on either Facebook or MySpace, or both, my family included. USA Today published an article today, saying that social networks will assume the role of TV networks, and marketers will benefit from placing ads on these sites.

Sounds fantastic, but I think something important is missing here. Let’s see. Have social networking web sites accumulated massive numbers of users? – Yes, they did. Do those users constitute the demographics most desired by advertisers: young, affluent, educated people? – No doubt about it. Now, will the social networking sites become an effective advertising vehicle? – This is where I am not so sure.

Online advertising has absorbed the largest part of ad dollars shifted from traditional media. However, the lion’s share of that money goes into Search Marketing – the most proven model for online so far (and the lion’s share of Search Marketing budgets go to Google AdWords):

Where do Facebook, MySpace and the like fit in here? They will probably compete with many others in the display ads category.

The problem I see with social networking audience is essentially the same as with TV viewers: they come to those web sites to socialize, whereas viewing or clicking on ads, no matter how relevant the messages are, is the last thing on their minds. Much like viewers turn TVs on to watch programs, not ads. So you are still stuck with the same predicament: no one really wants your ads, except for the media owners – the social network sites themselves.

By contrast, people who see sponsored links in their Google search results, view them as relevant timely information to help them find what they are looking for… Searchers actually appreciate those ads, and often click through them. This explains the high effectiveness of Search Marketing and its unstoppable boom.

As a TechCrunch blogpost put it, commenting on the above table: “The numbers look great for Google, with paid search advertising expected to hover at around 40% of the total online ad spend through to 2012, increasing as a whole from $8.6 billion in 2007 to $16.59 billion in 2012, a 92.9% increase over 5 years.”

Online advertising was propelled to its current height and market share after Google finally figured out a business model that harmonized the interests of users and advertisers. It worked like magic. Social networks, however, are yet to figure such a model out. Similar problems hamper the growth of online display ads. In many cases display advertising is bought just because it falls under a section in the media plan with a trendy title ‘digital’, which in the advertising lingo is synonymous with ‘internet’, while the metrics are still quite vague.

As we know, the only other advertising medium, apart from Paid Search, that has been defying recession is Digital Out-of-Home. Unlike the case of TV or social networking web sites, the business model here is pretty straightforward and fits the interests of both consumers and marketers:

- modern consumers are pressed for time and are receptive to brief info that may help them make a purchase decision, while on-the-go. They are NOT annoyed, because they are not interrupted. Therefore, the acceptance of DOOH advertising is much higher.

- operators can make sure that the screens are on and show the right content, therefore – the proof-of-play is predictable and measurable.

- the audience is more easily measurable. New technologies will soon allow high-precision, passive (automated) digital audience measurements.

- the ROI is more direct: one can trace an ad from proof-of-display to proof-of-audience – to sales increase, as the advertised products are usually not far from the screens.

My point is, I love the phenomena of Facebook and MySpace and they probably have a great future, but at this moment I wouldn’t give them a penny from my ad budget. There are much more viable advertising alternatives to TV networks than social networks as they are today.

1 comment May 12th, 2008

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

Alternative Media Ad Spending Defies Slowing Economy: PQ Media Report

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.

Add comment March 31st, 2008

No Metrics – No Buys: the War of Metrics Has Begun

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.”

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.

1 comment March 24th, 2008