Recession? What Recession?
And it was a presentation I saw Tony give a couple of years ago that made me think the industry could use a good forum for the burgeoning digital out-of-home media marketplace -- a place where buyers, sellers, and developers could meet and discuss issues and trends in an editorially neutral environment. So last April we introduced MediaPost's Digital Out-of-Home Media Forum, and were surprised by the turnout we received. It surpassed even my wildest expectations, both in terms of the volume of attendees, as well as in the energy and the tenor of the conversation.
I especially loved the tit-for-tat interchange between Tony and Out-of-Home Video Advertising Bureau chief Suzanne Alecia. It was one of the few times I saw someone get the better of Tony in a panel discussion -- though I suspect he was just being gentlemanly about it.
I cannot promise you the same fireworks next month, when we hold our second annual Digital Out-of-Home Forum, or if the attendance will be as robust or energized, but I can tell you we have a bigger venue this year, so it won't look as if people are hanging off the rafters.
Meanwhile, the digital out-of-home marketplace has been hit by the same economics that are impacting other industries, and we've already seen some pretty high-profile failures, like Reactrix's unfortunate demise. And I hear that another big, highly capitalized digital out-of-home player may soon find itself in a similar situation.
But I for one am optimistic about the medium, both near- and long-term, even if there is some shakeout in the short run. That's because digital out-of-home is fulfilling an intrinsic need for all its stakeholders -- advertisers, agencies, content creators, and yes, even consumers -- by providing relevant media, in relevant locations, and at relevant times. I've already opined on that plenty of times since we launched the Digital Outsider, but let me take a moment to discuss some new data indicating why I have reason to be confident.
It comes from ABI Research, which earlier this week released a study indicating that the market for digital out-of-home signage will expand 33% in the U.S. this year. That's a fantastic rate of growth even in a strong economy. Right now, it seems phenomenal.
However, there's some fine print in the ABI data. When ABI talks about the digital signage marketplace, it is talking about the entire infrastructure of that industry: the creation of hardware, software, deployment and maintenance of digital signage, which we all know is capital-intensive. ABI did not report what percentage of that growth will actually come from ad spending.
It's hard to imagine that digital out-of-home advertising budgets will grow 33% in the current economic environment, but I personally don't think it will be much off that mark, for several reasons. One, obviously, is that the category still has a relatively small base of just over $1 billion in annual advertising revenues. Another reason is the rapid expansion in the supply of digital out-of-home inventory, and the new and unique locations it is opening up. A third reason: Advertisers have an imperative to find new ways of reaching consumers in relevant locations, and at relevant times, if they are going to maintain their brand awareness with an increasingly transient consumer population. The final reason is the good work the digital out-of-home industry has done over the past 12 to 18 months to develop an infrastructure that will make it easier for advertisers and agencies to get on board -- and yes, on the boards too.
I have never seen an industry move faster to address key issues like research and metrics, advertising and content formats, and other issues of standardization that historically have stymied the growth of emerging media on Madison Avenue. It has moved much faster than the Internet has. And it even moved faster than cable TV did back in the 1980s.
That's noteworthy, because OVAB has been a big factor in the rapid maturation of the digital out-of-home media marketplace, and because OVAB itself was modeled on the cable industry's own Cabletelevision Advertising Bureau, the brainchild of CAB founder Bob Alter, who recognized the issues surrounding the rapidly growing multichannel TV marketplace, and the need for an organization to, first and foremost, develop its infrastructure; and secondly, to help promote and market it. Alter would no doubt be proud of what OVAB has accomplished from his model, and I suspect that the next year, as rocky as it might be, will demonstrate exactly how resourceful the digital out-of-home marketplace is, and the role of OVAB within it.
Meanwhile, I'm looking forward to year two of MediaPost's Digital Out-of-Home Forum, though I'm a little disappointed that there won't be any fireworks between Tony Jarvis and Suzanne Alecia this year. Suzanne, unfortunately, has another engagement -- one that undoubtedly will help move the ball forward the way I described above. In the meantime, she's helping me figure out and finalize the agenda for next month's forum. If you've got any ideas, please comment here or contact me at firstname.lastname@example.org.
See you next month.