On the cusp of the 2012-13 upfront advertising marketplace, new data indicates that demand for digital place-based networks has slowed down relative to the rest of the digital out-of-home advertising marketplace. The estimates, released this morning as part of PQ Media’s annual global digital out-of-home advertising forecast, indicate that U.S. ad growth on digital place-based networks “decelerated” to 7.5% during 2011 -- about half of the medium’s 15.3% rate of growth in 2010.
While digital place-based networks nonetheless remained one of the fastest-growing segments of ad-supported media during 2011, the slowdown indicates that some steam has gone out of the digital out-of-home media marketplace.
PQ, which attributed the 2011 slowdown to “cyclical events” including the economy, said the impact was more negative during the second half of 2011, and singled out a “substantial slowdown” in cinema ad spending, the largest sector within the place-based digital ad network marketplace in the U.S.
On the plus side, PQ cited “double-digit demand” from corporate, health care, entertainment, education and transit advertisers.
“While 2011 began strong for [digital place-based networks] in the U.S., a record broadcast and cable TV upfront and the sudden change in sentiment regarding an economic recovery triggered a decline in national scatter ad [spending] in the second half, as ad budgets tightened in the fourth quarter,” PQ’s analysis notes. “Excluding cinema, however, the deceleration in overall DPN growth was much less severe in 2011, as combined operator revenue in the other four venue categories increased 13.2% to $736 million.”
Digital billboards and signage, the other major digital out-of-home ad category, meanwhile expanded 20.3% to $638 million in 2011. When combined, the total U.S. digital out-of-home ad marketplace grew 11.2%.
US DOOH operator revenue increased 11.2% to $2.05 billion, making it the largest market in a rapidly expanding global marketplace. PQ estimates the worldwide digital out-of-home marketplace expanded 15.3% to $6.97 billion in 2011, and projects it is “on pace” to expand 19.2% in 2012, due largely to fast-growing markets such as China and Japan, as well as special stimulus in the U.K. due to demand from advertisers related to the London Sumer Olympic Games.
Despite the slowdown in 2011, PQ projects the U.S. digital out-of-home ad marketplace will expand 12.5% to $2.3 billion in 2012, and that it will continue to expand at about that rate through 2016.
“While TV remains the 800-pound gorilla of ad-based media due to its reach, scarcity and measurement, [digital place-based networks] offer brands opportunities to extend their reach by engaging target consumers with contextually relevant content in venues outside the home,” PQ CEO Patrick Quinn states, adding: “Despite the growth deceleration in 2011, we believe 2012 has the potential to be a watershed year for DPNs, particularly in the second half, as there appears to be a good chance for network operators to differentiate from other emerging media and prove their value as part of integrated media solutions.”