• by Erik Sass  @eriksass1, March 14, 2007

Out-of-home advertising continued its meteoric progress in 2006, growing 8% or $500 million from 2005, for a year-end total of $6.8 billion, according to the Outdoor Advertising Association of America (OAAA). It outpaced every other medium except the Internet, which enjoyed 17.3% year-over-year growth, according to a new report from TNS Media Intelligence. The strong performance was driven by categories like insurance and real estate, which grew 26.2%, communications--up 25.7%--and local services and amusements, which grew 16.4% and posted the biggest increase in absolute dollar terms.

Moreover, this marks the fourth straight year of growth in out-of-home revenue--which has also seen a general rise in year-to-year growth rates in percentage terms. From 2002-2003, revenues rose $300 million, or about 6%; from $5.2 billion to $5.5 billion; in 2003-2004, revenues again rose $300 million, or about 5%, to $5.8 billion; and in 2004-2005, revenues jumped $500 million, or 8.6%, to $6.3 billion.

The downside: the fourth quarter of 2006 outdoor experienced a stronger-than-usual seasonal dip, with relatively low 6.4% growth, compared to the same period of 2005.

While other media would probably be happy to post that figure, it's a noticeable decrease from 7.7% growth in the first quarter, 8.6% growth in the second quarter, and 9.3% growth in the third quarter. It's also down from 8.2% year-over-year growth rate in fourth quarter 2005, compared to the same quarter in 2004.

In recent months, the outdoor industry has also hit a rough patch with one of its most promising future growth areas: digital signage. This practice allows outdoor vendors to raise revenue by showing multiple ads on a single billboard, as well as vary rates by selling dayparts corresponding to heavy commuting periods.

Warning signs: In the second half of 2006, various city governments began instituting temporary freezes on digital signage, citing concerns that the moving images can distract drivers and cause accidents. Among the cities that have enacted bans are Atlanta, Georgia, Concord, New Hampshire, St. Paul, Minn., and Des Moines, Iowa--all located on or near major Interstate highways with heavy commuter traffic.

To date, about 400 electronic billboards have been erected around the United States, at an average cost of $500,000 per unit.