• by Erik Sass , Staff Writer @eriksass1, May 13, 2010

Digital out-of-home video is growing by leaps and bounds, but digital advertising and media agencies are still coming to grips with its capabilities, according to a new report and forecast from Adcentricity -- a company that aggregates DO networks to make it easier for media buyers to achieve scale through a single interface.

Part of the blame lies with digital network owners and operators, according to Adcentricity's "Q1 Digital Out-of-Home Market Review": while they're aware of mainstream ad agencies, they're less familiar with digital agencies, which still tend to be smaller, niche operations. Across the board, advertisers are also expressing frustration at seeing a single network represented by multiple sales forces, which inevitably results in inconsistency in pricing, execution, performance reporting, and so on.

On the other hand, digital agencies have unrealistic expectations for measurement and accountability, Adcentricity says, and they also must contend with inconsistent spending patterns, which present obvious operational difficulties. This is partly the unavoidable result of working in a new medium, but it makes it that much more difficult to achieve the kind of scale that would attract more consistent spending -- a classic chicken-and-egg conundrum.

Despite all the obstacles and challenges, Adcentricity predicts that 2010 will be a boom year as the burgeoning medium comes into its own. In the first quarter, the company's own booking and spending has already increased by a factor of ten over the first quarter of 2009 -- the kind of growth rates that characterized the early days of online advertising.

Spending in 2010 still appears to be dominated by place-based networks in retail venues, according to the report, with advertising spending led by automotive, financial services, and telecoms. Less spending comes from packaged goods and entertainment brands, which are approaching the new medium with caution.

Interestingly, Adcentricity found that sound -- while useful -- was secondary to the visual impact of DO video networks. Among consumers who notice DO screens, Adcentricity found that 51% did not notice any sound, versus 26% who said sound made them notice the display.