According to a new study and report from Borrell, Out-of-Home advertising is the only advertising medium unaffected by the Internet. At $7.5 billion it is half the size of radio advertising and one-third the size of newspapers. Except for a slight dip in 2014, it’s the only ad medium outside of the Internet that’s shown consistent growth since 2008 and the only one expected to show year-to-year growth over the next five years.
Growth is also being sustained by broader creativity and interactive capabilities, says the report. An industry once dominated by flat posters is now vibrant with signage that emits sound, scent, and video, or billboards that can “read” the grille of a passing Ford Fusion and deliver a message.
While “digital” can mean disruption for print and broadcast media, it has a very different connotation in the outdoor world. The digitization of signage has allowed a single billboard to go from delivering one poster-type advertisement per month to offering 10 per minute in vibrant, eye catching brilliance. This year, digital signs will account for 17% of all billboard revenue, up from 4% a decade ago, says the report.
Outdoor is very much a local business. The average outdoor company employs 11 people and grosses $3.5 million annually. In all, there are 2,190 out-of-home advertising companies. Even for the big companies, almost two-thirds of ad revenue comes from local establishments.
Legislation in four states has banned billboards, and countless municipalities have instituted some sort of restrictions over concerns about distracted driving or beautification. In addition, the plethora of options has fostered competition that has driven pricing down. This paper details the growth of the out-of-home industry and examines its future, says the report.
Although billboards have long been a part of Americana, they’re often overlooked as a “media” business because they are, after all, just ads. Similar to the print and broadcast industries, however, outdoor companies dot the landscape, ranging from large enterprises with thousands of displays to the many small, family-run companies with just a handful of signs.
Most billboards are all about size, and grabbing attention as people rush by. Highway billboards are as tall and wide as 10 giraffes standing side by side, projects the report. There are also taxi ads, posters, bench signs, subway ads, and a lot more; 368,000 in all, according to the Outdoor Advertising Association of America (OAAA). If erected side by side starting in New York City, billboards would stretch all the way to Santa Fe, NM.
Borrell currently projects that almost $7.5 billion will be spent in the U.S. on ads outside the home this year. Of the total, two-thirds will go to billboard ads, but more than one dollar of every five will be spent on transit advertising, and almost one dollar of every eight will go to “alternative” out of home. In total, out of home has shown steady growth during the past five years. Current forecasts call for growth to continue, at least through the end of the decade.
Total U.S. Projected 2016 Out Of Home Ad Spending By Category (In $ Millions)
Ad Spend MM
% of Total
Sources: OAAA, Dun & Bradstreet, Borrell; 2016
To understand Out of Home advertising better, a look inside each of its component categories is necessary, says the report:
This is the predominant part of out of home advertising, projected to earn more than $4.7 billion by the end of 2016. There are four semi-standard size ranges of billboards, ranging from the largest (billboards) to the smallest (junior posters), and including wall murals and “spectaculars” – enormous cityscape constructs which may employ animation, neon, and other eye-catching features as well.
Also included in the billboard category are digital billboards, which come in a variety of sizes. Banned outright or limited in some cities, digital billboards have the ability to change ad content, multiplying their value and enabling marketers to alter the ads displayed to fit the demographics of viewing drivers by time of day. It is estimated that digital billboards, on average, generate ten times more revenue than their static predecessors annually.
The bus shelters and street benches we’ve all sheltered in or relaxed on, the trash receptacles we use to prevent litter, the banks of news racks we pass on city streets; a good number of these are advertising venues as well. This year, marketers will spend more than $400 million to put their messages on them.
Digital urban furniture has become available at a growing number of urban locations. Bus schedules, weather, directions, and more are all available in street-hardened kiosks that carry advertising as well. As these locations increase, so will street furniture’s share of the out of home advertising “pie.”
The advertising you see at airports, as well in buses and commuter trains, are all part of what the OAAA calls transit advertising. When surface travel alone is considered, public transit consists of more than 72,000 routes which travelled almost 43 million passenger miles last year, according to the U.S. Department of Transportation. 78% of these routes were plied by buses, cars, and vans. Most of the remainder used trains, trollies, and ferry boats, and a few used funiculars and escalators. Almost all showed advertising to passengers.
Almost 4,000 mobile billboards and truckside signs bring marketing to travelers and commuters in their own cars as well, along with more than 45,000 wrapped vehicles. Finally, almost 4,000 vehicles are now equipped with digital transit ad capability. All told, transit advertising is projected to reach $1.36 billion this year, says the report.
U.S. Transit Routes By Type Of Vehicle Used Through 2015
# of Routes
Cars & Vans
Source: U.S. Department Of Transportation, 2016
The signs at sports stadiums, malls, and shopping centers, as well as the digital kiosks that supplement them, fall under the OAAA category of alternative out of home advertising. More than a million “place based” ad platforms have been installed in stores of all kinds, including more than 30,000 malls throughout the nation. Ad revenue from alternative sites is projected to reach $977 million this year, but the burgeoning digital/video component of this out of home category promises increasing future growth.
The Immediate Future
Forecasting out of home’s next five years shows out of home advertising as a continuation of history: small total shifts that mask greater activity at the category level. The reasons behind the predicted changes, says the report, are entwined with expected changes in the U.S. economy and consumer technology, as well as shifts in transportation use, concludes the report:
For additional information from Borrell, the Executive Summary report is offered free using this address.