Commentary

Why SVOD + The Big 3 Will Benefit DOOH

The migration of viewers from linear TV to online video has some obvious advertising casualties, but there also is one less-than-obvious beneficiary: digital out-of-home advertising, especially place-based video networks. What’s the connection? To find out in detail, stop by Needham & Co. Managing Director Laura Martin’s session at the upcoming DPAA summit in New York on Oct. 15, but in a preview interview late last week, Martin gave me the heads up to share with you.

Actually, she told me digital out-of-home stands to benefit from two meta developments currently going on with digital media: the looming category war among so-called SVOD (subscription video-on-demand) services, as well as regulation of digital’s Big 3 dominant players (you know, Google, Facebook and Amazon).

Both developments will constrain the supply of desirable ad inventory available to consumer marketers, making DOOH one of the best logical options for brands to reach consumers. Ironically, one of the marketing categories that will be most desirous of DOOH is the SVOD brands, which will be fighting tooth and nail for market share in an increasingly crowded category, which ironically, will help constrain the supply of ad impressions.

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“If you’re an SVOD subscriber, you’re spending hundreds of hours with no ads in front of you,” she explains, predicting, “These services are going to have to go out-of-home, because that’s where they can reach new potential subscribers.

“The inventory of ad units that reaches consumers is shrinking,” she continues, adding: “Anyone that has an ad unit that can reach consumers will increase in value.”

So why won’t that demand continue moving to digital’s triopoly? Martin believes the Big 3 will be so distracted and consumed by fending off regulatory pressure that their “new product innovation” will suffer, along with it their ability to capture or even maintain share of the digital advertising pie.

“They will be distracted and digital out-of-home will benefit from that,” she says, adding that the “numbers are huge,” because even if it only amounts to a few points of digital ad market share, that’s potentially hundreds of millions of dollars that will be siphoned off to alternative media.

After going back and forth on some digital out-of-home ad market projections, Martin did a back-of-the-envelope calculation for me estimating that the twin effects could double digital out-of-home’s projected growth rate well into the double digits over the next several years.

1 comment about "Why SVOD + The Big 3 Will Benefit DOOH".
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  1. Ed Papazian from Media Dynamics Inc, September 23, 2019 at 10:29 a.m.

    Joe, I happen to be a big fan of digital OOH and have done some consulting work in this area in the past. However, I find it hard to accept the assumption that as SVOD/OTT grows in share from its current fairly small size---about 10-15% of all viewing---to a larger share, that this will represent a drastic curtailing of available "TV" GRPS which, in turn, will force TV advertisers to move heavily into DOOH. First off, I expect to see SVOD become increasingly a mix of ad-free and ad-supported options, which will help fill the slack of reduced "linear" GRPs. Also, it is not true ----as was implied----that its either SVOD/OTT or "linear TV" for many viewers. The evidence tells us that a high percentage of SVOD/OTT subs are also "linear TV" content viewers--especially for categories like sports and news as well as many others which are not offered by SVOD/OTT services. As for DOOH, I, too, see big ad dollar gains, however, most of these will be of the more selectively targeted types---and local/regional advertisers---not the massĀ  marketers who continue to buy national TV on a corporate not a brand by brand basis.

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