DO's strength is evident in its recent growth: Quinn pegs spending in 2007 at $2.19 billion, noting that this represents a 24.5% increase over 2006. Looking back a few years, Quinn found that the DO market tripled in size from 2002-2007, thanks to a cumulative annual growth rate of 23.1% during that time.
Thus, DO outstripped the growth rate for out-of-home advertising in general, which posted annual increases of 5% to 8% per year from 2002-2007. Comparing Quinn's estimate with the Outdoor Advertising Association of America's estimate of $7.28 billion for all out-of-home advertising in 2007 shows that DO constitutes about 30% of total out-of-home revenues, doubling its 15% share in 2002.
However, its strong performance in recent years will not insulate DO from the current economic downturn, according to Quinn. He predicts a "shakeout" in 2008-2009 followed by a "breakout" in 2009-2010.
In addition to general economic woes, the shakeout will be driven, in part, by the elimination of redundant or inefficient video networks-- many of which were thrown together with little thought for strategy and profitability during DO's boom years earlier this decade.
It will also see the liquidation of some high-quality networks that were unable to make their business model work. Quinn pointed to the recent demise of Reactrix, which earned kudos for its engaging interactive technology and high-profile partnerships, but still burned through venture-capital cash without turning a profit.
In large part, the shakeout will take the form of mergers and acquisitions, as complementary and competing networks are rolled up by private-equity firms. However, Quinn declined to name any specific candidates for acquisition (or failure).
The shakeout will set the stage for another surge of digital out-of-home spending in 2010, once the overall economy begins to recover. The medium's intrinsic advantages are being reinforced by new technologies for targeting and venue-based media solutions. According to Quinn: "Marketers from time immemorial have searched for ways to influence the consumers at the point of decision. Now they're finding ways to coordinate multiple media platforms with digital out-of-home, including event marketing, brand integration, product sampling and online content."
Quinn was particularly enthusiastic about the "convergence between digital out-of-home and mobile." In addition, the aggregation of video networks, either through M&A or by meta-networks like SeeSaw, will allow comprehensive geo-targeting of consumers in particular areas. In effect, it will surround them with video messages at multiple venues--a practice called "area-jacking" in Japan, where it was pioneered by advertisers.