Behind the Numbers: The Energizer Bunny Sector

Digital-Out-of-Home keeps growing and growin

At a time when many traditional media are posting double-digit reductions, it's heartening to see one that is moving in a (sort of) upward direction. That medium is digital out-of-home. In Q408, PQ Media projected that digital OOH - which includes both static signage and full-motion audio and video on a flat screen - would finish
2008 up 11.2 percent at $2.43 billion. And although that's roughly half its 2007 growth rate (24.5 percent, according to PQ Media), that's still triple its 2002 size and a healthy number given current market conditions.

Digital OOH will generate a compound annual growth rate over the next five years of 14 percent, PQ Media says, with digital billboards the fastest growing sub-segment, which grew 44 percent in 2007 and was projected to grow another 28 percent in 2008. u.s. DOOH maintains a 40 percent share, although PQ Media says growth is coming heavily from overseas. Today, DOOH comprises 29.1 percent of all out-of-home spend.

Why is digital out-of-home doing so well when some other forms of media are not? "Because it addresses the 'perfect storm' of technology combined with consumer behavior combined with addressability," says Suzanne Alecia, president of the Out-of-Home Video Advertising Bureau.

In addition, DOOH, which includes networks at gas pumps, as well as in stadiums, bars, elevators and doctors' offices, to name a few, is highly targeted and is a great platform for social interaction. "It's like that friend you run into all the time at Starbucks and that's the only time or place you see him and you chitchat and have a conversation," says Alecia. "They become part of the community and the experience in those venues."

It's also equally beneficial for direct response and brand marketing. "It depends on how close you are to the product," says Connie Garrido, president of Chrysalis, a new division of Havas that focuses on DOOH. "When you're close to the product - such as in a retail store - you can push harder. The farther away you are, the more brand-driven your message should be."

As a young medium, DOOH is primarily regional and lacks scale, despite the fact that 66 percent of all DOOH spending comes from national advertisers. "There are some good networks out there," says Garrido, "but if you have a network in a coffee shop that is trying to build a footprint with a singular focus, it gets difficult to see where it plays into the plan. It would be smart for these networks to play on the synergies of each other rather than to competitively sell against each other, so you can present the advertiser with a more holistic solution."

In addition, the capital expenditure for building digital networks is high, resulting in a lot of networks with limited distribution, few of which have a strategic approach to their business model, Garrido feels.

OVAB released metrics guidelines in October, but standards will take a while longer, "because we're still in growth mode," says Alecia. "We didn't want to lock in just one way of doing things because that stifles innovation and growth. So we say, 'Here are the parameters. Go make it happen.' Then innovation will develop."
OVAB's plans for 2009 include a campaign for raising industry awareness, consumer behavioral research, media impact studies and some creative counseling to help advertisers make the transition from traditional and online media to digital out-of-home. 

1 comment about "Behind the Numbers: The Energizer Bunny Sector".
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  1. Daniela Santos from Minicom Digital Signage, February 3, 2009 at 5:34 a.m.

    One more fact to endorse your article: midst an international economical crisis, we see a dedicated digital signage company blooming -

    Regards, Daniela

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