Forget the doom and gloom for a moment – there’s one sector at least that’s doing bumper business, explores Jonathan Cotton; Out-of-home advertising.
Driven by digitization, programmatic proliferation and super-smart screens, the Out-of-home (OOH) sector seems to be having its moment.
According to New Zealand industry body OMANZ (the Outdoor Media Association), the Kiwi market grew 22 percent for annual revenues to NZ$174m in 2019. Over the last four years, the sector has seen a consolidated annual growth of 37 percent.
That’s healthy growth by any measure.
“2019 has been a successful year for the Out-of-home Industry with growth of 22 percent year on year,” says Outdoor Media Association of New Zealand (OMANZ) GM, Natasha O’Connor.
“2018 was a bit of a challenge for the industry, so seeing every quarter of 2019 not only in growth but the strongest quarters since before 2016 has been incredibly pleasing.”
So what’s behind the big upward trend?
In part it’s growth driven by maturing technology, and in particular, digital screen infrastructure.
In a word, digitisation. According to the most recent reckoning, digital out-of-home accounts for about 61 percent (NZ$87m) of OOH’s revenue growth in 2019. That’s in line with the upward global trend as worldwide the digital-out-of-home market is forecast to hit almost NZ$13 billion by 2023.
It’s a rapid shift in the industry globally and in New Zealand.
“At the end of 2013 in New Zealand, less than one percent of OOH advertising spend was made on digital OOH media,” says Phil Clemas, founder and CEO of Lumo. “At the end of 2019 – just six years later – over 63 percent of all OOH spend was on digital inventory.”
“During that same period, total spend in OOH more than doubled.”
Media consumption habits are evolving
Of course the changing fortunes of media in general plays a role in out-of-home’s surging popularity.
“The biggest influencer for us has been the fragmentation of traditional media,” says oOh!media GM and OMANZ chairman, Nick Vile.
“We have seen plenty of examples of advertisers who have traditionally been TV-centric now spending in out-of-home to replace the audience they are no longer reaching via their historical approach.”
Add to that long reach a lower price point, and you’ve got an attractive option for advertisers looking to spread their budgets across several platforms.
“There are plenty of case studies that demonstrate that out-of-home is a key component of any long-term effectiveness play,” says Vile, “but ultimately it is quite simple: out-of-home is in the real world where people are, it can’t be fast forwarded, and it can’t be ad-blocked.”
The challenge now, he says, is to find innovative ways to engage audiences and demonstrate the effectiveness of the medium to advertisers.
“There are so many variables as to what makes a platform effective,” says O’Connor.
“It depends on what your reach objectives are, your brand, your messaging and the audience that you’re trying to target.”
“I believe the strength of out-of-home is in the fact that the OOH market is out there where people are living their lives. It’s not intrusive…and with the right creative, can be a valued part of the cityscape.”
Add to that continued industry investment and ever-greater capabilities and the shift in spending towards digital OOH options seems likely to continue, says Mike Porter, outdoor media director at QMS New Zealand.
“Advertisers understand that the out-of-home audience is growing,” he explains.
“That’s a rare trend in the current media landscape as traditional media channels continue to fragment and their audiences decline.”
“The industry’s significant and continued investment into digitalising assets and its investment into better understanding audiences through data and research is seeing new and existing advertisers invest and grow their out-of-home spend,” he says.
“This trend is set to continue and drive further growth in the long term for our channel both locally and globally.”
Making the most of it
And with all that investment has come the new imperative: deliver advertising solutions that truly exploit the possibilities of digital OOH.
“Digital has really opened up the platform to advertisers who traditionally needed greater immediacy of message in-market,” says O’Connor.
“Categories that are embracing the immediacy of digital and using Out-of-home for more than their branding messaging include the retail sector, personal finance, media and travel.”
“The flexibility of digital has meant clients that traditionally used other media such as radio or press for their daily messaging are now moving more revenue to Out-of-home.”
“Again, this is reflected in our revenue growth of 2019.”
Case in point, QMS’s recent collaboration with radio station The Rock, to broadcast a live feed of their annual ‘The Rock 1500 Killer Countdown’.
“Utilising various prominent digital billboards, we were able to dynamically update the creative live, to show motorists nationally what was currently playing on air to ensure they tuned in to hear their favourite track,” explains Porter.
It’s cool stuff, but it’s early days yet and we’re only just seeing the tip of the creative iceberg, he says.
“As a medium, out-of-home now provides advertisers with the ability to better understand and analyse how to reach their audiences more effectively, with campaigns that deliver immediacy of message to specific and multiple locations, as well as the ability to create campaigns that utilise dynamic feeds, day parting and hourly targeting to broadcast more relevant and memorable messages.”
“These new data and digital capabilities are helping advertisers deliver real and proven results which in turn is seeing the continued growth of the medium.”
With great power comes great accountability
But quick reflexes are only part of it. The demand for more data and better reporting around each and every campaign – not to mention each and every site – is increasing.
“While the out-of-home industry is a lot more accountable than it’s ever been, a greater level of accountability is on the horizon with OMANZ and its members working on an industry wide Audience Measurement System,” says O’Connor.
“Agencies will have a level of accountability that they haven’t had in the past. There will be a ‘one truth’, rather than every member having a different measurement system.”
“The AMS being developed will make it easier for agencies to report on their Out-of-home campaigns once we are all speaking the same language.”
There are several ways of doing that in the market already of course. oOh!media has Craft, QMS has Datalab and JCDecaux, Calibre.
In October, Lumo introduced its own AMS, ‘Real-Time Traffic Insights’, which reports traffic volume, trends, patterns, and other insights in real time, a process described by the outdoor media firm as “audience metrics without smoke and mirrors.”
“This technology uses camera and smart software to accurately count vehicular traffic coming towards each of Lumos billboards in real-time,” says Clemas. “It is the basis of Lumo’s ‘truth metrics’ with number-plate data insights coming in March 2020”.
The company also offers clients ‘Lumo-Livestreaming’, another camera-based technology which uses Lumo’s fibre network to provide 24/7 livestreaming of screen displays as seen by the oncoming audiences.
“We use it for surveillance, but clients can log-in and view their client’s ads, other advertisers, take their own Proof of Postings screen shots and check the number of ad slots per loop for proof of share of voice”, says Clemas.
And the move towards real transparency is just getting underway says Richelle Scott, head of BrandSpace New Zealand, Scentre Group.
“The delivery of OOH campaigns will become more accountable and transparent as verification providers enter the New Zealand market,” says Scott. “This should result in greater levels of trust being placed in the medium, which is good news for all providers.”
That in turn will encourage better use of the tech, and that, says Scott, will allow brands to be more effective with their OOH campaigns “by enabling greater targeting, using data to understand the audience profile of a digital OOH site and then deploy specific creative for that audience”.
It’s now up to the industry to communicate the possibilities to clients then deliver them, says Porter.
“Our role right now is to help advertisers understand how they can maximise the growing data and research currently available to them, as well as demonstrating what is now possible with advancements in digital to create campaigns that reach and engage audiences like never before,” he says.
“Through the power of our data and technology combined, we are increasingly showing advertisers how they can now create more accurate and engaging campaigns by harnessing the digital capabilities; dynamically adjusting the creative at each location to deliver tailored messages around current temperature, time of day, pollen counts, nearby fuel prices and even a song being played on the radio.”
Keeping it clean
For a high-profile industry such as OOH, accountability means more than just good traffic reporting. In 2020, everyone’s thinking about the hidden costs of doing business, so in the face of such a profound market opportunity, it’s almost essential that an industry commitment to sustainability be demonstrated too.
Luckily, digitisation itself has some green benefits.
“One of the biggest improvements in sustainable practices for OOH has been the rapid transition from print to digital,” says Clemas. “OOH advertisers in 2013 would have disposed of over 400,000 sqm of solvent printed vinyl billboard skins, not to mention the materials used for bus shelter posters, bus skins and the like. Almost all of that would have ended up as landfill.”
“Today, over 63 percent of all OOH advertising spend is invested in digital, which requires no printing or mechanical installation processes,” he says.
“We choose to partner with the world’s most sophisticated outdoor LED manufacturer using their USA-based advanced technology which utilises the most energy efficient electronic components when designing and manufacturing our screens. This results in lower power consumption, superior display quality and a slightly healthier planet.”
“We’ve also deliberately approached each of our static billboard conversions with a ‘less is more’ attitude. This means if we can reduce the number of billboards – for example, dismantle two or three static billboards to build one digital billboard to reduce clutter.”
When asked, everyone is quick to offer their green credentials.
“Sustainability is a key pillar of the JCDecaux platform,” says Mike Watkins, country head NZ at JCDecuax.
Globally, JCDecuax has been recognized for its commitment to environmental management with Watkins saying the company has a sustainability programme that ensures they remain carbon neutral.
“In New Zealand, our digital screens are bought on quality and longevity, meaning the replacement cycle is longer than many of our competitors,” he says. “This delivers less e-waste.”
Scentre Group’s Richelle Scott says their latest generation of SuperScreens – as deployed in Westfield malls across New Zealand – are 75 percent thinner, consume 50 percent less power and are 40 percent less expensive to operate than their predecessors.
Energy consumption in particular has been a talking point in recent times. Following Stuff’s June 2019 online story questioning the energy consumption of Auckland’s advertising-enabled bus shelters, there’s an interest in arguing for the sustainability of the industry in general.
“There has been a bit of a microscope on the sector recently, particularly around the power usage of digital units,” says oOh!media’s Vile. “What we need to remember is that our electricity supplier produces power using renewable sources, so it is a non-argument really.”
“From an oOh!media perspective, sustainability is top of mind for us and something that is reviewed as a program of work monthly,” he says.
“Examples of initiatives that we have underway include the use of deionised water and low-pressure water blasters to clean all our street furniture assets. This means that we do not need to use detergent based cleaning products.”
“Where possible we are installing solar powered solutions for our poster light boxes. We are upgrading the illumination of our poster light boxes from fluorescent tubes to LED and we are reviewing current recycling options and trailing moving to a 100 percent paper-based poster.”
As for non-digital OOH sites, they come with their own sustainability challenges, namely the reduction of waste and an industry-wide shift away from PVC, the latter project currently underway here.
Phantom Billstickers’ Ben Stonyer says that the poster placement company is always looking for more sustainable ways of operating.
“We totally get behind the sustainable movement and practice this as much as possible,” he says.
“Posters are recyclable, and we use a biodegradable plant-based glue. We have an electric bike fleet to reduce our carbon footprint as well.”
“Anything we can do, we will.”
Any conversation involving technological change is, to some extent, a conversation about the future. Given the radical changes experienced by the industry in recent years, what does the next ten years of OOH advertising look like?
“In the future the sector will move closer to a pure play digital approach for digital assets, offering advertisers the opportunity to buy real-world real-time audiences,” says Vile. “This will be delivered across all out-of-home formats and via automation – one-to-many not one-to-one as in the online world.”
It’s all about the data enabling better planning capabilities and making ad placement that much more relevant for audiences and advertisers alike, says O’Connor.
“What I find most interesting is how the technology is being so completely embraced by clients and creative agencies and really pushed and tested and turned into great campaigns,” says O’Connor.
“Clients can now see exactly what impact each creative has and how responsive it is. For me, I think that’s the most exciting thing about the industry at the moment.”
“I believe the focus of technology over the next few years will be the use of ad serving technology – right ad, right time, right audience.”
That feeling of optimism is shared by many in the industry.
“The OOH industry is just scraping the surface of what can be achieved through technology,” says Watkins.
“Innovation is being driven through data, from gaining better audience understandings and metrics through to attribution and mobile integration.”
“From a sales side, automated/programmatic buying platforms are being launched to simplify what can be a time consuming process,” he says. (JCDecaux’s VIOOH global programmatic platform is scheduled for New Zealand rollout in 2020.)
“Growth will continue but is unlikely to be at the same rates we have seen over the past few years.”
“OOH still only commands a small portion of media budgets and as an industry our task is to continue to educate and demonstrate the power of OOH as a media, both stand alone and complementary with other platforms.”
“Interestingly, if you look at the largest spenders on OOH globally, it is the online giants Amazon, Google, Facebook.”
“That says a lot about the power of our medium,” says Watkins.
So with lots of potential and lots of room still to grow, expect lots more investment in the near future.
“We are excited about the future for OOH, especially the opportunities that Digital OOH will offer advertisers. And we aren’t the only ones. Most commentators, investors, operators, suppliers, agencies and advertisers predict ongoing investment in infrastructure to meet current and future demand.”
Clemas says he believes that another surge in growth is imminent, especially for the digital side of the industry.
“There is much more to come for the industry, but I believe there will be two key switches through the next 12-18 months which will set the stage for another surge in growth for the DOOH channel in particular.”
“They will be when the ‘creative penny’ drops, which will see far greater use of DOOH’s dynamic and interactive capabilities and when the programmatic tipping point is reached.”
“Watch this space.”