Over the last two years, the nation’s outdoor companies have all invested heavily in the digitisation of inventory and the improvement of their measurement capabilities.
These moves essentially set the stage for outdoor advertising to eventually be traded programmatically in the local market as it has been internationally for some time. And now, with the launch of Val Morgan Outdoor’s programmatic product, that moment has come.
VMO marketing director Nicolette Onsley says Subway is the first brand to trial the new offering, which she believes to be the first instance of an ad served programmatically in New Zealand.
Onsley says this move has been enabled through VMO’s real-time measurement system DART, which is capable of detecting up to 18 different demographic profiles.
“The way our model works is we agree on a CPM delivery and the specific demographic and serve the creative until we hit that number,” she says.
While this move might be positive from a technology perspective, the introduction of programmatic to outdoor also carries a fair amount of risk.
As seen in the news publishing space, programmatic advertising has not delivered sufficient revenue to offset the losses in print.
However, there is a distinction between what VMO is doing and what has happened in news publishing.
"At this stage, we aren’t considering opening up our network to trading desks,” Onsley says.*
This means that VMO retains control of all its inventory, allowing the company to set its own prices.
Programmatic experts respond
KPEX chief executive Richard Thompson welcomes the move from the outdoor company.
“This is a natural progression of the industry,” says Thompson. “Like in many other industries, media owners are benefiting from efficiencies in the automation of parts of the booking process.”
Thompson also says VMO is in no danger of cheapening its inventory as it ventures into programmatic.
“A common misconception is that programmatic will devalue the inventory,” he says. “However, it's important to remember that Val Morgan Outdoor will remain in control of its floor rates, the lowest price the market can access inventory, and therefore I can't imagine they face any risk of cheapening the value of their proposition. In fact, by providing increased targeting options, it should create additional value.”
AcquireOnline programmatic director Zane Furtado mirrors Thompson’s sentiments, saying that VMO could easily safeguard the value of its inventory by setting desired floor prices.
Furtado does, however, asterisk his optimism with a concern about how outdoor companies might harvest customer data in the future.
“We still need to figure how the audience measurement technology works and steps taken to protect the data privacy of the consumer,” he says.
Furtado points to a patent filed by Yahoo in 2015 for a smart billboard embedded with sensors capable of identifying the demographics, tracking eye movements and collecting conversations of passersby in a bid to record their responses to the advertising.
In theory, this data could be stored or sold to advertisers looking to target their outdoor advertising to specific demographic groups.
Of course, this is far removed from what VMO is currently doing but the technology in this space is evolving quickly and consumers are becoming increasingly worried about how their data is being harvested.
According to GlobalWebIndex figures, New Zealanders 52 percent of New Zealanders worry about companies using their personal data. And while this is below the global figure sitting at 62 percent, it certainly does give businesses operating in this space reason to tread carefully.
What’s more is that this concern is magnified in outdoor advertising because consumers don’t have the option to opt out as they do when they’re online (perhaps, unless they close their eyes when outdoors).
Writing on this topic, advertising philosopher Faris Yakob explains that David Ogilvy’s famous hatred of the billboard was derived from the fact that that there’s no consent from consumers when they engage with outdoor advertising.
As this space evolves, it will be interesting to see how the outdoor industry manages the dual challenge of offering targeted products to advertisers while simultaneously not creeping out consumers.
*Correction: this quote has been updated for accuracy.