Tech-savvy OOH outperforms other traditional media

While other traditional media sectors are struggling to reach consumers in this digital age, out-of-home (OOH) advertising is leveraging technology to innovate, remain relevant and attract new advertisers. As a result, OOH is the only traditional format that has experienced consistent growth in global advertising sales in the last ten years. This is one of the main findings from the brand-new report by MAGNA and RAPPORT on global OOH media. The 60-page report looks at the state and trends of OOH in 70 countries (total OOH spend, by segment, digital vs static), including in-depth analyses and insights for the top 20 markets (US, UK, China, India etc.).

Michael Cooper, Global CEO, Rapport, said: “There has never been a more exciting time in the OOH (out-of-home) industry. The industry has exploited all the benefits of evolving digital technologies, but retains a unique geographical footprint in a way that no other medium can. Spotify, Amazon, Apple, Netflix, Hulu and all the tech companies you are excited about, have dramatically increased their spending in OOH advertising, across almost every world market in 2018, with very good reason”.

Vincent Letang, EVP, Global Market Intelligence at MAGNA, said: “OOH is the last advertising format that consumers can’t skip or block, and still reaching the young urban active. Combined with huge progress in campaign management, audience measurement and attribution, this explains why OOH advertising has grown steadily in the last ten years and will continue to grow, by 3% per year globally, in the next five years.”

The report’s top key findings states that the OOH is the only traditional media segment to experience consistent advertising revenue growth. Global OOH advertising revenues grew in each of the last nine years (2010-2018), with an average growth of +4.1% per year over the period, to reach $31 billion in 2018. Meanwhile, traditional non-digital media as a whole (television, print, radio, OOH) experienced stagnating advertising revenue (+0.4% over the period, and -1.5% in the last four years).

As a result, the share of OOH, out of total traditional media sales, grew from 7% in 2010 to 10% in 2018. Considering all media sales (traditional and digital) the share of OOH has remained stable at 6% while the share of television decreased from 41% to 33% over the period and the share of print collapsed from 28% to 10%.

OOH outperforms other traditional media formats for multiple reasons: (i) Audience Holds. Consumers are increasingly mobile and OOH does not suffer from the erosion of reach and audience that affects editorial media, or the brand safety issues that affect digital media. (ii) Technology Helps. Digital innovation drives OOH performance and attractiveness in many ways: high-yield digital billboards colonizing classic sites and new urban niches, to better audience measurement and the use of data to optimize cross-media campaigns in real time.

These are the reasons why MAGNA expects OOH advertising revenues to outperform again in the next five years (2019-2023) with a global growth of +2.8% per year, compared to a decline of -1.7% for total traditional media advertising.

First of all, Retail is the largest contributor to OOH advertising revenues in most markets. Other large and over-indexing client verticals include Entertainment (pay TV, movie releases), Quick-Service Restaurants, Travel, and Beverages. In the last two years, internet and technology giants significantly increased advertising budgets in traditional branding media, which propelled some of the global brands (Google, Amazon, Facebook, Apple, and Netflix), or other local eCommerce or social media giants into the top ten OOH spenders in many markets. The growing use of OOH campaigns by digital media giants is both a testimony to the efficiency of OOH and a factor of future growth, as marketing spend in the sector is bound to grow further.

OOH inventory is stable in the main traditional OOH segments, globally, but roadside billboards are slowly declining due to regulatory pressure and media owners’ strategies, while other segments (transit, street furniture, malls) are adding volumes. Meanwhile, place-based digital OOH inventory (small inexpensive screens in niche indoor environments) is exploding, but struggling to find a business model in some markets.

Digital OOH units generated almost six billion dollars in 2018 globally i.e. 18% of global OOH ad sales, three times the share in 2010 (6%). DOOH sales have been growing by 16% per year in the last five years. Following significant investment from media owners in the last few years, there are now more than 300,000 digital ad units in the world, compared to just 160,000 four years ago.

Some markets are well ahead of the average 18% for DOOH share of revenue: 2018 was the year when two markets (UK and Australia) generated 50% of total OOH sales from digital units. The US is close to global average (17% share for DOOH) but some markets are lower (e.g. Italy and France) due to regulatory obstacles and/or industry fragmentation. MAGNA predicts the share of DOOH to grow to 28% globally by 2023 following an average growth rate of +12% of advertising sales between 2019 and 2023.

Finally, the MAGNA-RAPPORT study observes that the OOH industry is undergoing consolidation. The top three OOH advertising vendors control an average 63% of total OOH ad sales in the top 20 markets at the end of 2018, but concentration (share of top three) jumped to around 90% in two key markets (UK and Australia).

Further consolidation must be expected as all traditional media industries consolidate in an attempt to match the scale of internet giants. Besides, the OOH industry is seeking scale to finance further digitization and leverage data to improve ROI, and outsiders from the traditional OOH industry – from other media and technology – are now interested in OOH assets too. The relatively fragmented US market (share of top three 57%) is a likely candidate for the next wave of consolidation.