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A look at DOOH by the numbers

DOOH industry observers take a look at the promising figures recently released by PQ Media.

December 9, 2010 by Christopher Hall — w, t

U.S. digital out-of-home advertising spending, including digital place-based networks, billboards and signage, grew almost 15 percent in the first half of the year and is on pace to finish the year with nearly the same growth rate, according to a preliminary outlook delivered by PQ Media CEO Patrick Quinn at the Customer Engagement Technology World show in New York City last month.

But what does that mean?

After the CETW show, Quinn sent out a summation of his talk in response to numerous requests, and posted some of the information he delivered on his blog at the Digital Screenmedia Association website.

PQ Media has reported that U.S. DOOH spending grew 14.9 percent in the first half of 2010 and forecast that it is on pace to grow 14.8 percent for the full year to $2.07 billion.

"U.S. digital out-of-home media resumed its strong growth track in the first half of 2010 due to several key trends, including shifts in consumer behaviors, improved audience metrics, more effective sales and marketing strategies, growth in key brand categories, consolidation and better scale, new technology, and the integration of mobile and social media," Quinn said. "Our research indicates the place-based network segment, in particular, will remain in the shakeout, or consolidation, phase that every successful new medium must endure through at least 2011 and likely into 2012. But this is good because it will defragment the industry and create a stronger set of leading operators with better content, scale and metrics."

Digital Screenmedia Association executive director David Drain said he thinks the PQ Media numbers could indicate that the DOOH industry could finally be getting to a point that's been long predicted.

"I think it is really positive news and further illustrates the tipping point for digital out-of-home everyone has been talking about," he wrote in an e-mail. "I think we're there."

Industry strategist and technology specialist David Weinfeld, of the Obscura Digital Retail Solutions Group, was a little more hesitant. Weinfeld wrote in an e-mail that the kinds of numbers presented by Quinn at CETW make it only natural for anyone in the DOOH space to get excited. DOOH media and digital place-based media networks are growing at an attractive rate, an outgrowth of both the increased fragmentation of traditional media and heightened sophistication of the DOOH networks themselves, he said. According to Weinfeld, DOOH networks are continuing to become more sophisticated — from business model, operational and measurement standpoints — because the market requires it.

Basic economics indicates that consolidation will continue to be a significant factor in the DOOH industry for a number of years, because the industry is filled with diamonds in the rough and failing networks that could be successful with the right team and capital behind them, he said.

A caveat to numbers like the ones being put out by PQ Media is that they require a disclaimer, Weinfeld wrote:

Yes, the DOOH industry is growing. It is a rising platform in a world of crumbling traditional media stalwarts. That growth, however, doesn't mitigate the fact that to succeed in the DOOH media sector requires a strong executive team with advertising sales experience, significant operational capital and a well-thought business plan.

Positive growth numbers are great, but they don't tell the entire story. They don't tell the story of networks struggling to get media attention, an industry working to cement measurement standards, and the reality that the bulk of media agencies still do not attend the industry's largest trade shows.

DOOH media is gaining a larger share of advertising revenue. But, that slice is still comparatively small to the dollars that continue to flow into traditional media channels. The industry has a right to congratulate itself for pushing revenue numbers higher, but we are not at a position to stop and pat ourselves on the back. There is still a lot of work and heavy lifting to be done.

Finally, longtime digital signage consultant and content evangelist Lyle Bunn saw both good things and room for improvement in the numbers.

"The PQ Media data and forecast is in large part based on current operating paradigms in dynamic place-based media, and double digital growth is good to see in comparison to other media," he wrote in a recent e-mail. "But growth that is only 14 percent given the inherent advantages of the medium strongly suggests the importance of increasing media planning/placement efficiencies and improving 'content' to better deliver communications outcomes."

Both of the aforementioned areas are receiving increased attention, Bunn said, and there is the potential that the growth in advertising revenues (on a "revenue-per-display" basis) could reflect the value and investment-worthiness of the format.

"A million deployed displays (NPD Displaysearch) in over 260 operational networks (PQ Media) which are seen by almost 70 percent of North American consumers in a given month (Arbitron) would suggest that a 14 percent annual growth rate indicates the need to refine the value proposition," he said.

According to the statement put out by Quinn, PQ Media breaks down the DOOH industry by two major platform segments and six venue/location categories: Digital place-based networks integrate entertainment and/or informational programming with advertising narrowcast on video screens in venues such as cinema, retail, office, entertainment and transit. Digital billboards and signage communicate primarily advertising messages through LED or LCD screens, and the ads often change at predetermined times to showcase multiple brands at locations including roadside, transit, entertainment and retail.

PQ Media will launch the full fourth edition of its "Global Digital Out-of-Home Media Forecast 2011-2015" on Feb. 22 at the Digital Signage Expo in Las Vegas, where Quinn is scheduled to deliver the keynote address for the Digital Out-of-Home Advertising Summit. PQ Media's new "Digital OOH Forecast" will include 2010 year-end actuals for the U.S. and global markets, five-year forecasts, historical perspective, and a wealth of other data and analytics by platform, venue category and country, among others, PQ Media said.

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