Article

Just how big *is* the DOOH industry? (Commentary)

How big is the digital out-of-home industry? Analysts' estimates can vary greatly.

February 28, 2012

By Steven Keith Platt

Director, Research Fellow, Platt Retail Institute

Estimates of the size of the digital place-based advertising (DPA) or digital out-of-home (DOOH) market vary greatly, as do growth forecasts. This variation is due to many factors including the immaturity of the industry, a lack of accepted measurement standards, and differing industry definitions. Thus, as the information below illustrates, even the most respected firms are navigating in somewhat uncharted waters.

Consider that PQ Media, in its Global Digital Out-of-Home Media Forecast 2011-2015, for example, estimates the global digital place-based advertising industry at $5.06 billion, and the U.S. market at $1.54 billion in 2010. Kinetic, in its 2011 Global Digital Out-of-Home Handbook, pegs the global market at around $3.3 billion, and the U.S. market at $1.1 billion (see Chart 1). MagnaGlobal, in its 2011 Advertising Forecast, advanced that the global market was $2.1 billion in 2010 (see Chart 2).

Chart 1.

Source: Kinetic

Chart 2.

Source: MagnaGlobal

Perhaps a more informative question would be: What is the pace of growth for the U.S. DPA market, and is this a reliable trend indicator for 2012? As a starting point, we have found only one qualified firm that has advanced growth projections: PQ Media found that the U.S. digital place-based advertising industry grew by 15.0 percent in 2010, and expected 16.0 percent growth in 2011.

How realistic is 15-16 percent growth in the DPA market for 2012? Hard to say, of course. But in considering this, we believe that the advertising industry itself offers a strong directional indication as to where the DPA market is heading. The following two reasons form the basis for our opinion:

• The ad industry is well established.
• The big five agencies, which account for more than 30 percent of industry spend, are public. Thus, their revenue performance is a good indicator of overall ad industry spending.

MagnaGlobal estimates that the U.S. advertising market grew by 2.9 percent in 2011, and looks for 3.7 percent growth in 2012. And according to MagnaGlobal, "the U.S. advertising market is still 13 percent smaller than what it was in 2007 ($168.7 billion)."

According to PwC's Global Entertainment and Media Outlook 2011–2015, advertising spending in North America grew by 5.5 percent in 2010, and is projected to grow by 4.2 percent during 2011-2015 (see Chart 3).

Chart 3.

Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Assoc.

Out-of-home, where DPA tends to get positioned, is projected to grow 5.5 percent during 2011-2015 (see Chart 4).

Chart 4.

Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Assoc.

Another perspective comes from the 2012 RSW/US New Year Outlook Survey, which polls advertisers and agencies about their outlook. As the following Charts 5A and 5B illustrate, Agencies' expectations (increase in 2012 by 55 percent) are ahead of those of their clients (increase in 2012 by 41 percent).

Charts 5 A&B.

5A. Agencies.

5B. Clients.

Source: RSW/US

Considering that the advertising industry is on track to grow by 3.7-4.2 percent, and out-of-home is forecast at 5.5 percent, will the DPA market grow by 15-16 percent? Anything is possible when one considers that U.S. spending on mobile advertising is projected to grow by 80 percent in 2012 (see Chart 6). Guess it depends on whom you ask.

Chart 6.

Source: eMarketer.com

(Platt is director and research fellow of The Platt Retail Institute, an at-retail marketing research, consulting and analytics firm. PRI focuses on research and consulting to retailers, banks, media companies and other business enterprises seeking to impact the in-store customer experience. This is an edited version of a commentary that originally appeared in the Platt Retail Institute blog.)

Read more about digital out-of-home trends and statistics.