Article
Three things that will change DOOH ad pricing
Demand, interactivity and aggregation services are poised to pull more dollars to screen advertising.
February 9, 2010 by Bill Yackey
Research shows that digital out-of-home is a growing medium, but when compared against total media spending, including TV, print and Internet, it still has a long way to go in order to become a bigger piece of the pie. However, several trends in this space are setting it up to be competitive in the years to come. Here are three things that will strengthen DOOH CPMs going forward.
1. Supply and demand. Unlike the Internet, digital out-of-home is a finite media model. There are only so many screens and so much time in the day to run ads on them. If the network is 100 percent sold out, then it's not charging enough and should charge more.
While the total available screen space in the world is no where near being filled, there's a chance it may be in the future as the medium catches on. Then, the power of "naming the price" will fall into the hands of the DOOH network owners, where it had traditionally been with the ad agencies and media buyers.
2. Ease of purchasing One of the reasons that demand doesn't exist yet is because up until this point, planning, measuring and purchasing a DOOH campaign has been for media buyers. They want to buy audiences, not screens, and trying to place ads across multiple networks can be a planning and billing challenge.
In order to simplify the process, several aggregation companies have emerged to facilitate the sale of DOOH advertising based on audience demographics and location rather than individual networks. Adcentricity represents over 80 network partners with over 140,000 screens covering 16 main venue categories. SeeSaw Networks creates "life patterns" like "mobile millenials" and "alpha moms" and aggregates more than 50 networks to target them. And rVue acts as an advertising exchange platform for about 50 networks.
Even NEC Display Solutions, traditionally a screen manufacturer, got into the aggregation business last year when it released VUKUNET, a software platform designed to be a universal aggregator of all signage networks.
These software tools allow advertisers to target specific demographics all the way down to the local level, thus raising the CPM for those networks.
3. Interactivity New technology in the DOOH space will allow users to interact with messages, not just be passively exposed to them. The change will create more meaningful contact, which can be leveraged for a higher CPM.
Consider what Rob Gorrie of Adcentricity calls this the CPM+ model. They work with Ecast, which has digital jukeboxes equipped with screens in entertainment venues. One has the ability to run a passive ad as part of the attractor loop, but can also run an interactive application that is designed to gather information like mobile phone numbers and email addresses.
Interactivity such as this allows networks to move from a cost per impression unit to a cost per acquisition (CPA) or cost per engagement (CPE) pricing model, where they can charge much more for ads that guarantee user interaction and information.
Buying Model | CPM | CPA | CPE |
Definition | Cost per thousand impressions | Cost per acquisition | Cost per engagement |
Explanation | Agree to rate on guranteed impressions by size and placement | Agree to rate on desired transaction (sale, coupon download, cell phone number | Agree on rate to pay only when user interacts with ad unit. |
This chart was developed by NEC Display Solutions and used in the webinar "The impact of digital out-of-home on digital signage."
