Dec. 16, 2016
By Christian Lundgren, U.S. CEO, StickerRide
It's nearly impossible today to read any advertising trends article that does not mention the explosive growth in digital, particularly mobile. According to the IAB 2015 Internet Advertising Revenue report conducted by PricewaterhouseCoopers (PwC) released in early 2016, U.S. online ad revenue hit $59.6 billion in 2015 – $10 billion more than in 2014 (a 20.4 percent YoY increase).
Mobile has been the main driver of the consistent high growth in digital advertising, with a compound-annual-growth-rate of 100 percent over the past six years. Ultimately mobile – which accounted for 35 percent of 2015 digital ad revenues in the U.S. compared to 25 percent the year before – has been the primary impetus behind the digital advertising's decade-long 17 percent CAGR.
But mobile advertising is not without its challenges. The mobile advertising channel has grown so crowded and cluttered that the recent rise in ad blocking (deployed on one in five mobile devices worldwide, according to PageFair) could be a sign that the industry is reaching a tipping point. This may be why - amidst the current mobile advertising explosion - more traditional, physical out-of-home (OOH) advertising methods continue to hold steady.
According to the most recent statistics from the Outdoor Advertising Association of America (OAAA), OOH advertising revenue rose 4.1 percent in the second quarter of 2016 compared to the previous year, accounting for $2.35 billion. OOH is also outperforming the U.S. economy, more than tripling GDP in the second quarter. Well-recognized global brands, including Deloitte & Touche Consulting, Amazon, Budweiser, Google, Chevrolet Dealers Association, Chevrolet, Anheuser-Busch, and the New York City Department of Health & Mental Hygiene, all more than doubled OOH spend from Q2 2015.
While internet-connected digital OOH is leading the way for growth in the OOH advertising sector, newer OOH formats, like on-vehicle advertising, are also gaining steam. According to a recent survey that StickerRide conducted, users overwhelmingly prefer on-vehicle ads to traditional billboards, using words like "appealing," "catchy" and "unusual" to describe ads placed on cars.
In an increasingly digital world, how do we explain the ongoing popularity of OOH advertising? Quite simply, OOH ads deliver an experience that digital ads often cannot. They capture our attention and our memorable. They are a fun, captivating part of our real physical worlds and experiences. Much like a social media or email-based interaction cannot match the intimacy of a face-to-face encounter with an old friend, real-life interactions with ads tend to be felt on a deeper emotional level and foster higher rates of psychological engagement.
This dynamic may explain the rising popularity of augmented reality games. Augmented reality is so appealing because it does not separate the user from his reality but instead uses it and realistically transforms it. This usually results in a high degree of surprise and curiosity in users.
OOH advertising is successful because it makes advertising a seamless extension of users' realities, naturally blending marketing messages into the audience's environment. You'd never see an OOH advertisement that prevents a viewer from looking at other things, like an intrusive interstitial mobile. In a strange twist, we are seeing digital ads looking to mimic the OOH experience through native advertising, as well as advertising on digital "billboards" within games and apps.
If OOH advertising remains so powerful, why then are so many advertisers directing an inordinate share of their attention to digital and mobile? The answer lies in one word – measurability. To date, the OOH advertising industry has lacked the reliable performance metrics that today's media planners and marketers seek before committing money to a placement. OOH companies need reliable data and analytics tools to demonstrate the reach, frequency and return on investment their channel can offer.
One interesting approach is leveraging mobile technologies combined with Big Data to estimate audience reach. For example, on-vehicle advertisement companies like StickerRide offer mobile apps, which drivers can access when they begin driving. The duration of the ride, combined with GPS ride-tracking information, traffic patterns data and other factors, provides an algorithm for accurately measuring ad reach and impressions.
In addition, there is evidence of huge dividends for marketers that successfully complement OOH with mobile. A recent study by industry body Outsmart identified a strong relationship between OOH sites that people walked past or were exposed to, and smartphone activity. The study found that people who had seen an OOH advert were 17 percent more likely to interact with the brand or campaign in question on their phone than those who had not.
We believe that over the next few years, we'll see increased convergence between digital and OOH advertising – both on terms of the techniques working in concert, as well as each side taking a page from the other's playbooks. Digital advertisers must strive to deliver more seamless, natural and less intrusive experiences, while OOH advertising must adopt more precise, scientific ROI measurements. Greater measurability will play a huge role as OOH advertising looks to evolve and flourish in the years to come.
Image via iStock