Aug. 4, 2014
Global digital out-of-home media revenues are on pace for accelerated 11-percent growth in 2014 following three consecutive years of slowing expansion, as a dynamic combination of sporting mega-events, increased ad spend on health care and transit video nets, and a streaking DOOH sector in Australia are expected to fuel the industry's best performance since 2010, according to PQ Media's annual performance benchmark released today.
"Defying economic and political headwinds worldwide," PQ Media said in announcing the release, DOOH media operators managed to eke out a 9.3-percent revenue gain to $8.86 billion in 2013, a solid increase tempered by the fact that it was the third straight year of slower growth.
Key first-half indicators this year point to DOOH growth accelerating to 11.3 percent in 2014, boosted by a dynamic combination of the global economy gaining momentum, two sporting mega-events, and increased health care, political and transit ad spend, according to the new "Global Digital Out-of-Home Media Forecast 2014-18."
Influential developed and emerging markets stuttered in 2013, due to myriad challenges posed by debt issues, asset bubbles, political tensions and slower economic growth in high-flying markets such as China, PQ Media said. These issues filtered down to ad-driven media, which also faced tough comparisons with 2012 as a result of the even-year boost from pivotal sporting and political events. Roadside digital billboards and cinema-based video networks — the two largest location categories — were the most affected verticals in 2013.
While global revenue growth decelerated again in 2013, consumer exposure to DOOH increased at the same rate as in 2012, rising 7.2 percent to an average of 14 minutes per week, according to estimates from PQ Media. Key growth drivers included new deployments and the expansion of existing DOOH media in high-traffic areas of the world's largest cities. Average consumer exposure is pacing for accelerated 9.5-percent growth in 2014, driven by higher engagement with newly launched DOOH, particularly during the Winter Olympics in Russia and the World Cup in Brazil.
PQ Media defines DOOH by two major platforms, digital place-based networks and digital billboards and signage; and more than 10 key indoor/outdoor locations, including roadside, cinema, retail, transit, health care and entertainment.
DPNs generated 71 percent of global DOOH revenues in 2013, growing 8.4 percent to $6.26 billion, a slight deceleration from 2012. Slow-moving economies weighed on cinema — the largest DPN vertical — resulting in several top 15 global markets posting revenue declines. Global cinema networks produced the one of the weakest years on record, although some slack was picked up by U.S. cinema nets, which had their best year since 2010, as well as strong gains by transit and health care DPNs.
Although global revenue is on pace for faster growth in 2014, several challenges continue to shadow DPN operators, including issues related to standardized measurement, planning and buying systems, mobile media integration, and operator consolidation and its impact on network scale.
"From the Americas to Asia-Pacific, financial transactions involving DPN operators continued unabated in 2013 and the first half of 2014," PQ Media CEO Patrick Quinn said in the announcement. "A diverse group of deals were consummated across the vertical spectrum, including cinema, health care, corporate and transit networks, reaffirming that consolidation is accelerating and likely to churn for several more years."
Among the major M-and-A deals announced in 2013-14 were National CineMedia's proposed acquisition of Screenvision; Captivate Network's planned purchase of the Wall Street Journal Office Network; and Cineplex's acquisition of EK3 Technologies. Notable equity investments included those involving Captivate, GSTV, Mood Media and Eletromidia. And while RMG Networks went public, Focus Media went private.
The rapid growth of mobile media has created the proverbial "frenemy" for DPN operators, PQ Media said, as it has become imperative to integrate mobile technology into ad campaigns, particularly those aimed at post-Boomer generations. Driving consumer engagement through mobile interactivity will only become more important with each passing year. DPNs are already being squeezed by mobile, with brands increasingly demanding mobile components to their integrated media campaigns.
"To put this juggernaut into perspective, our research indicates that mobile media revenues from the U.S. alone will be larger than the entire global DOOH industry by year-end 2014," Quinn said, referring to data from PQ Media's Global Digital Media and Technology Series.
Meanwhile, DBB growth slowed for the second consecutive year in 2013, rising 11.5 percent to $2.6 billion. The sharp deceleration was mainly due to local government rulings that led to digital billboards being shuttered in major metros, such as Los Angeles and Moscow. Nevertheless, OOH operators continue to transition static signs to digital for the simple reason that digital signs generate higher revenues and margins.
In addition, digital screens placed in and around transit hubs, sporting venues and busy roadside locations have become must-buys for brands during major sporting events and political campaigns because they reach on-the-go consumers with a combination of dynamic ads and real-time results, according to PQ Media. For example, the increasing amount of soft money and third-party groups involved in U.S. elections drove double-digit increases in political ad spending on OOH media in 2010 and 2012. DBBs were a key contributor due to their ability to tailor messages and respond to breaking news. PQ Media expects these trends to spur DBB revenue growth of 15.7 percent this year to $3.01 billion.
Asia-Pacific was the largest of the four global regions in 2013, with aggregate revenues of $3.83 billion, fueled by surging growth in Australia and a strong rebound in Japan. The U.S. remained the world's largest DOOH market, with $2.37 billion in revenues, followed by China at $1.87 billion. The injection of ad spending and new deployments ahead of the World Cup helped Brazil's DOOH industry grow at the fastest rate, rocketing upward at 41.9 percent, followed by Australia at 23.6 percent.
U.S. DOOH media revenues rose at an accelerated 8.7 percent in 2013, driven by strong growth in health care nets, which benefited from new ad dollars related to the Affordable Care Act. DPN revenues increased 9.5 percent, as the transit and entertainment categories joined health care to offset slower growth in retail and cinema. U.S. DBB revenues were up 7.2 percent in 2013, the lowest growth rate since PQ Media began tracking DOOH.