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The Smart Money is on Digital Out of Home Media

According to Market and Markets, the Digital Out of Home market continues to be dominated by the U.S. Forward-thinking investors are NOW looking to emerging markets, such as Southeast Asia, the Middle East, Eastern Europe and Latin America.  


DOOH Revenue Growth


The Out of Home Advertising Association reported on August 22, 2019 that the OOH industry, is experiencing growth the market hasn’t seen in over ten years.


Adweek points out that OOH revenue grew by almost 8% to $2.7 billion for the 2nd fiscal quarter of 2019, compared to the same period for 2018. The spike marked the highest quarterly growth since 2007. Revenue was up 7% for the first six months.


“The strong growth happened through all four major OOH channels: billboards, street furniture, transit and place-base,” OAAA President and CEO Nancy Fletcher told Media Post.

"Digital OOH posted the highest increases across all formats, representing 31 per cent of total OOH revenue in the second quarter.”


Nancy has held her position since 1991 and has announced her retirement at the end of this year. She is based in Washington DC, but has her thumb on the pulse of OOH worldwide. She has been a key influence on Servernaya's decision to focus on the digital out of home advertising market as part of our global M&A strategy.


Data from other sources back up the OAAA’s findings.


A report by IPG MediabrandsMagna Intelligence showed OOH as being the only “traditional” medium that is experiencing growth. 


Global Forecast


According to Carlos de Uribarri, Global Development Director of Severnaya Investments growth is expected to continue, as the DOOH market is expected to reach $26.2(USD) billion by 2023.


The market growth is supported by the increased use of commercial display in advertising as well as the cost-effectiveness of digital displays.


The participants in the marketing place, both big and small, must continually find new and unique products while creating complementary products and innovative services, all resulting in increased market share.


DOOH opens the door to marketing opportunities as digital billboards create interactive campaigns and produce weekly promotions at higher levels without wasting resources, as is the case with paper based, printed billboards.


Digital billboards are designed to use computer software, thereby allowing constantly changing text, images and video streaming to create an impact on consumers. DOOH technology gives brands a broad exposure to the targeted audience.


Widely used in the transportation, sports and hospitality niches, the penetration of outdoor advertising is expected to remain high in the transportation industry during the forecast period.


Billboard advertising represents large investments in high-traffic venues for passing pedestrians and drivers and results in attracting many customers due to high-density consumer exposure areas.


North America is anticipated to carry the largest market share throughout the forecasted period, with the U.S. acknowledged as the most technologically advanced market. North America s the earliest adopter of the latest technology; and there is a continuing awareness of commercial displays’ benefits.


UK radio giant Global recently completed the acquisition of Exterion Media estimated upwards of £450million after suggesting that Digital OOH would become an increasingly important part of its business. Exterion Media operates in the UK, Ireland, France, the Netherlands, and Spain, holds the £2billion, 8 year long London Underground advertising contract, renewed in 2016, with an estimated 22% share of the OOH market in the UK. Together with Global’s previous purchase of Primesight and Outdoor Plus in an estimated near £30million double deal, this gives the radio group a combined share of 32% in UK OOH, making it a strong number two to JCDecaux, the world’s biggest OOH media group. The deals bring the main UK OOH market down from six main players to four, taking into consideration Clear Channel and Ocean Outdoor.


Meanwhile in Australia, consumer watchdog Australia Competition and Consumer Affairs Commission (ACCC) has approved both of the major acquisition deals in the out of home sector. JCDecaux and Ooh!Media were both given the go-ahead to complete their acquisitions of APN Outdoor and Adshel respectively. The APN and JCDecaux deal is worth $1.2 billion and the Ooh! Media Adshel Deal is valued at $570million.


DOOH and Emerging Markets


In July 2017 Bloomberg reported JCDecaux signed off on a new street furniture contract in Dubai along with DXB Media Advertising from the UAE for a period of 10 years.

The contract covers installation, operation and maintenance of over 400 advertising lamp position along Jumeirah Beach Road and 50 fully-interactive e-village location scattered around the city.


PwC points to four factors which make emerging markets especially attractive for investors:


1. Worldwide OOH advertising will grow at a CAGR of almost 5% and now exceeds $40billion.


The global OOH market will be dominated by China, followed by the US and UK being the key growth markets. Driving growth will be a combination of expanding infrastructure and the benefits provided by DOOH advertising.


2. DOOH advertising will continue to drive OOH advertising growth around the planet, while in emerging markets DOOH advertising revenue will grow even more rapidly, with CAGRs above 30%.


3. Until now, one of the major suppressors of OOH advertising acceptance has been the dearth of measuring tools to gauge viewer and campaign metrics and effectiveness. As the tools improve, the business will experience growth. With the development of Quantum, the result of a partnership between CUENDE Infometrics and Telmar Group, an American company with clients in 85 countries, specializing in media software planning tools, the challenge of measuring effectiveness has been met. 


According to CEO and founder, Jose Maria Cuende, as announced in an April 2019 Press Release the company recently on-boarded Silvia Fernández, a specialist in high availability and high computing solutions to manage the constant growth of infrastructure, systems and databases.


4. With the advent of mobile banking apps and near-field telecommunications, or NFC-enabled phones, DOOH has the potential to become a point of sale. Continuing innovation in mobile technology will help OOH advertising to have a role in developing m-commerce in emerging markets.


Emerging Opportunities in Asia


Between dense populations, growing competition and rapid infrastructure growth, there are many reasons why DOOH is ready to explode in Southeast Asia, according to CampaignAsia.com.


Southeast Asia’s emerging market place is starting to take notice and represents one of the biggest growth regions for the medium.


By the Numbers


OOH media cannot be blocked by advertising clutter. According to Carlos de Uribarri, the average consumer is exposed to between 4K and 10K digital advertisements daily, while 66% of American consumers remember seeing a digital OOH advertising in the past month.

Desktop and mobile ad-blocking is increasing and publishers lost $42 billion in potential ad revenue in 2017, a 50% increase over the previous year.


About 25% of American consumers have posted an image of an outdoor ad on Instagram and in 2018, one New York City subway billboard reached 50 million people when it was shared on social media.


Tweed, a producer of high-quality cannabis products since 2014, created Instagrammable outdoor art and the brand reach was pushed to the number one spot, in awareness, among all Canadian cannabis brands.


Programmatic platforms continue to drive growth by reducing campaign purchasing reluctance in 3 ways:


1.  Automation eases the buying process, 

2.  RFPs, human negotiation and manual orders are the speed bumps which traditionally have impeded any possibility of an efficient buying journey, and;

3.  Programmatic Platforms help current asset owners optimize inventory monetization.


Programmatic Advertising


Simply put, programmatic advertising is the automated buying and selling of online and DOOH advertising. Targeting algorithms are utilized to segment audiences using data so advertisers just pay for ads delivered to the right people, at the right time. Programmatic advertising saves the advertising client money, as they don’t have to depend on the “spray and pray” methodology.


What once was a marketing activity driven by creative and mass media is now much more sophisticated because of programmatic technology.


With Programmatic Advertising, clients can see their advertising optimized. With the new data, they can effectively reach their target audience at scale.


With programmatic growth expected to reach $33 billion this year, it shouldn’t be surprising that programmatic advertising has come under scrutiny.


To maximize savings while boosting effectiveness, the creative advertising agencies have to work in harmony with the media agencies on the programmatic rollout.


Great creative work in advertising is still possible, but the creative side needs to catch up with the technology.


Consumers don’t care how an ad is delivered. They want to know about its ability to engage and add to their overall consumer experience. 


Delivering ads programmatically is the most efficient means available. It allows marketers and businesses to understand the media journey better than before, while having one-to-one conversations with individuals.


Programmatic advertising is still going through development, but is already is adapting to changing consumer, business, and marketing environment needs.


While DOOH is growing in importance both for advertisers and for advertising spend in a wide range of industries like retail, investment bankers in the TMT industry know how to look at the expected growth in DOOH and the possible synergies in this area, for their next M&A opportunities.


The OOH industry is scaling to finance further digitization and leverage data and technology to continuously improve ROI, which is creating interest in outsiders to the traditional OOH industry.

If you are interested in expanding your geographical reach, enter new markets by acquiring already functioning DOOH or OOH companies, or sell your OOH business, please feel free to contact us.


For further information and details, please write to: contact@severnayainvestments.com


Follow us on Instagram: https://www.instagram.com/severnayagroup


*This article was originally published on LinkedIn on September 2nd, 2019

© Copyright Severnaya Group Limited. All rights reserved.

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