30% digital growth sustaining OOH market: Magna report with APAC breakdown

The share of global advertising spend going to out-of-home (OOH) advertising remains stable at 6 percent, according to a new report, and it is the only offline media category to show consistent growth. This is largely down to major investment in digital OOH (or DOOH), which is growing in every environment and has seen unit numbers jump 70,000 to 300,000 worldwide in two years, and revenue increase by 30 percent.

These are the headline findings in ‘Why Out Of Home Performs’, a joint study by Magna Intelligence and Rapport, IPG Mediabrand’s out-of-home agency, into OOH’s continued growth and impact. The report was based on findings from a survey carried out in 22 key markets including eight in Asia-Pacific: Australia, China, India, Japan, Malaysia, Philippines, Singapore and Thailand.

Global outlook and trends

• The OOH market was worth $28 billion in net advertising revenues in 2016, according to Magna’s report, and is predicted to grow by 4 percent per year to reach $33 billion by 2021. This puts its current share of the overall traditional media market at 10 percent, up from 8 percent.
• Behind this growth is an ever-more concentrated supply-side market, in which the top international OOH media owners are continuing to expand their influence: the six main global vendors (in order of 2016 revenue size, JCDecaux, Clear Channel, Outfront, Lamar, Stroer and Exterior) now control almost 40 percent of the whole market (see graph, below).
• By 2021, the report predicts small but significant changes in the environments most used for OOH. Use of billboards, currently the top revenue-generating segment and performing particularly well in India, Russia and the US, will drop 4 percent from 45 to 41 in the next five years. Street furniture and transit, meanwhile, are due to grow, respectively, from 31 to 34 percent and from 14 to 15 percent as local authorities become more willing to partner with OOH vendors. A series of major contracts—typically over 10 years long—in big cities are also in the process of renewal, the first time this has happened in the era of DOOH and programmatic opportunities, which partly explains DOOH’s recent giant revenue leap.

APAC findings

• While the US is the largest OOH market, valued at $7.1 billion last year, APAC countries Japan ($4.7 billion) and China ($3.1 billion) come in at second and third position and per capita spending on OOH amounts to a record $38 per year in Japan, compared to $22 in the US. Singapore spends the second highest amount per capita at $36 a year.
• In the Philippines, meanwhile, OOH accounts for one of the highest percentage shares of overall ad spend in the world, at 15 percent compared to the global share of 6 percent. Singapore (12 percent) and Thailand (9 percent) also exceed the worldwide average.

• Transit is currently where the majority of OOH inventory is found in both Japan (63 percent) and China (72 percent), countries in which public transport is used by huge numbers of people every day. It generates just 9 percent and 6 percent of revenue for these markets, however. As per the global trend Japan earns the most from billboards, although they account for just 21 percent of its ad inventory; while China earns 60 percent of revenue from street furniture, which make up only a quarter of its inventory.
• Singapore’s OOH ads have the highest reach range of any other APAC market, getting eyeballs from an estimated 70 to 80 percent of the relevant population because of its concentrated levels of urbanisation. Australia’s have the second highest, reaching 60 to 70 percent, but neither matches the reach of OOH ads in Argentina, which are considered seen by a huge 85 to 95 percent of the population.
• Australia: DOOH represents more than a third of total OOH spend, which the report attributes to a sophisticated advertising market and a population relatively concentrated in a few urban centres.
• China: While China’s total OOH spend about matches other markets, it is one of the top five global markets in terms of penetration of digital, led by the transit segment. By 2021, MAGNA predicts that digital growth will have doubled, while OOH growth will be stagnating, partly due to lack of interest in non-digital inventory.

What’s behind OOH’s resilience? In a word, DOOH

The simplest reasons for OOH’s consistent performance, according to the report, are that “everyone is outside” and OOH ads can’t be skipped or blocked. Ever-improving audience measurement metrics, such as eye-tracking and location data tools, are also helping raise OOH’s popularity.

DOOH, however, is undeniably a major factor. While this medium currently still represents just 5 percent of OOH inventory, the opportunities it offers—such as advertising in premium spaces like malls and airports and access to niche environments like bars and taxis—mean it is already bringing in 14 percent of the sector’s total revenue, a figure set to grow to 24 percent by 2021. Digital currently thrives in indoor markets, the report states, such as malls and place-based spaces (gyms, offices, lifts etc); but revenue from DOOH ads used on street furniture, currently worth 8 percent of the total, is predicted to grow as this segment opens up.

DOOH is also starting to be used more creatively, to complement social campaigns, for example. “There are two main avenues DOOH is being used to complement social campaigns, either through integration or through content creation,” says Neil Morris, founder and CEO of UK-based creative production house Grand Visual, in a quote included in the report.

“During the FIFA World Cup last year, Continental Tyres integrated their social media activity with their DOOH campaign—broadcasting their #ContiQuiz live Twitter stream, featuring fans' predictions and messages to 2,000 screens across the UK. The other way social is complementing DOOH is where experiences in the physical world such as AR stunts (PepsiMax Bus Shelter) or interactive events (Disney Shadows) are being used to create content to be seeded across social channels.”

Besides this, of course, DOOH is optimised to target customers much more precisely through programmatic ad placement, an increasingly hot topic. The future of programmatic in this space, says MAGNA, will revolve around improvements in measurement, such as live location-based data; better attribution, i.e. better physical behaviour verification; and linking OOH to other channels, from mobiles to audio and TV.

While there are plenty of drivers to DOOH, however, such as falling screen costs and improving reliability, the main barrier to increasing digital OOH spend is "the investment required to convert sites" says Luke Stillman, VP, Digital Intelligence, Magna. "In markets where there are few very dominant players, there are fewer resources to make those conversions." The hesitancy some brands feel at sharing DOOH loops with other brands also remains an issue.