Ad spending is forecast to grow 20 percent in the coming few years, reflecting big changes within the industry as well as declines…
By the editors of Media Life
This is one in Media Life’s ongoing series, “Swept by change: The new out of home.” Click here to read our previous stories.
On the face of it, compared to other media, out of home would appear to be bumping along, each year clocking modest growth, typically in the mid-single digits—growth dwarfed by mobile, for example, and the other new advertising options.
But a deeper look at the numbers shows a much brighter picture for out of home.
While the year-to-year gains are modest, the cumulative effect is dramatic, transforming the medium in just these recent years.
There’s more to come.
In the next few years, growth will be even more dramatic, by all estimates.
Two questions loom: How fast will it come, and who within out of home will win, reaping the biggest gains, and who will lose?
Surges in growth, whatever the industry, are disruptive. They change how business is done. They reward the innovators and have a way of punishing those who fail to adapt to the new, more competitive culture within the marketplace.
Consider these numbers.
Back in 2002, out of home, including cinema, accounted for just 3.7 percent of total ad spending, according to ZenithOptimedia. This year that share will rise to 5.2 percent. While that increase in share may not sound all that impressive, it represents a nearly 74 percent growth in ad dollars spent on out of home.
Just since 2010, out of home has grown 18 percent, according to Pivotal Research’s Brian Wieser, and he is forecasting 20 percent growth between 2014 and 2018. newsstand3Certainly a cause for much of this growth is what’s happened within the out of home industry, with the influx of new technologies, capital and talent and better measurement.
There’s that much more inventory to sell, and a greater variety of inventory. There are more advertisers trying out of home, and more and more of those advertisers are liking the results out of home delivers.
Three areas in particular will lead in growth.
* The first surely is digital, which has already led much of the transformation of out of home.
Digital place-based media clocked a growth pace of 13 percent in 2013 and is on its way to turning in a similar performance this year. With cinema included, digital place-based brought in $1.9 billion last year, up from $1.1 billion in 2010.
* The second growth area: alternative media.
Alternative has long been a favorite of media planners and buyers, but like so many other media it took a real hit with the crash of late 2008. Spending toppled from $1.2 billion in 2008 to $708 million in 2009, a 37 percent drop, according to the Outdoor Advertising Association of America. Alternative has been slow to come back; in 2013 it reached $856.5 million, roughly the halfway point in its recovery. But that recovery should speed up with a big boost alternative is getting these days from tie-ins with social media. Now a smart alternative media campaign might well deliver millions of ad impressions if it goes vital, giving the advertiser a great return on its investment.
* Third is cinema, which has seen ad spending more than triple since 2002 and now accounts for 0.5 percent of all media spending. Last year it saw revenue of $678 million, a healthy 6.5 percent gain over 2012.
In recent months, the nation’s No. 1 ad chain, National CineMedia, bought the No. 2 chain, Screenvision, giving the combined entity all but total dominance of the market with some 34,000 screens in 3,900 theaters. With just one buy an advertiser can now blanket the country, showing up in all the top markets and a lot of others as well. The effect is to make cinema advertising a much more attractive advertising option. But out of home is also benefiting from what’s been happening to other media, its longtime competitors for ad dollars.
Among traditional media, out of home is one of but a few showing gains in ad spending. All others are suffering declines.
A decade ago, new dollars flowing to out of home came mostly from newspapers, according to media buyers. These days they are coming from a range of traditional media, including newspapers, magazines, radio and even broadcast TV.
