Why Is OOH Bucking The Declining Ad Spend Trend?

February’s SMI numbers made sobering reading for many figures in the industry with almost all sectors seeing a decline in ad spend.

Out-of-home (OOH), meanwhile, bucked the trend. Spend was up 17.9 per cent year-on-year in February. Admittedly, OOH spending in February did not quite match the numbers from February 2019 — though the SMI has said that in some months was already back above pre-COVID levels.

However, the question remains why OOH did perform so well when other areas performed so poorly? Video, for example, was down 16.2 per cent and news media advertising was down a quarter.

“We are starting to see bigger and bigger brand names wade into programmatic DOOH, many digital-savvy clients are now using this as an extra channel to complement their targeted audience strategies. Better measurement now gives offline audience insights that help our advertisers to understand its effectiveness on a few key KPIs such as brand lift and increased footfall to stores,” said Nick Brignell, GroupM’s general manager of Xaxis & speciality businesses.

However, it isn’t simply metrics that are drawing advertisers back into OOH. Some of the biggest advertising industries are back with a bang following the pandemic.

“Travel, auto, and retailers — the growth in those categories does contribute to the growth in outdoor. What we’re seeing in the numbers and across the market is the growth in roadside formats, retail formats and, this year, we’re seeing increasing spend in transit, as well,” explained Rebecca Ho, Rebecca Ho, Starcom’s Sydney head of investment.

The OOH sector is diversifying in ways that other channels cannot. New formats and increasing use of programmatic tech are breathing new life into a sector that, traditionally might have been seen as a bit stale.

“Programmatic digital out-of-home (PDOOH) isn’t just small formats anymore, large format tentpole sites are now being bought programmatically regularly. Clients are loving the extra refinement and addressability of PDOOH and are more and more buying media through omnichannel means which, when overlaying data onto the buy – equals ultimate relevancy,” added Brignell.

“With economic uncertainty bearing down on us, we are seeing brands feeling more empowered buying in an automated fashion. That means more creative flexibility and control over how and when the creatives can be shown in a real-time manner.”

Ho has also seen big changes in the OOH market thanks to new tech.

“Buying models have changed completely. Some of the new innovations that we’re seeing, for example, 3D OOH, everyone seems to be jumping on that wagon.”

She added that the growing adoption of the new tech for OOH campaigns was something that she had “seen a lot in the market and with a lot of my clients… Not just looking at the 3D OOH billboards that seem to be the talk of the town but those interactive panels, the way our clients are now using consecutive panels, looking at time targeting and that sort of capability to break through the clutter.

“It’s no longer about having one creative on one billboard, it’s about creating an experience or a journey for the customer and storytelling.”

The elephant in the room is whether this growing spending is sustainable or whether it will even lead to a see-change in advertising.

Dentu’s global head of OOH explained to B&T last month that the sector held a five per cent share of the global advertising market before COVID and looks set to stay that way — despite the changing technology.

“If we look at PDOOH, it’s estimated to command just under a billion dollars in global spend, it’s relatively insignificant when you look at the total addressable programmatic market,” he said.

“The PDOOH only accounts for 0.37 per cent of the total addressable market.”

Ho, meanwhile, believed that the February SMI papered over a range of cracks in the broader advertising market.

“It will be interesting in the first half [of 2023] to see what the numbers look like — the broad numbers, not just OOH — because we came from such an over-inflated ad spend market last year with government spending, I think we can expect to see the market either flat or in a bit of decline.

“I think H2 2023 — of course there are economic uncertainties — will put us back on a level base because there wasn’t that influx of government spending last year. I think, in the next couple of months, we will still see a bit of impact but we will continue to see growth in the areas that have seen growth in the past few months like outdoor.”

OOH still has one big trump card that it can play compared to other ad formats.

“Trust is elementary to advertising effectiveness and even more so in this growing climate of uncertainty, OOH advertising is trusted because it’s big, bold and most importantly public. It doesn’t just exist in a feed on a phone — it physically exists in the real world and that makes it fundamentally feel trustworthy,” said Brignell.

In an uncertain world, OOH might become agencies’ get-out-of-jail card when clients come looking for results.