ANALYSIS


How Out-of-Home is outperforming
the global advertising market

Magna Intelligence and Rapport have released their latest report on global out-of-home media and the news is encouraging. Mark Lane assesses the findings.

By leveraging technology to innovate and remain relevant, Out-of-home (OOH) advertising is the only traditional format to experience consistent growth in global advertising sales over the past ten years. And it is expected to continue to outperform.

These are the main findings from a new report by Magna and Rapport on global OOH media. The report, which looked at the state of and trends in OOH advertising in 70 countries, says global OOH advertising revenues grew in each of the past nine years, with an average annual growth of +4.1%, to reach US$31 billion in 2018.

Over the same period traditional non-digital media as a whole experienced stagnating advertising revenue.

Beauty brands Lancôme and Sulwhasoo compete for attention via these sites near the Sunrise Duty Free stores at Beijing Capital International Airport.

As a result, the share of OOH advertising, out of total traditional media sales, grew from 7% in 2010 to 10% in 2018. The share of OOH in all media sales has remained stable at 6%, while television’s share decreased from 41% to 33% over the period and print’s share collapsed from 28% to 10%.

“OOH is the last advertising format that consumers can’t skip or block, and still reach young, urban, active [people].”

OOH does not suffer from the erosion of reach and audience that affects editorial media, the report notes. Pictured are high-impact JCDecaux executions at London Heathrow Airport for French fashion brand Lacoste (above) and beauty house Jo Malone London (below).

Magna/Rapport expects OOH advertising revenues to continue to outperform in the next five years, with an annual global growth of +2.8%,compared with a decline of
–1.7% for total traditional media advertising.

“There has never been a more exciting time in the OOH industry. The industry has exploited all the benefits of evolving digital technologies, but retains a unique geographical footprint in a way that no other medium can.”

The report attributes the success of OOH to several interrelated factors. Consumers are increasingly mobile and OOH does not suffer from the erosion of reach and audience that affects editorial media, nor the brand safety issues that affect digital media. Also, digital innovation drives OOH advertising in many ways, with high-yield digital billboards colonising classic sites, new urban niches, better audience measurement and the use of data to optimise cross-media campaigns in real time.

Retail is the largest contributor to OOH advertising revenues in most markets. Other prominent sectors include entertainment, quick-service restaurants, travel and beverages. In the past two years, Internet and technology giants significantly increased advertising their budgets in traditional branding media, which propelled some of the global brands, or other local e-commerce or social media giants, into the top ten OOH spenders in many markets.

Digital OOHunits generated almost US$6 billion in 2018 globally, representing 18% of global OOH ad sales –three times the share in 2010. Digital OOH sales have been growing by +16% per year over the past five years. Following significant recent investment by media owners there are now over 300,000 digital advertising units in the world, compared to just 160,000 four years ago.

Japanese beauty brand Shiseido takes ownership of this powerful multiple platform at Tokyo Narita International Airport.

Australia and the UK between them generated half of total OOH sales from digital units, and the US is close to the global average with a 17% share. Magna/Rapport predicts that the share of digital OOH will grow to 28% globally by 2023, following an average annual growth rate of +12% of advertising sales between 2019 and 2023.

Finally, the Magna/Rapport study observes that the OOH industry is undergoing consolidation. The top three OOH advertising vendors controlled an average 63% of total OOH ad sales in the top 20 markets at the end of 2018, but concentration (share of top three) jumped to around 90% in the two key markets of Australia and the UK.

The report sees the relatively fragmented US market as ripe for the next wave of consolidation.

“There has never been a more exciting time in the OOH industry,” said Rapport Global CEO Michael Cooper. “The industry has exploited all the benefits of evolving digital technologies, but retains a unique geographical footprint in a way that no other medium can.

“In 2018 Spotify, Amazon, Apple, Netflix, Hulu and all the tech companies you are excited about have dramatically increased their spending on OOH advertising, across almost every world market, with very good reason.”

MagnaGlobal Market Intelligence Executive Vice President Vincent Letangsaid: “OOH is the last advertising format that consumers can’t skip or block, and still reach young, urban, active [people].

“Combined with huge progress in campaign management, audience measurement and attribution, this explains why OOH advertising has grown steadily in the past ten years and will continue to grow, by +3% per year globally, in the next five.”

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A Moodie Davitt Report publication | Sight Lines April 2019