Out of home advertising is opening 2020 with some flex. The medium’s been bucking the downward trend for traditional advertising revenue for years. Now it’s poised to hit a milestone that just a decade ago would have seemed unthinkable.
Global spending on outdoor advertising will outpace ad spending on newspapers for the first time ever in 2020. That’s according to a new report from GroupM, a media buying agency. The forecast projects that worldwide ad spending on outdoor will grow to $40.6 billion this year, $4 billion more than advertisers will spend on newspapers.
And this is just the beginning. GroupM further projects that by 2024, out of home spending will outstrip the combined total for newspapers and magazines, with annual growth for the category between 2.5 percent and 4 percent.
So think, just a minute, what that means. Within four years, advertisers will put more dollars into billboards, bus shelter advertising, ambient ads and more than they will into the entire print industry.
There’s no doubt that print has been on the decline. But this says more about outdoor than it does about print. It confirms the great faith people have in this type of advertising. Let’s explore why.
Behind Outdoor Ads’ Steady Growth
The U.S. media economy is the world’s biggest, and as goes our country, so goes the rest of the world. So it’s no surprise that ad sales for outdoor have been strong here for years. According to the Outdoor Advertising Association of America:
- OOH ad spending has grown for nine straight years
- It hit a new peak of $8 billion in 2018, and 2019 is expected to reach even higher when final numbers come in
- Outdoor advertising has grown year-over-year for more than three dozen consecutive quarters
Globally, outdoor is equally hot. In the UK, for instance, outdoor jumped almost 8 percent in 2019, though the overall economy was flat.
Why Is Outdoor Advertising Booming When Other Traditional Media Is Not?
A number of factors have contributed to this trend, including:
- Improved measurement: Advertisers like to know what they’re getting, and over the past decade, better technology has allowed OOH to provide advertisers with qualified impressions versus the old “opportunity to see” measurement. As we’ve seen with digital, where ad fraud is a huge concern, advertisers want assurances that their ads will be seen by their target audience, and OOH can give them that.
- No declines in audience: If you look at the audience for TV, newspapers and magazines in 2010, they were much bigger than they are now. But the audiences for outdoor have not slipped. Technology doesn’t change your need to commute to work or go on road trips. We predict you’ll still see outdoor ads even when the flying cars arrive.
- Affordability: Despite outdoor’s in-demand status, its CPM remains quite low compared to other media. PJ SOLOMON ranks outdoor behind only online display in terms of affordability.
- Creativity: Outdoor is just so darn fun. Seriously, we know we’re biased, but do you remember any ads from the last edition of a newspaper you read? Now think back to a billboard or seven that stood out the last time you were on the highway. Out of home offers the ability to show creative muscle while still getting clients’ points across, which is an invaluable combo.
- Coolness factor: You probably heard about Netflix buying up billboards on the Sunset Strip. And Apple upping its outdoor budget. And other cool brands like Google and Facebook staking out a greater share of out of home. When one person does it, so do the rest because they want to keep up with each other. And outdoor benefits from that perceived hipness. People share billboards on social media. You don’t see them doing that with newspaper ads. Ever.
- Digital ads inventory yield: The number of digital billboards is booming. When traditional billboards convert to digital, they can fit more advertisers, with ads blinking in and out every few minutes. That sends revenue for the location up. (Consider: A quarter of JCDecaux’s revenue comes from digital, though it makes up just 5 percent of its billboard holdings.)
The Decline of Newspapers
Of course, you can’t talk about the rise of outdoor without also acknowledging that newspapers aren’t what they used to be.
There was a time, not all that long ago, when newspapers were the No. 2 medium for advertising in the United States, behind only television. Ad revenue peaked at more than $60 billion per year in 2000, but that number dove off a cliff as digital ad spending boomed in the late 2000s forward.
The U.S. isn’t unique. The same thing has happened abroad.
Fewer people subscribe to newspapers, and advertisers eager to get their messages in front of people have followed them to other venues. Newspaper advertising has fallen worldwide as papers shut down or move to a few days a week of publication. Some papers have entered bankruptcy or been bought up by venture capital firms that squeeze what they can from their press runs before initiating mass layoffs and leaving a skeleton crew to write the news.
Advertisers just don’t want to be associated with that.
Undoubtedly, shifts in technology have impacted other media as well. Television, magazines, yellow pages and more have seen tremendous changes in how they are distributed, produced and consumed since 2000. Since many advertisers are by nature cautious, they may gravitate a medium with greater stability and less disruption — hence the rise of outdoor while newspapers (and the others) decline.
The Longer-Term Outlook for OOH Advertising
No surprise, it’s good. The medium has proven its ability to adapt with the digital age, resiliency not seen in other traditional media sectors, and its longevity is not in question. Billboards are the oldest type of media, dating back more than 5,000 years. Looks like they’ll continue to thrive for quite a while.
Want to get in on this fast-growing medium? Contact DASH TWO to talk about the latest opportunities.