Out of home advertising bounced back during 2021, though that wasn’t exactly hard to predict. Spending fell so sharply in 2020 that coming back was never really the question for 2021. It’s what happens in 2022 that matters, and the goal is no longer outdoing 2020. It is equaling (or outdoing) 2019, the best year ever for the outdoor industry.
So what are the chances of that happening? We think pretty good.
We’re basing that on our own experience in the marketplace right now as well as the recent year-end forecasts from all the big agencies, including MAGNA, ZenithOptimedia and GroupM, and all of them predict an even rosier 2022 for OOH. When the most recent numbers for 2021 came in from the Out of Home Advertising Association of America, that tipped it.
We can confidently say 2022 is going to be great for outdoor. Here’s why.
Consider Past Out of Home Expenditures
To see where we’re going, you have to understand where we’ve been and what the comparisons will be. In 2019, outdoor advertising hit $8.56 billion, topping the previous record of $8 billion, set in 2018. The industry had 10 consecutive years of growth following the downturn in 2009, and there was no reason to think the good times would end.
They did, of course, for all industries. In 2020, total ad spending for outdoor tumbled to $6.1 billion, the lowest total in 11 years and a 29% decrease from 2019.
The industry was hardly alone. Other forms of traditional media, which encompass everything non-digital, saw massive declines. COVID hit OOH particularly hard because people stopped going out in March 2020. Public transportation systems shut down. Offices closed. Just about anything you could do for fun got suspended, like movies, amusement parks and malls. People stayed home, and so there was no one to advertise to in the usual outdoor venues.
In second quarter 2020, OOH ad revenue basically fell off a cliff. But there was always a silver lining: It wasn’t the industry at fault. It was the circumstances. People still believed in the power of out of home, and it seemed likely to rebound when the circumstances abated. To wit: Even with the downturn, outdoor actually outpaced both print advertising categories for the first time in 2020, accounting for 2.8% of total advertising vs. 2.2% for newspapers and 1.9% for magazines.
While the pandemic lingers, the vaccine rollout and lifting of many restrictions have made a return to normalcy somewhat achievable, and the strictures limiting OOH spending in 2020 are largely gone. That led to a much better 2021.
The Present Course of Outdoor Advertising
In 2021, ad spending returned fast and furious, not unlike a certain movie franchise that drove some of those dollars. Through third quarter, according to OAAA, year-to-date revenue increased 10%. Spending in third quarter shot up 38%, with every top 10 category up by at least 13%.
Media and advertising saw the biggest jump, up almost 85%. You can credit the pandemic for some of that, too. With people no longer trapped in their homes, they also stopped consuming a bazillion hours of streaming and cable content; those companies need to work hard to lure people back in now that they can go outside again.
Other interesting takeaways from the latest 2021 numbers include:
- The vast majority of the top 100 advertisers — 88 of them — increased their spending versus third quarter of 2020. Slightly more than half of these advertisers more than doubled their spending. And just over a third bumped up their spending by tenfold. That indicates not just an increase but a full-on commitment.
- Technology and direct-to-consumer brands continue to recognize the value of OOH, with more than a quarter of the top 100 biggest spenders fitting into those categories. That includes usual leaders Amazon, Apple, Google and AT&T as well as smaller companies starting to make a name for themselves, such as Webull and ClickUp.
- Digital out of home continues to surge. It jumped 56% in third quarter compared to the previous year, and so far this year, it represents 26% of all OOH spending. At the same time, advertisers have allocated more of total OOH spending to billboards than in past years, with the share of place-based, transit and street furniture shrinking since 2019. Right now, advertisers want a sure thing, and billboards deliver.
The Future of OOH Ad Revenue
So: Ad spending is on the way back, but will it rise above historical levels in the future? The leading forecasters in the ad industry seem to think it will take until 2023. The big three agencies see OOH keeping its momentum in the coming year. MAGNA foresees a return to 90% or so of 2019 levels, and GroupM and ZenithOptimedia offer similar outlooks.
But we’re betting on reaching that level in 2022, reasons that include:
- Advertisers don’t have a lot of patience, and they return to what has worked in the past when faced with tough economic situations. With fears about inflation growing, sure things (see billboards a couple paragraphs back) will be in vogue. OOH meets the criteria for that.
- Movies look poised for a much bigger 2022. MAGNA notes that cinema advertising already jumped by half in 2021, so that spectacular growth will continue. “Spider-Man: No Way Home” became the COVID era’s first blockbuster, proving people are ready to return to theaters. It’s a small segment of OOH but a meaningful return to normal.
- Automotive, a top-10 category in 2020, pulled way back on spending in second half of 2021 because of chip shortages. Dealers and manufacturers didn’t want to advertise inventory they didn’t have. The issue should resolve in the second half of 2022, and those advertisers will be eager to reconnect with consumers. A big bump in auto advertising should be on the horizon.
Whatever happens, we anticipate 2022 will be a good one for out of home, and we’re excited. If you want to get started on a campaign of your own, reach out today so we can discuss your goals.