Enjoy the read, TCB360 Smart Business Network listeners – LaTanya Junior, Your Brand Friend
Posted by Sheila Shayon on January 25, 2013 09:55 AM
Digital messaging will rise in 2013 and owners of prime real-estate (out-of-home landlords) are increasingly venturing into the landscape for marketing and revenue.
According to a new report from Accenture, “Despite the global economic downturn, significant infrastructure projects are still being planned or built, and interestingly, the money realized from selling advertising space at airports, train stations and other transport hubs will supplement the finances needed to deliver the upcoming large-scale projects.”
Opportunities for owners of public and private facilities, struggling to offset rising costs, such as airports and on-road transit systems abound. Recent US transit examples include: Cleveland renamed the new Bus Rapid Transit system the “HealthLine” promoting the Cleveland clinic and University Hospitals; the Chicago Transit Authority is in the process of selling naming rights of 11 train stations to advertisers; and the New York MTA is considering selling advertising space on the front of the subway MetroCard.
Kerry Bianchi, Managing Director, Global Lead for Media Management, Accenture Interactive, spoke with brandchannel about the biggest obstacles to digital out of home advertising in 2013.
“One of the biggest obstacles is the state of the economy. In reaction to the economy, if advertisers continue to cut budgets and drive more dollars onto digital/social media then DoOH’s growth could be affected,” Bianchi said.
“Generally there needs to be a rationalization of the digital out of home industry to make it simpler and more structured. The danger is that the growth to date could be seen as opportunist. For example, different styles of screens across all kinds of placed-based media venues with a perceived lack of pricing rationale. Based on this, it could be inferred this has made advertisers wary of the value proposition.”
When the Chicago Transit Authority sells naming rights of 11 train stations to advertisers, who holds editorial sway over that messaging? “The structure of the Chicago naming rights for 11 train stations is usually held by the transport authority, although the deal has to be attractive to advertisers if they want to get the right revenues and the relevant advertisers," Bianchi stated. "This was a through the line sponsorship deal where the advertisers/sponsors had their name and logo on CTA maps and exclusive advertising at the respective stations."
The big question, of course, is how budgets are being allocated. “Accenture Interactive sees DoOH as a growth medium. The growth is thought to be in the mid-teens each year but it is still a small dollar total compared to the total OoH market in the US. We are finding that budgets are often being moved from traditional out of home into digital, but it is thought that there will be an increase in the number of advertisers using out of home driven by the digital offering. If it is local advertising then we could predict that the budgets would probably come from local press and radio and if national, probably from national press and possibly TV.”
While consumer behavior is changing (the subject of another new Accenture report), digital out of home requires a new/different skill set for advertisers. “DoOH is still new and advertisers – and equally their advertising agencies – need to understand how to most effectively use it. It could be stated that planning campaigns need to be enhanced, and this is where the increased data and insight will be useful. At the moment there is possibly an over-simplification in planning.”
Worldwide infrastructure investment projects in the works include: China plans to build 97 new airports by 2020; Brazil is expected to invest nearly US$500 billion on highways and other infrastructure for the 2014 World Cup Soccer Championship and the 2016 Olympics; Russia will invest US$11 billion to refurbish existing infrastructure and build new facilities for the 2018 FIFA World Cup.
It's a rapidly changing space, to be sure. CBS plans to divest its outdoor ad business, converting the North and South American operation into a real-estate investment trust and putting its European and Asian outdoor businesses on the block. CBS Outdoor is a top worldwide DOOH company along with JCDecaux and Clear Channel Outdoor Holdings.
JCDecaux SA announced a 20-year contract with the City of Chicago in joint venture with Interstate Outdoor Advertising and Foster Interstate to build and operate 34 digital billboards and 60 LED display panels along Chicago’s expressways, with the largest signs measuring 1,200 square feet. The contract for the Chicago City Digital Network will generate around $700 million in advertising revenues making it one of the biggest municipal outdoor ad programs in the U.S. and the first public-private partnership to build a DOOH network on public land.
“The pace of development and change is quick and all parts of the ad industry ecosystem are on a learning curve,” said Bianchi. “Increased data width, better technology – smartphones and digital screens — greater interaction and improved real-time data will mean that campaigns will improve in all ways but the set of skills needed to succeed will expand and become more dynamic.”