Jenny Mu, our research analyst focused on the media and advertising sector, shares her thoughts about Out of Home Advertising:
Q: What is Out of Home (OOH) advertising?
A: Out-of-home advertising refers to any promotional content seen outside of the home. This includes things like billboards, transit ads on buses and trains, street furniture like bus stop shelters, and other types of outdoor media.
Q: What is the size of the OOH advertising market?
Historically, the OOH has maintained a 4-6% share of the global advertising market. In 2023, the global OOH market is expected to grow 10.3% y/y to $35 billion, representing 4% of the total $874 billion global ad market. GroupM projects OOH to reach $49 billion in 2028, continuing its growth at a 6.9% CAGR, faster than the total advertising market CAGR of 5.6%. This faster-than-market growth rate is mostly driven by the rise of digital OOH. Digital OOH represents 38% of global OOH revenues and is projected to continue to grow in the high single-digits in the medium term.
Q: What makes OOH different from other advertising media?
While OOH often competes with other mediums for advertising budget, there are a few main characteristics that differentiate it from other forms of media and position it to benefit from future trends in advertising
Highly visible: visual format that is difficult to avoid – cannot be switched off or skipped like other display media.
Pure advertising medium: typically not competing for audience attention with the content (like TV or radio).
Large reach/upper funnel: can reach a mass audience quickly, with the ability to be booked at short notice.
High frequency: offers repeated impressions resulting in a higher impact for brand awareness over a single view.
Hyperlocal: targets consumers geographically, allowing advertisers to reach targeted audiences at the right time and place.
Cost-effective: a low cost-per-impression (CPM) medium ($2-$9) with high ROI ($5.97 average product sales for every OOH dollar spent)
Q: How has OOH maintained it’s market share of the ad industry despite the recent growth in digital advertising?
A: Several factors are driving out-of-home’s resilience and growth. Unlike other traditional media, out-of-home cannot be easily replaced by digital advertising. Outdoor signage and transit ads will continue to exist despite digital advertising.
Additionally, out-of-home remains one of the last forms of mass-reach media. As linear TV has declined, dropping from 25% to 16% market share of the total ad market since 2019 due to cord-cutting and streaming, advertisers are instead turning to out-of-home for cost-effective, upper funnel brand marketing to reach a wide audience.
Q: How has the OOH industry changed in the past few years?
A: OOH is experiencing a digital transformation, as signage is converted from physical displays to digital screens. Digital out-of-home (DOOH) is more visually engaging, impactful, and more effective in capturing customer impressions. Digital screens can also host multiple ads, quickly changing ads without the need to replace physical ad copy. As a result, digital out-of-home allows for more effective and relevant advertising. For example, a screen can show breakfast ads in the morning rush hour, and switch to restaurants or leisure in the evening. DOOH is a more attractive medium for advertisers and is fueling growth in the industry.
Q: How will Digital Out-of-Home (DOOH) drive growth?
Digital OOH (DOOH) and programmatic buying will be the primary drivers of industry growth in the long run. DOOH grew 26% in 2023, driving overall OOH growth of 10.3%. The ability to host more ads on the same display, provide more dynamic and creative impact, and eliminate posting and printing costs associated with vinyl ad copy provides a meaningful uplift to revenues (4-6x) and margins (~5%) relative to static screens. DOOH makes up 38% of OOH revenues, but only 5% of OOH inventory. Continued digitization will drive further growth in the industry.
Q: How can OOH impact be accurately measured?
OOH has traditionally been a mass reach media format, with more limited targeting and measurement compared to data insights from online campaigns. DOOH allows for better targeting, attribution, and measurement analytics by leveraging consumer data like geolocation. Geolocation data is combined with in-store or online sales data to make the format more measurable, allowing for better insights on the reach and effectiveness of campaigns.
