Digital out of home worth the premium but agencies are ballsing it up

Bryan Magee, chief investment officer, Ikon Communications
By Bryan Magee, chief investment officer, Ikon Communications | 21 October 2016
Bryan Magee.

Out-of-home in Australia has enjoyed a stellar few years of growth, with figures from the OMA indicating outdoor audiences have grown by +20% over the last six years. The success has been mainly driven by a huge investment into digital infrastructure but also supported by a widely accepted measurement system in MOVE: it also helps that as a nation we are blessed by being able to spend so much time outdoors.

SMI tells us that the OOH revenues grew by +20% year-on-year in 2015 ($765m) and year-to-date is showing more impressive growth of +11% (that’s an additional $50m into the channel this year).

To put this into context outdoor is the third largest channel in terms of media spend and beaten only by digital for growth (+16% yoy).

Australia is a world leader in digital OOH investment with the OMA reporting that around 45% of total OOH revenue is made up of digital with this number expected to rise to 50% by the end of next year.

It’s hard to get an accurate view on exactly how much has been has been invested into Australian DOOH infrastructure but a conservative estimate would be between $300 - $400m over the last two years (excluding acquisitions). That’s almost 25% of turnover, and dwarfs that of markets like the UK at 10%. The digital large format sites can cost around $1m per installation so the capex is huge but rewards are seemingly worth it.

So the sector is making good money and reinvesting it back into itself to continue to drive the growth. The problem is that for every dollar spent on a digital OOH campaign, clients can expect to pay a premium of anywhere between 15-30% versus a traditional static panel.

So let’s consider the power of DOOH and look at what a digital panel can do for a brand that its static sibling cannot.

1. Digital allows you to change your message quickly via dynamic creative meaning that time sensitive offers can now be deployed
2. Specific locations can be targeted with individual creative no matter what time of day
3. DOOH can deliver interactivity via actual panel interaction or by linking to a mobile device via beacon technology.
4. Data can be applied to DOOH which means that creative can change depending on what variables I choose to set (weather, betting odds etc.)
5. Digital will allow the eventual automation of the booking of campaigns that will in time give advertisers the ability to buy audiences programmatically across many channels in one go.

I would argue that all of the above is worth paying a premium for wouldn’t you?

The problem is that we are not seeing the campaigns that are justifying these premiums, which begs the question; are we ballsing it up? If you are buying DOOH and not utilizing the benefits that it has to offer, in effect your cost is increasing by up to 30% and your share of voice has dropped from 100% to now one of six advertisers sharing the same space. The only people winning here are the people selling the inventory. In my mind, that’s ballsing it up.

Now there are exceptions. Bonds ‘Giant Balls’ was a brilliant example of what can be achieved using digital and indeed that campaign won a Cannes Lion but it was only executed across a couple of sites, how good would that campaign have been if it was national? Ladbrokes also deployed some nice work recently where they took betting odds and dynamically changed the creative but these examples are few and far.

So whose fault is it that this is happening? I’m not going to criticise the sales teams for taking the dollars that agencies are willing to spend and at the premium. I say the fault lies with the agencies, and I include media and creative in this.

The solution is simple. There is a requirement for much more thought and collaboration between all stakeholders involved from the media, creative and yes the sales houses. Yes, it might take more time and different creative executions but we are starting to apply this way of working to video and mobile, so why not DOOH? We have the best set of tools at our disposal, let’s start using them and taking brilliant ideas to our clients which will help get their campaigns noticed and justify the premiums.

I’m truly excited about the future of our industry and the effect digital is having across all channels and DOOH is going to lead the way.

The investment into the infrastructure will continue and the journey to automation has already begun, the use of data to enhance our campaigns will improve but we have to become more creative in our thinking of how we exploit all of these opportunities.

The gauntlet has been thrown down, let’s get to work.

Bryan Magee, chief investment officer, Ikon Communications

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