The concept of advertising with media outside of the home gained a good degree of notoriety Sunday in The Los Angeles Times with a major article by staff writer Alana Semuels.
The 1,000-word article, “Now showing very near you…”, makes a strong case for digital signage networks and advertising as well as other out-of-home media. In the article, Semuels identifies digital video recorders as a major culprit in diluting the frequency with which traditional television commercials are viewed. As a result, advertisers are hungry for an effective substitute, and out-of-home ads appear to be the solution.
Semuels elaborates on a major theme of several of my recent columns, namely every day more TV viewers are skipping past commercials with their DVRs, making in-store, out-of-home advertising all the more appealing. (Two of my earlier columns discussing the impact of DVRs on TV viewing, include: “Digital Signage Payoff: What Is A Challenge For TV May Be A Boon For Digital Signage Networks” and “Digital Signage Market Poised to Skyrocket.”)
According to the LA Times story, about 20 percent of U.S. households now have digital video recorders. The ease with which viewers in these homes can skip past the commercials has a growing number of advertisers interested in out-of-home ads on flat panel displays near the point of sale where they can influence shoppers making purchasing decisions. And, if they can’t influence a particular buying decision, at least they can elevate brand awareness.
Quoting San Francisco-based Premier Retail Networks, which has 200,000 screens in 6,500 stores nationwide, the article points out 42 percent of shoppers remember a brand they see on in-store screens, twice number for television commercials.
It’s no wonder then that a recent forecast from PQ Media Research indicates that spending on out-of-home advertising will grow 27.7 percent this year. The statistics, part of the company’s “PQ Media Alternative Out-of-Home Media Forecast 2007-2011” report show the category to be among the fastest growing segments in the media industry.
Last year, media spending on out-of-home advertising reached $1.69 billion, up 27 percent from the 2005. In fact, spending on out-of-home advertising has grown at double-digit rates every year from 2001-2006 with a compounded annual growth rate of 22.6 percent, according to the PQ Media report.
In discussing the reasons for the growth, Patrick Quinn, president and CEO of PQ Media said: “Unlike its mass media peers, alternative out-of-home advertising is impervious to channel or web surfing and is immune to audience fragmentation.”
PQ Media identified several factors driving the growth of out-of-home advertising, including:
- advertiser perception that out-of-home ads provide high engagement, targeting options, proximity to point-of-sale, measurable impact and cost effectiveness;
- data indicating exposure to and recall of these media are growing;
- research suggesting the vast majority of consumers view alternative out-of-home media as favorable and educational;
- new technology enabling companies to launch digital advertising platforms that generate higher revenues than the conventional formats they replace.
PQ Media divides out-of-home advertising into three categories: video advertising networks and screens; digital billboards and displays; and ambient advertising. The research firm has found video advertising networks is the largest category, accounting for 60 percent of all out-of-home ad spending. Spending on this category grew 28 percent in 2006 to $1.01 billion with double-digit growth in four markets: in-theater, in-office, in-store and in-transit, according to the company.
High-profile news articles, like the one from the LA Times, draw the public’s attention to this market. More importantly, this sort of coverage helps busy ad professionals focused on traditional media segments to notice the out-of-home advertising market. As these ad pros have their own “Ah-Hah” moments thanks to these sorts of articles, it won’t take too much effort to back up the perception that out-of-home advertising is a growing, important new segment. Research, such as that from PQ Media, makes it easy for out-of-home advertising to be taken seriously -and more importantly for ad buyers to consider it as a new part of their media mix. As they do, out-of-home advertising and digital signage are likely to enjoy even wider acceptance and use.