Thursday, June 14, 2012

Out-Of-Home To Reach $8.2 Billion By 2016

Despite continuing economic uncertainty at home and abroad, U.S. out-of-home advertising will enjoy a cumulative annual growth rate of 4.9% from 2012-2016, increasing to $8.2 billion over that period, according to PricewaterhouseCoopers, which just released its latest global advertising forecasts.

That’s about the same as PwC’s forecast for the global out-of-home marketplace overall, which the consultancy sees expanding at a CAGR of 5% for 2012-2016. It’s also higher than the predicted growth rate for the broader U.S. economy, with most economists predicting GDP will grow by low single digits over this period, at best.

Stefanie Kane, a partner with PwC’s entertainment and media practice, attributed the positive forecast to the continuing rollout of digital billboards and captive audience video networks, both of which have been growing at an impressive clip in recent years. Captive audience networks, in particular, are “widening to locations that weren’t previously available,” noted Kane, including taxi cabs and gas pumps.

Digital billboards and video networks also allow owners and operators to sell inventory based on dayparts, giving advertisers greater flexibility, as well as more precision in targeting audiences. Increasing adoption of the new “Eyes On” metric from the Traffic Audit Bureau should also result in greater advertiser confidence in the out-of-home medium.

Kane pointed to the growing overlap between all types of out-of-home advertising and the burgeoning field of mobile marketing, with coordination between the two enabled by QR codes, near-field communication and other mobile response mechanisms.

While mobile e-commerce is still in its early stages, hybrid models combining out-of-home and mobile marketing can facilitate in-store mobile transactions for retail customers.

That said, out-of-home does face some headwinds in the U.S. The cost of installation for new digital billboards, in particular, remains high -- at an average price of $450,000 for a 14-by-48-foot LCD billboard. Digital billboards only make up 2,400 surfaces of the total 400,000 billboard surfaces available in the U.S. -- or less than 1%. Digital billboards also face continuing opposition from some state and local governments, which contend that they distract drivers or are aesthetically unappealing.-Erik Sass, MediaPost

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