Magna and Rapport, IPG Mediabrands’ out of home (OOH) media buying arm, have released a new report assessing trends in OOH media in 70 countries. Here are our top takeaways.
What’s new in OOH and why should marketers care?
OOH is the only traditional media segment to consistently grow global advertising revenue, by +4.1% per year, on average, for the last nine years, according to the report. It is expected to keep growing, if more slowly, at a rate of 2.7% per year, until 2023.
APAC is now the largest OOH market, making close to $13 billion in sales in 2018. Japan and China are the second and third largest markets for OOH. Along with the US, the largest market, these three countries make up 52% of the world’s total OOH sales. The strongest growth in the next five years will come from Latin America, where a growth rate of 5% a year will exceed that of APAC by 2%.
Several factors are suddenly starting to make OOH feel like an exciting part of the industry to be in, writes Michael Cooper, the global CEO of Rapport, in his introduction to ‘The State of Out of Home’, published today.
One is developments in technology, which are giving media buyers “the ability to study consumer patterns, using data to establish more accurately where they live, where they work, where they play and how they travel between those three entities”—and serve them with messages accordingly, says Cooper.
Another is a wave of investment by both traditional OOH players such as JCDecaux and Clear Channel, and new faces like Google and Amazon. The report states that the growing use of OOH campaigns by these digital media giants is “both a testimony to the efficiency of OOH and a factor of future growth as marketing spend in the technology sector is bound to grow further.”
OOH global trends
- Roadside billboards (RBB) are in decline. RBB inventory is plateauing in most markets and the share RRB contributes to overall OOH revenues is on the slide, finds the report. This segment doesn’t lend itself well to digitisation because of both regulations and cost. The transit and street-furniture segments, meanwhile, which digitisation has made more profitable, are growing revenue share “almost everywhere”.
- Digital out of home (DOOH) ad sales have grown by an average of 16% per year for last five years. In the UK and Australia the segment reached half of total OOH sales (these markets benefit from a consolidated OOH industry, which means greater financial resources). These two markets are way ahead of the rest: the next most digital market is Thailand, where DOOH accounts for just a third of the total.
- OOH inventory has stabilised, but digital inventory has swelled in the last three years, from 160,000 digital units in 2014 to almost 300,000 by early 2018. While this amounts to just 5% of all OOH inventory, it brings in 18% of the total advertising revenue, for reasons including digital inventory’s ability to increase yield (advertisers in a loop of other ads still pay the same as they would for a static ad); attract new types of advertiser thanks to its immediate nature (betting shops, for example, could use DOOH ads for live news); and open up new environments such as lifts or taxis.
- The global OOH industry is consolidating. In the top 20 markets analysed in the report, the top three vendors hold a 63% market share, on average. In most of Asia (not including Australia, which became even more consolidated) the picture is more fragmented, with the top three vendors amounting to under half of the total.
- More national and multinational companies are starting to spend on OOH as they seek to scale up around the world, particularly brands in CPG, automotive, finance, entertainment and technology segments.
APAC deep dives
The well-developed Australian OOH market will see solid revenue growth (10%) in 2019, thanks to DOOH sales, which now account for half of all sales and are expected to make up 60% by 2023.
- 6.4%: OOH’s share of the advertising market in Australia.
- 80%: the amount of the market controlled by three vendors (Ooh!media/Adshel, JCDecaux/APN and QMS): Australia is one of the most consolidated markets in the world.
- Biggest segment by revenue: Roadside billboards, followed by malls, transit and street furniture.
China is the third largest OOH market in the world and the sector is becoming more valuable as the population continues to urbanise. Growth is expected to remain stable at 9% in 2019.
- 6.1%: OOH’s market share in China.
- Over 25%: DOOH’s share of total OOH sales, higher than the global average of 18%.
- The OOH scene is fairly fragmented. The top three media owners (JCDecaux, Focus Media and Whitehorse) control around 40% of the market.
- Biggest segment by revenue: Transit, followed by place-based.
- Largest three advertisers in 2017: Alibaba Group, Uxin Group and JD.com.
India is the fastest growing of the large emerging markets in terms of advertising spend.
- 5%: OOH’s market share in India. DOOH makes up 2% of the total, due to lack of regulations and investment.
- Largest OOH format in India: Roadside billboards, followed by transit and street furniture.
- Top spending industries: building materials, real estate, telcos, automotive and finance.
- The industry is very fragmented. The top three vendors (Bennett Coleman, Pioneer and Bright Advertisers), account for under 30% of total OOH NAR (Net Advertising Revenues).
Japan is the third largest advertising market in the world, and advertisers here spend $300 per year per capita. OOH, along with other traditional advertising sales, are in decline.
- 12%: OOH’s share of the Japan market, the second largest in the world, due to Japan’s urban density.
- Digital’s share of OOH is below average, which could be due to regulations, industry fragmentation and high prices.
- 450,000: number of OOH ad units in Japan; there are almost 5,000 digital units.
- Largest OOH format: Roadside billboards, followed by transit and street furniture.
The top three vendors in Japan (Japan Railways East, Japan Railways West and Tokyo Metro), control just 20% of the market.