Digital out of home (DOOH) is coming of age, and Southeast Asia’s emerging markets are taking notice—representing some of the biggest growth regions for the medium.
Out of home has weathered the digital revolution better than other legacy media formats and is therefore the only traditional media segment to consistently grow global advertising revenue—by an average 4.1% per year for the last nine years, according to a January report by Magna and Rapport.
It is expected to keep growing, if more slowly, at a rate of 2.7% per year to reach US$38 billion globally by 2023.
This growth will be driven by the dissemination of digital screens, the automation of OOH trading, and the ability to measure impressions in what has for many years been a blackbox medium.
DOOH has a lot of benefits over other forms of digital media. It is the last advertising format that consumers can’t skip or block, it is by its nature mostly immune to fraud and brand-safety issues (unless a site is vandalised), it has unique one-to-many scale, it is GDPR-compliant, and it is the second cheapest advertising medium, after radio.
But it carries with it legacy systems that are difficult to disrupt and stringent regulations that limit automation. The relative stability of OOH compared to other media forms can also result in less of an inclination to change.
Let's dive in.
Asia's growth opportunity
While some markets have been quicker to embrace digital OOH than others—in the UK and Australia it has now reached half of total OOH sales—the biggest growth opportunity lies in Asia, where the industry is much more fragmented.
Looking at overall OOH spend, India is the fastest growing of the large emerging markets in terms of advertising spend, predicted to grow by 37% by 2023. But DOOH currently makes up just 2% of the total, due to a lack of investment and the fragmentation of the market—with the top three vendors accounting for under 30% of total OOH revenues.
Similarly in Japan, the leading vendors control no more than 20% of the market, resulting in a low (11%) penetration of DOOH. The opposite is true for the Philippines, which has a highly fragmented market (one vendor controlling 20%) but a relatively high (21%) share of DOOH.
The Philippines is also tipped to see some of the highest (22%) digital growth over the next five years, and has this year piqued the attention of global adtech firms Dataxu and Rubicon Project, both of which have struck deals with digital out-of-home provider Aircast to offer programmatic trading of inventory.
Fragmentation is both a challenge and opportunity. On one side, it means there’s a lot more players that have to rally behind a switch from static to digital; on the other hand, having a market made up of lots of small players generally breeds greater agility and innovation.
“In Southeast Asia we have seen markets like Malaysia, Indonesia and Thailand digitise OOH very fast, and the number one reason is because of fragmentation, with a lot of new players emerging in these markets which are purely digital,” explains Srikanth Ramachandran, the founder and chief executive of outdoor adtech provider Moving Walls.
Businesses like Moving Walls and AnyMind Group, both headquartered in Singapore, are looking to take advantage of the fragmentation by offering advertisers the ability to buy DOOH across multiple media owners in Asia through a single access point.
Interestingly, both platforms are seeing the biggest investment in DOOH from digital-first brands like Gojek, Google and Grab.
“Currently a lot of growth is coming from the big tech companies. It is easier for them to do a DOOH marketing activity because they can use their digital marketing assets,” says AnyMind Group co-founder and chief executive Kosuke Sogo. “In the near future we expect SMEs will pay more attention to DOOH because of the opportunity to buy more localised inventory for a shorter period of time.”
In many ways DOOH lowers the barrier to entry for brands. Where traditional OOH usually requires advertisers to book space for a substantial amount of time, DOOH can be booked for as short as a few hours.
Location-based targeting also allows advertisers to be smarter about where they book space; driving consumers to local stores. The ability to more strategically locate campaigns, have dynamic creative that can react to various signals including the weather, and track concrete sales uplift, opens DOOH up to direct response clients.
“Where static OOH favors brand communication over a long posting period, DOOH now makes it compelling to retail and response-based marketing through increased tracking and attribution,” says MediaCom APAC chief investment officer Paul Waller. The agency has delivered DOOH campaigns for clients including Shell and Domino’s in the region.
Omnicom Media Group Malaysia’s head of investment Anne Leow echoes: “DOOH is currently being used mostly for tactical executions and short-term/ad-hoc marketing objectives.”
Digital is more expensive, but it pays dividends
But digital comes at a higher cost. Accordingly, DOOH units generate 18% of advertising revenue in the world’s top 20 markets, yet only represent approximately 5% of OOH inventory. Higher CPMs can be difficult to justify for Southeast Asia’s notoriously frugal advertisers.
“When both agencies and clients realise that the cost of digital is often higher than static, they do not pursue this,” says JCDecaux managing director for South Asia Olivier Héroguelle.
“Advertisers are also prioritising widespread coverage over the quality of the media,” Héroguelle added.
It’s all relative though, since brands won’t need to spend 10 to 20% of their budget into printing anymore, points out Franck Vidal, Asia-Pacific director of AdCity, Havas Group.
“At most, some vendors would charge an uploading cost but hopefully that will be progressively removed in the near future to align with online practices,” he adds.
For vendors, the cost of converting static to screens is also getting significantly smaller over time, and is offset by digital panels driving greater profit than static ones.
Despite this, many media owners in developing Asia remain unconvinced of the value of converting to digital screens, named by AnyMind Group’s Sogo and Moving Wall’s Ramachandran as their biggest obstacle to further growth.
“The biggest challenge we have seen on the supply side is education; convincing the media owner why they need to shift,” says Ramachandran.
Sogo adds: “Media owners which have a lot of demand like in Changi or Tokyo airport don’t need to put a lot of effort in to sell inventory to clients, so they don’t have any reason to change. We need use cases that show the ROI of DOOH for them to embrace it.”
New screens, legacy processes
Disrupting the legacy system of how OOH media is sold is the next challenge.
“Uniformly across all markets there’s been digitisation to signage but not process,” says Ramachandran. “Media is still sold in a very traditional way, rather than using data to optimise creative and maximise revenue from screens.”
Programmatic digital OOH is in its infancy in Southeast Asia.
“Vendors are still trying to get around the complexity of making their inventory available programmatically,” says Dataxu general manager of Asia Alvin Wong. “We are just trying to lay the groundwork of how this will pan out in the future, it is the same journey that programmatic went through 10 years ago with online.”
Rubicon Project regional manager Asia Yogesh Sehgal adds: “Getting access to supply is not as easy as integrating with display or online video, for example, because the ecosystem was not built for digital. There is a lot of fragmentation and no standardised ad servers where each supply partner can work on a common platform, like Google Ad Manager for the online world.”
Since DOOH has a limited supply, Ramachandran believes programmatic guaranteed deals—deals based on a guaranteed volume of impressions at a fixed price—will be the only method of trading inventory over real-time bidding (RTB).
Mediacom’s Waller agrees: “The medium is undoubtedly primed for programmatic disruption, however countries and formats are at different stages, so in many cases the ability to buy programmatically may be more aligned to an automated buy than a real-time auction.”
Kinks to iron out
Local market regulation is a key factor in the penetration of DOOH in Asia.
The OOH market in Singapore has very strict regulations, both in location and content. There’s very limited availability of billboards, while advertisers must ensure their creative upholds the shared values of Singapore’s society, and are banned from denigrating competitors. In Malaysia all OOH creatives must be submitted for pre-approval to authorities to ensure they comply with guidelines.
Roadside restrictions are common in the interest of driver safety: India bans DOOH roadside altogether while Malaysia has restrictions brightness and the use of video roadside. Indonesia has taken a different direction, taking down static billboards within prime areas and actively encouraging the deployment digital OOH screens.
In general in these markets, media owners focus on digital deployment in commercial buildings, malls and airports.
The Philippines has very little regulation, which has provided a favourable market for DOOH investment and growth, but may turn into a liability in the future. The Department of Public Works & Highways oversees the structural integrity of billboards, with content regulation left to advertisers themselves.
There are also a number of technical challenges DOOH must overcome if it is to reach scale. Currently in Southeast Asia there’s a lack of consistent standards for execution and measurement, as well as independent third-party verification.
“There is a place in this ecosystem for Moat, IAS to step up and do more policing work over what gets delivered on a DOOH screen,” says Dataxu’s Wong.
Measuring the volume and profile of consumers that have seen an OOH ad and matching this to conversion remains the biggest technical challenge, but solutions such as using beacon technology to send signals to passersby's phones are addressing that. And as 5G technology is adopted, tech solutions will get faster and smarter.
“There’s a lot of kinks to work out to make ecosystem work like clockwork," Wong adds.
OOH still has a ways to go to match the efficiency of ad serving online, but developing markets are innovating fast to combine scale with data, premiumising what is already a premium media. Safeguarded from many of the issues that have plagued the online ad ecosystem, and proven to increase reach and clickthrough rates when combined with other media, there are very few downsides to DOOH.
"The adoption of digital and programmatic techniques and technologies is making DOOH a trusted and meaningful medium that is integral to a marketer’s plan," surmises Havas' Vidal.