The Market for Out-of-Home Digital Ad Networks

Marketers will allocate more than $1 billion of national media budgets to advertising networks located in stores, shopping malls, office buildings and movie theaters this year, according to Profitable Channels, which today released the findings of its recent research report, titled "Adding Out-of-Home Digital Advertising Networks to the Marketing and Media Mix." Based on interviews with 50 marketing and media executives, customer behavior research and an industry analysis, the report shows that marketers regard these networks as an increasingly viable alternative for reaching a national audience, and feel that the most mature networks are ready to be added to the marketing and media mix today. It identifies one dozen professionally managed advertising networks based in supermarkets, big-box retail, cinemas, office buildings and shopping-mall venues that have "crossed the chasm" and now deliver national reach and measurable value to marketers and consumers. "Out-of-home digital advertising networks are perfectly positioned for addition to any current marketing mix, given the way that the forces of consumer control, technology, and mobility are reshaping the media landscape," says David Verklin, CEO of Carat Americas The research, conducted in June of 2006 by marketing services company Profitable Channels, shows that mainstream marketing and media executives are investing more of their media budgets in out-of-home digital ad networks because they solve many of the problems plaguing traditional media and deliver five unique capabilities: measurable sales impact, point-of-purchase proximity, customer targeting, purchaser relevance, and local sales support. "Marketers who rely heavily on national advertising will need to master how to market through a variety of alternative digital platforms to effectively reach national audiences and remain competitive," according to Steven Mueller, president of Outdoor Services, a U.S. out-of-home media management company owned by Interpublic. "As communications planners, it is imperative that we remain ahead of the curve on this new and evolving new media phenomenon." This analysis of consumer behavior, industry trends and marketing best practices suggests that marketing and media executives should care about out-of-home digital advertising networks because: The industry is growing rapidly. This year, marketers will shift $1.2 billion of their national media budgets into out-of-home digital advertising networks. Established networks are expanding their reach and new ones are being launched at an accelerating rate. More than 700 out-of-home digital advertising networks have been launched since 2002, according to Interpublic Group estimates, and five new networks -- based in convenience stores, gas stations, malls, transit stations and office buildings -- were announced in June 2006. They are valuable marketing and communications channels. These rapidly emerging networks offer superior coverage, control, customer experience and cost effectiveness relative to traditional marketing and communications channels. These networks deliver more measurable sales impact closer to the purchase decision-making point and are highly relevant to many products and brands -- particularly those sold through retail channels or targeting high-value clients and households. These networks will accelerate several important marketing trends. Out-of-home digital ad networks are accelerating major changes in how national advertising investments are allocated and measured, as well as how agencies staff their client teams, plan media and create campaigns. As a consequence, media buyers and ad agencies will have to adapt how they plan, buy and measure media and create advertising campaigns if they are going to effectively reach a national audience. The most mature networks are ready to be added to the marketing and media mix now. Leading marketers and agencies that have experimented with them have figured out already how to take advantage of these unique channels. The established syndicated media research companies that evaluate traditional media viewership, including Arbitron and ACNielsen, have conducted more than 10 studies that consistently indicate acceptance by and positive response from customers to this media. About the Author Stephen Diorio is a partner in Profitable Channels and author of Beyond e: The 12 Ways Technology Will Transform Sales & Marketing Strategy (McGraw-Hill 2001). He also is a prominent speaker on sales and marketing strategy. Profitable Channels LLC is a marketing company that designs and builds communications, promotions, sales and marketing programs.

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