BY Kathy Crosett
The out-of-home (OOH) ad market should grow by 5% next year. And while, out-of-home advertising had great results in the first quarter of this year, the ad format has not been spared during the coronavirus outbreak. Marketers have slashed their OOH budgets as they realized just how many people were no longer commuting to work or traveling to entertainment venues with the social distancing mandates in place.
Stellar First Quarter
With a 5% revenue increase over 2019, Q1 ad sales in 2020 totaled more than $1.5 billion. The verticals with the largest increases in OOH Q1 ad purchases were government/politics (+20.6%) and insurance and real estate (+17.4%).
Until Q2 2020, the OOH ad market had been a bright spot. According to Group M, 7% of all tracked advertising in 2019 globally, about $40 billion, went to OOH in 2019. This figure includes cinema advertising. Roughly $12 billion, or 30%, of the market is digital. That number indicates that the digital out-of-home market is growing rapidly. Marketers clearly believed that they were reaching consumers on their way to work or en route to one of their favorite entertainment destinations. Consumers were noticing ads on billboards, street furniture and public transit vehicles. In many cases, those outdoor messages were digital.
However, the challenges posed by the COVID-19-related lockdown severely impacted the OOH ad industry in Q2. Keep in mind that the largest category for OOH spending, accounting for 24.2%, is local services and amusements. Spending is likely to remain subdued in that category well into the third quarter of this year or until a vaccine for COVID-19 becomes widely available.
Forecasts for 2020
In June, forecasters issued predictions for the 2020 drop in OOH revenues that varied significantly. A chart in a BillboarderInsider column shows these details:
- Group M ‑21%
- Magna ‑16%
- Billboarder Insider ‑14%
- Signvalue ‑9%
One industry expert noted that national OOH advertisers have pulled back on spending in densely populated areas throughout the U.S. However, sales in local areas to local marketers may not suffer as big of a decline as the averages indicate. Despite the challenges posed by the COVID-19-related lockdowns, consumers are beginning to travel locally again. And, political advertisers, in particular, will want to reach these consumers on the move with their messages. It's possible that digital out of home marketing will grow rapidly at the local level this year and next.
OOH Ad Market to Grow by 5% in 2021
On a brighter note, both Group M and Magna expect the OOH ad market to recover in 2021, with ad revenue increases of 5% and 6%, respectively. And we can expect that digital out of home marketing will grow rapidly in 2021. Between now and then, media sellers should focus on selling to organizations with ad money to spend before the elections take place in early November. To learn more about voters, whether they’re registered Democrats or Republicans, and about the media formats that influence them, check out the AudienceSCAN profiles available from AdMall by SalesFuel.