The is the first in a series of blogs around the highs and lows of setting up my own Digital Out of Home media sales business
I recently launched my own Digital Out Of Home (DOOH) media sales business [plug: done] and was lucky enough to be able to get it off the ground without having to enter the Dragons Den! I’ve worked in the DOOH arena for a while now, so it was the natural place for me to launch my new business. Stick to what you know, as they say. But, what would those scary dragons have thought of my idea had I entered the Den. Well, a quick look at the astonishing growth in the DOOH sector would’ve provided a strong opening gambit, but would it have been enough to get their money (in exchange for 49% of my business!)?
On the surface it is a rock solid sector to launch into, with unbelievable quarterly growth. The latest figures from the Outdoor Media Centre (OMC) suggest that digital revenues were up 42% in the last quarter, at £35.5m. It would have been so easy for me, or others, to present a business plan with lots of nice ‘staircase’ graphs, showing exponential growth in the sector. With these figures I can’t imagine it would have been particularly hard to secure a chunky investment; after all, how many other media channels can claim that sort of growth (except online, of course). It’s the sort of logic that made me take out a mortgage in July 2008!
But I don’t think DOOH is the gold rush that it might appear to be. Yes, it offers more sophisticated and targeted ways of reaching consumers, even more so when mobile and DOOH really start to really interact, so it naturally should command more attention from advertisers.
3.1%, though, is the figure that tells the true story. That is the amount the overall outdoor sector grew last quarter. 3.1% is steady, solid growth; not earth-shattering, but growth all the same. So, if DOOH is up 42%, doesn’t this just suggest that we are witnessing a mass upgrade of paper inventory to digital? Yes – more or less the same ad spend is coming to OOH, but it is probably just on a digital six sheet, rather than a paper one, or a digital billboard, rather than a paper one.
The major outdoor media owners are investing significantly in digital formats, often upgrading the best existing sites. New destinations such as Heathrow T5 and Westfield Stratford have been kitted out with purely digital formats, not a paper poster in sight. And other newcomers, such as Amscreen, are rolling out 100% digital networks, bringing some new money to the sector, but probably at the expense of media owners offering traditional paper formats in the environments they operate in.
It’s a bit like the switch from analogue to digital TV; the total universe of users remains similar, but the consumer experience becomes richer, more accountable and more reliable. The total outdoor spend is broadly the same, it’s just that advertisers are now choosing the digital formats on a more regular basis.
Over the past few years I have witnessed various DOOH networks fail as they wrestle with new technologies and reliability issues. However, we are now in a place where only the best remain, and the newcomers can learn from past mistakes and benefit from improved technologies. And it is probably because advertisers can now truly capitalise on high quality, targeted and reliable digital formats that media owners are reacting to demand and upgrading their inventory.
But it is not been an easy road to get here; lessons have been learned and mistakes made. It is not enough to simply jump on the bandwagon and blindly invest in a new DOOH network or screen on the merit of the upward curve DOOH is enjoying at the moment. If you do, you may here those famous words from a certain Scottish Dragon – ‘I’m ooot’!
James Thornton, Managing Director at Hub Digital Networks