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Out-of-home

Out-of-home

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The Out-of-Home (OOH) industry was disproportionately affected by COVID-19. The market was severely impacted due to reduced audience movement and the subsequent decline in reach available to advertisers. As a result, 2020 saw a 39 percent decrease in year-on-year revenue to A$772 million.


The OOH industry is beginning to see green shoots of recovery, with year-on-year declines in revenue continuing to improve since the second quarter of 2020 (April - June).1

While all formats and almost all advertiser categories declined throughout the year, the market was particularly impacted by decreased investment across advertiser categories with historically large investments in OOH, including Automobile, Travel, Media and Retail.2 The market has seen a gradually improving rate of decline since the second quarter of 2020, the hardest hit due to the severe and sudden restriction to movement. Early in 2021, large format Roadside billboards have primarily driven demand. The share of investment of digital assets as a percentage of the total market slightly increased year-on-year in 2020,3 indicating advertisers’ preference and requirement for flexibility in a volatile market, and this trend is continuing in 2021.4

Looking forward, growth in digital revenues will continue to be a strong revenue driver for the industry, as the major players continue to convert their suite of assets to digital, and advertisers embrace the functionality.

Digital revenues have been a major growth driver in recent years. This is expected to continue as advertisers become further accustomed to trading their media investment with short lead times as a result of COVID-19 volatility. The immediacy of digital assets is a key and emerging value proposition for the market and a driver of incremental revenue for the sector. Further, the dynamic nature of digital formats means that creativity can be tailored to the environment and updated with ease, an attractive proposition for marketers and sectors needing to update messaging frequently.

Reach remains critical for advertisers, and the OOH industry will be somewhat future proofed through more sophisticated measurement, with the Outdoor Media Association (OMA) announcing a $10 million investment in the evolution of the industry’s measurement system, MOVE (Measurement of Outdoor Visibility and Exposure) 2.0.

MOVE 2.0, developed in conjunction with IPSOS and Veitch Lister Consulting (VLC), 5 is expected to be available to media planners and buyers in 2023 and will offer significant enhancements to the measurement of OOH in order to meet the changing shape of the industry. Enhancements include the inclusion of the measurement of all formats and the inclusion of Digital Out Of Home (DOOH) assets, across more than 100,000 locations in both metropolitan and regional Australia. This new system will encompass “precise passive measurement that utilises multi-sensor fusion, as well as big data coming from multiple sources ranging from a large-scale travel survey, mobility data and official traffic and pedestrian counts”. MOVE’s qualitative metric evolves from the current ‘Likelihood To See’ (LTS) to ‘Visibility Adjusted Contacts’ (VAC). 6 This new methodology and metric will provide a more accurate and granular measurement of audiences across all formats and inventory. 

MOVE 2.0 will be of considerable value to advertisers given it is an industry-wide, cross-format solution, which differentiates it from many other channels. It is expected that MOVE 2.0 will play an important role in growing the size of the OOH sector as a proportion of the total advertising market, as advertisers continue to demand and favour channels with strong measurement capability.

The increasing sophistication and industry adoption of programmatic buying will be one to watch throughout the forecast period. Although it remains a focus for many of the major players, it is not expected to completely replace current methods of buying.

Programmatic buying for OOH focuses on “the better many”, and may realise growth in a number of ways.

  • First, it may allow the OOH industry to compete for advertising investment not traditionally available to it; specifically, investment that has been usurped by digital players due to a requirement for granular audience targeting and flexibility. This type of investment may increase as a result of the pandemic driving marketers to favour environments which offer flexibility with their media buying (a differentiating trait of programmatic buying).
  • Second, the availability of programmatic buying may increase ease and access of planning and buying. This has the benefit of opening up the market more effectively to direct advertisers - an advertiser group traditionally dominated by the digital platforms.
  • Third, the move to programmatic allows the OOH sector to realise the true value of its digitised assets, including lower yield sites, as it introduces a data overlay which drives confidence for the buyer and provides site value beyond location.

While programmatic buying presents an opportunity for the market, significant work is required to lay the groundwork to effectively capture it. Specifically, the industry requires a focus on business processes, sales platforms and education.


Q1 2021 Highlights

Early data in 2021 suggests green shoots, with:

  • Automobile, Media and Retail are driving the recovery; 7
  • Increasing demand for Roadside and Retail formats;
  • Increasing share of investment of digital assets as a percentage of the total OOH market, indicating advertisers’ preference and requirement for flexibility in a volatile market. 8

Looking forward, growth in digital revenues will continue to be a strong driver for the industry, as the major players continue to convert their suite of assets to digital, and advertisers embrace the functionality.

Forecasts at a glance

Total Out of Home market (A$ millions)

CAGR 2019-2025 based on the midpoint forecast scenario

Total OOH Market 2.0%

 

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