Exec Summary
- 1 Out of Home media revenues to see continued growth over the next decade, reaching £1.15bn by 2020.
- 2 A re-appraisal of the value of the Out of Home media sector will be justified by robust long-term growth and a rising share of total media expenditure.
- 3 Digital OOH revenues will account for a quarter of total OOH revenues by 2020.
- 4 Out of Home will segment into two dual sectors; Broadcast OOH and Targeted OOH.
- 5 Interactive OOH (iOOH) and Poster to Mobile will emerge as new specialisms.
- 6 Specialist OOH agencies and media owners will embrace mobile, social media, digital content creation and online advertising expertise, reflecting the change in the medium towards lifestyles and environments.
- 7 Consumers do want to interact more with digital screens.
- 8 Daypart, retail proximity and real-time planning will revolutionise the relationship between Out of Home and advertisers.
- 9 NFC and RFID have the potential to transform the relationship in the short term.
- 10 Smart posters capable of recognising and reacting to consumer type will become commonplace.
- 11 Digital poster networks will become more widely visible across at least 30 major cities within 10 years.
- 12 Digital screens in established Out of Home locations will double over the coming decade; significant impetus will be given to some roadside and bus 6 sheets after 2015.
- 13 The total Out of Home advertising universe will increase dramatically with very limited rationalisation of traditional static billboards.
Looking to 2020
The Out of Home industry in the UK is characterised by a long, creatively prosperous history and has adapted well to change in recent years through the application of high investment levels from media owners and attempts to be more accountable, measureable and flexible. It is still delivering all of these elements to satisfy client demand and must now deal with how to effectively embrace technology as consumers get smarter and technology provides a fully interactive experience.
Kinetic's Future of Out of Home project focuses on how change can be clearly and successfully implemented by the industry, but also outlines how client, consumer and commercial needs will test the resolve and the creativity of the industry as it adapts to change.
Our research began in January 2011 by conducting several interviews across the industry with investors, consultants, media owners, media agencies, creative agencies and manufacturers – whilst adding our own perspective – on what faces the industry over the next ten years.
We also conducted consumer research into expectation, technology take-up and the perception of an industry in the process of change. The findings delivered a number of themes, spanning the commercial, developmental and technological aspects of Out of Home. There was consistency of perspective, particularly from within the respective quarters of the industry. There was also much debate and some conflicting expectation.
What we have done is bring that perspective and consensus together into a viewpoint and a forecast of how the industry will change in the next ten years.
The road to 2020 will be one that seizes on the considerable change and initiatives already underway. Our view is that we are on the threshold of change now and that this is an exciting time for a media sector that embraces consumer mobility, technology and communication response at its heart.
Consumers & Technology
"There is an opportunity to capitalise on the literacy of the IT generation."
Steve Davis, Clear Channel
47% of people agree that digital poster screens make shopping malls more interesting and attractive
Consumers & technology
Interactive OOH (iOOH) and Poster to Mobile will emerge as new specialisms.
Consumers do want to interact more with digital screens. Research by Kinetic reveals that half of consumers already see the value of interacting with posters and 20% even expect to be recognised by posters in the future; 75% expect to carry a smartphone or tablet computer; 66% expect to see digital screens in most city centres; 70% think digital posters beneficial in high-dwell time locations.
NFC and RFID have the potential to transform OOH in the short term. Some urban areas will deliver a multi-media experience. Instantaneous download capability within a growing number of smartphones, matched by NFC or RFID interactive technology in posters, could transform promotional marketing and the distribution of social media and entertainment content even in low-dwell time urban environments. In addition a significant number of sites are expected to be capable of recognising consumer types and moods.
Smart posters capable of recognising and reacting to consumer type will become commonplace.
Technology will not only re-value OOH but will forge a far closer relationship with other media and with technology sectors: Kinetic's analysis suggests OOH will develop a symbiotic relationship with mobile marketing and internet based campaigns, opening up new revenue streams. Content will play an increasing role in OOH media and billboards are likely to become a distribution point for digitised news and entertainment content.
In the context of the limited penetration of digital posters nationally, our research presents a pretty strong endorsement of the medium and also suggests a level of anticipation amongst consumers……
DigitaloOOH
"Digital posters are being transformed from a niche opportunity into a distinct medium with a national reach in a very short space of time. "
Jeremy Male, JCDecaux
Digital will make up around 23% of total Out of Home revenue by 2020
Digital OOH and Investment
Digital OOH revenues will account for a quarter of total OOH revenues by 2020.
Digital screens in established Out of Home locations will double over the coming decade; significant impetus will be given to some roadside and bus 6 sheets after 2015.
Digital technology will grow Out of Home's (OOH) total share of media:
Total OOH media spend to see continued growth from £880m (2010) to £1.15bn by 2020. Digital revenues will reach almost £260m accounting for approximately a quarter of total OOH spend.
The total OOH site universe will grow with digital adding additional sectors: Kinetic's analysis reveals that digital sites will not simply replace static posters, but will create additional levels of consumer reach. Digital poster networks will be visible across 30 cities nationally with almost 110,000 screens in use. Aggressive digital expansion expected for 6 sheets and bus shelters after 2015. Only a limited rationalisation of static posters is expected.
The dual opportunity of digital OOH to offer roadside and environment communication opportunities is based around a number of high value locations. This model has attracted new investors along with established media owners and combines large audience reach with high quality delivery; it therefore commands a premium.
However, this sector remains a niche and there is a clear need to attract more advertising that both uses the flexibility of digital formats and acts in tandem with traditional OOH.
The nature of digital OOH is in itself transformational. Significant national opportunities exist and will continue to grow across numerous environments as development becomes more cost-effective and more attractive to landlords and local authorities.
Agency opinion is that digital OOH can act effectively in enhancing simple messaging, with dramatic effects that enhance the medium in terms of reach, impact, relevance and interactivity.
Strategy for the Future
"There will be more iconic sites and city centre developments, but if the media-owners invest in digital 6 sheets, then that will open a whole new raft of opportunities. That would give you reach, and a whole new way of interacting with people."Carolyn Nugent, Kinetic
Location-based mobile services incentivise people to interact with brands
1/3 would check in to a poster in exchange for information
44% would use it to get deals or vouchers on products and services
Strategy for the Future
Daypart, retail proximity and real-time planning will revolutionise the relationship between Out of Home and advertisers.
Dynamic use of digital sites to create a powerful high-street direct response medium:
- The deployment of national digital poster networks in proximity to retail locations and the integration of day-part flexibility; real-time planning and new audience-based trading systems will unlock the potential to drive "smart" retail promotional marketing.
- Calculating a realistic long-term pricing structure is essential.
- Clearly a combination of high quality presentation, flexibility and audience reach will naturally command a higher price. But the basic rules of supply and demand will come into play as the supply of digital sites increases. This will be mitigated by the roll-out of national digital networks, which will clearly answer a demand from advertisers and re-enforce the value of digital posters.
- Digital networks must be sold flexibly and their full technical capability must be unleashed; the industry must use technology to create a point of difference
Clients are demanding an ever more FLEXIBLE and ACCOUNTABLE approach and the full potential of the medium will only be unlocked if digital technology adds significant value to the consumer and advertisers and if the industry can use digital to attract and not cannibalise revenues.
- Delivering broadcast reach and an increasingly sophisticated targeting capability, is critical to the future direction and prospects of the medium. But to build brands, sales, responses and experiences, the immediate focus will need to be on these factors...Flexibility, Creativity and Accountability.
Forecasts & Summary
"People's expectations of what they can do in terms of interactivity are sky high, because they can do it in their own home. "
Neil Morris, Grand Visual
The Out of Home medium will reach £1.15bn by 2020
Forecasts and Summary
Out of Home media revenues to see continued growth over the next decade, reaching £1.15bn by 2020.
Digital OOH revenues will account for a quarter of total OOH revenues by 2020.
Out of Home will segment into two dual sectors; Broadcast OOH and Targeted OOH. Two broad OOH sectors will emerge: Broadcast and Targeted. Broadcast will include large numbers of well-positioned static sites and premium digital sites. Targeted will include national networks of digital sites capable of time-flexible distribution and real-time reactive campaigns.
Interactive OOH (iOOH) and Poster to Mobile will emerge as new specialisms.
Specialist OOH agencies and media owners will embrace mobile, social media, digital content creation and online advertising expertise, reflecting the change in the medium towards lifestyles and environments.
Consumers do want to interact more with digital screens.
NFC and RFID have the potential to transform OOH in the short term.
Smart posters capable of recognising and reacting to consumer type will become commonplace.
Digital screens in established Out of Home locations will double over the coming decade; significant impetus will be given to some roadside and bus 6 sheets after 2015.
The total Out of Home advertising universe will increase dramatically with very limited rationalisation of traditional static billboards.
Download Kinetic’s report on the Threshold of Change