Getting In on the Out of Home Advertising Market

According to the Outdoor Advertising Association of America (OAAA), revenue in the out-of-home advertising industry continues to rise as the economy improves. Not surprisingly, many print service providers want to make sure their ability to serve that market advances hand-in-hand with that growth.

Out-of-home (OOH) advertising revenue grew 4.3 percent in the second quarter of this year, compared to the same period in 2011, the OAAA reports. First half 2012 revenues of almost $3.5 billion, following growth of four percent to $6.4 billion in 2011, are evidence of a steady increase in year-over-year revenues tallied in OOH advertising since second quarter, 2010.

The industry has seen revenue increases the past eight quarters, and forecasters predict the OOH advertising market will only continue to expand. In fact, only cable TV and the Internet are faster growing advertising categories.

The out-of-home advertising industry includes more than 2,100 operators across the United States, representing the four major OOH format categories. They are billboards, transit, street furniture, and alternative media, with billboards comprising 65 percent of the OOH revenue, says OAAA chief marketing officer Stephen Freitas. “OOH media companies range from public, multinational media corporations to small, independent, family-owned businesses,” he says.

Because OOH advertising encompasses billboard, transit, and similar advertising, “It reaches people on the go,” adds Buster Kantrow, vice president of business development for Lamar Advertising Company in Baton Rouge, LA.

That’s an important advantage in this era of major evolution taking place in the advertising landscape, Kantrow reports. “The traditional ways to advertise are to reach consumers in the home, through television, radio, and newspapers,” he says. “But they aren’t as effective as they used to be.

“The business we’re in is billboard advertising. And it doesn’t have the issues of fragmentation that some of the other traditional channels face.”

In the past, what was called outdoor advertising was divided into two separate categories, referred to as on-premise and off-premise signage, says Rich Gottwald, executive vice president of the International Sign Association, a 2,300-member trade association comprised of the manufacturers, suppliers, and users of signs and sign products.

On-premise signs are those on businesses such as stores that promote those venues. Off-premise signage refers to billboards along a highway advertising a business that might be five miles down the road.

“Over the years, those terms have changed a bit, and now we call it out-of-home advertising,” Gottwald says. “There’s a new kind of sign referred to as a dynamic digital sign. It’s basically a television screen, which might be on a gas pump, on a store, or in a shopping mall. What used to be considered just on-premise signage now encompasses those kinds of signs as well.”

 

Dynamic Digital Signage

While traditional on-premise signage will continue to be needed, dynamic digital signage provides another product and revenue stream for sign companies. Digital dynamic signage as a segment is likely to grow from 15 to 30 percent or more yearly, reports Alan Brawn, chairman of the Digital Signage Federation.

Notes Gottwald: “We’re trying to educate [sign providers] regarding the different aspects of what we call digital signage, including hardware, software, content and the business side, in which you install a screen and gain revenue.”

Entering this side of the business can be important for many print service providers already delivering a steady supply of static signage to customers. “The client may come to you and say, ‘You provide our print signage, and we want you to consider starting to provide our digital signage as well,’ ” Gottwald says.

Print providers offer a great deal of experience and expertise that lends itself to taking on that additional work, he adds. They have project management expertise in bringing together different suppliers, and content expertise based on having provided print signage and messaging to their clients for years.

These talents are welcomed by the OOH market, which, says Freitas, embraces innovation and “is focused on providing high-impact creative executions that leverage the power and visibility of the medium, not only in messaging but also in the quality of the production materials used.”

PSPs can draw on some of their abilities in taking on this new opportunity. Most providers will serve small- to medium-sized businesses, and those are the very companies with whom they have long-standing legacy relationships.

“Some of the basic hardware is not complex, and is therefore something they can master readily,” he says. “Where they may need training is in the revenue generating side of the equation, the business of it.

“Today, they typically turn over their sign to the end user. But in dynamic digital signage, they manage the content and gain an ongoing revenue stream. There may be a learning curve with respect to software. But a lot of these systems aren’t that complex, if you’re serving that small- to mid-sized company.”

Dynamic digital signage can be marketed in much the same way current offerings are marketed, Gottwald says. “A lot of it is word of mouth. It’s letting clients know you offer this new service, whether you do that through word of mouth, websites, direct mail or brochures and other materials.”

 

Gaining Training

Print providers can look to the ISA International Sign Expo, which brings together 18,000 end users, integrators, manufacturers, and suppliers under one roof over four days as one avenue to get up to speed on the new opportunity.

The ISA International Sign Expo, to be staged next in early April 2013, will offer two new ways to learn from industry experts.

One of those is Dynamic Digital Signage Park, an area of the Sign Expo show floor that will showcase the latest products, trends, and opportunities in dynamic digital signage. The other is Dynamic Digital Signage Day, to be held at the expo Wednesday, April 3, 2013. It is a full day of dedicated education on dynamic digital signage, how it is revolutionizing the signage marketplace, and how companies can leverage this $7 billion market, Gottwald reports. The day is designed to provide attendees with the knowledge, products and contacts they will need to capture success in the rapidly growing area of signage.

The day begins with a program focused on “The Seven Key Elements of Dynamic Digital Signage,” hardware, software, connectivity, content, operation, design, and business models. That is followed by seminars on “Demystifying Dynamic Digital Signage” and “Where to Sell Dynamic Digital Signage.”

Afternoon sessions will examine partnerships and the business side of dynamic digital signage for the sign installer. Trends in dynamic digital signage and how to demonstrate the technology to the customer conclude the day.

 

A Relationship Business

As so many businesses are, the business of providing clients with static or dynamic digital signs is essentially based on relationships. That is reflected in Gottwald’s observations about PSPs having a leg-up in dynamic digital signage because they’ve worked with their legacy customers for so long.

It’s also reinforced by the comments of David Allman, partner in Burbank, CA-based Imagic, a printing company that serves the OOH advertising market with standard billboard materials.

“It continues to be a relationship-type business,” Allman says. “We have strong relationships at Titan Outdoors, Clear Channel Outdoor, and J.C. Decaux, which controls the media at JFK, LaGuardia, and LAX airports. You also should have relationships with people at the traditional advertising agencies. The national campaigns come out of the major ad agencies around the country.”

Succeeding in the very competitive out of home advertising field takes an understanding of the industry and a lot of hard work, he adds. Those who succeed understand their cost structures and the specifications of the materials.

“It’s always good to under promise and over deliver,” Allman says. “We basically recognize that we make mistakes. But it’s how you handle the mistakes once they’re made that distinguishes [successful companies] from the others.”

 

One Last Thought

How important is it that print service providers seeking to serve the OOH advertising market look very seriously at dynamic digital signage, and attempt to add this to their menu of services? Gottwald sums it up succinctly.

“If a retailer is currently using a lot of printed signs, and wants to convert those to digital screens, the print provider serving that client would be wise to learn how to provide that service, rather than turning it over to another provider,” he says. “The other provider could wind up taking all the business.”

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