Digital drives out of home renaissance
In the first of two exclusives analysing the latest adspend figures, Warc's James McDonald examines a thriving out of home sector.
UK advertising expenditure for the out of home (OOH) sector rose 5.1% year-on-year to £271m in the third quarter of 2015, with full-year adspend estimated to have reached a new high of £1,054m, according to the latest results from the AA/Warc UK Expenditure Report, released this week.
Adspend of £271m was a new third quarter record for the OOH sector, surpassing the peak set in 2012 during the London Olympics for the first time.
Further, our preliminary estimate of £1,054m for 2015 marks 3.4% growth from 2014 and the highest annual total recorded during 34 years of monitoring. Ad expenditure for the sector is expected to rise still further this year, at the faster rate of 4.9%.
The out of home data within the Expenditure Report are provided by Outsmart, the industry body, which surveys its members for detailed ad revenues each quarter. The Outsmart data show that roadside ads accounted for approximately 50.9% of spend in Q3 2015, up 2.3pp from a year earlier on a like-for-like basis.
Transport also increased its share from the previous year, by 1.9pp to a total of 40.2%. Advertising in point of sale (PoS), retail and leisure environments made up the annual shortfall, with a share of 8.9% in 2015 demonstrating a 4.3pp dip.
The out of home sector has been experiencing somewhat of a renaissance in recent quarters, with digital technology galvanising trade. The amount spent on advertising via digital panels comprised 30.6% of the OOH total in Q3 2015. This is the highest share recorded for digital versus its traditional counterpart, and marked a 2.3pp increase from the previous year.
Furthermore, the latest Expenditure Report data show that over two-thirds of the new ad money in the OOH sector between July and September 2015 was specifically for digital panels.
We expect this trend to hasten with the launch of new programmatic trading networks in the UK. Google is currently trailing its DoubleClick platform in outdoor environments, while Kinetic has signalled its intent to launch a programmatic offering in Q1 2016.
The world's first programmatic advertising network for the outdoor industry was launched in Australia during May of last year and adoption has been swift; Warc's international data show double-digit growth in Australian OOH adspend last year.
This evolution within the out of home industry comes at a time when the UK display market is becoming increasingly competitive. All media bar desktop and mobile internet are forecast to have lost share of UK display adspend between 2012 and the end of this year.
"There are very strong signs that the OOH medium is in great shape, and getting better. All spend and growth trends are looking very positive," said Alan Brydon, CEO of Outsmart.
"Whilst technology is driving consumer behaviour in ways that are bringing challenges to all other media (fast forwarding, ad blocking, audience decline, etc), it is only driving opportunities in OOH.
"And there are very clear signs that the use of the medium isn't only growing, but it's getting better as well. Clients and agencies (creative and media) are applying creativity, relevance, automation, data and technology in all sorts of ways to make their use of the medium more efficient and more effective."