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Tim Lumb 

Econometrics must stop giving out-of-home a rough ride

Econometrics must stop giving out-of-home a rough ride

It's time to challenge the idea that out-of-home does not perform well, writes Outsmart's Tim Lumb.

There is a common misconception within the industry that Out Of Home (OOH) struggles to deliver measurable ROI within econometric models.

Historically, this has largely been due to the lack of robust, consistent, OOH audience data for modellers to utilise.

Route, which was launched in 2013, is key to overcoming this. Route is the industry standard for OOH media measurement (think BARB for TV, NRS for print, UKOM for online etc.), and provides audience estimates for OOH advertising in the UK.

It has become the currency in planning, trading and valuing advertising investment in OOH, and enables advertisers to identify impacts which were not previously measurable. Crucially, Route data provides the granularity and variation that modellers love.

However, there are other considerations when assessing OOH in the econometric context. One of OOH's great strengths is that it creates unavoidable impact that builds brands. If the creative for an OOH campaign is principally aimed at longer term brand metrics like fame, favourability or loyalty, assessing its impact specifically against short-term sales is not the best measure.

As Les Binet and Peter Field highlight in their book The Long & The Short Of It; brand building drives long-term success. Advertisers need to identify whether the OOH creative execution matches the ROI metric that the model is using.

In short: what does the 'R' in ROI stand for?

Although OOH roughly takes an overall 10% share of display advertising, sometimes the OOH spend at campaign level isn't high enough for a model to get a read on its impact. Being excluded from a model does not necessarily mean that a medium is not working; just that it could not statistically be separated from the other variables in play.

Taken together, one can see how the misconception of OOH and econometrics took root. So the question remains: if properly measured, does OOH drive ROI?

At the end of last year, a major econometric study of effectiveness was conducted by BrandScience, the Omnicom econometrics and data science business, and Out of Home media specialist Talon.

By using Route data, the study concluded OOH delivers strong ROI performance. It also highlighted that OOH improves the ROI of other media channels when used together. For example, in FMCG, including OOH in the media mix significantly increases the ROI for the TV and radio activity.

Similarly, Gain Theory (formerly OHAL), a WPP econometrics and data science business, conducted an econometric analysis comparing Route data with other types of data commonly used historically in modelling OOH, such as spend/cost, Panel site lists and GRPs. They concluded Route significantly improves models ability to measure OOH ROI.

Route's unique advantage is that it determines audience exposure to OOH based on a consumer's actual movements (based on a GPS sample of 28,000 UK adults), a threefold increase in the number of panels, each assessed for visibility and an increased range of panel types including tube, rail, and digital formats.

Furthermore, where OOH is being used tactically to drive sales response rather than long-term brand metrics, Route enables accurate correlation of consumer OOH exposure with the stores where they are likely to make purchases - ideal for retail clients with CRM data.

Gain Theory's work suggests that Route data identifies an additional c10% contribution to ROI that would have been undetected using other OOH data like spend.

There is no doubt, that as an industry, we are making headway but there is still work to do to evolve how OOH fits in econometric modelling. We need to work with data-hungry modellers and tell them about the granularity and sophistication of Route. But embracing Route is only part of the resolution.

We need to challenge the idea that OOH does not perform well, by asking the right questions of how it is being measured and collaborating to invest in the production of different media mixes, weights and regional models to produce more OOH ROI scores.

By doing so, advertisers can feel more confident that investment in OOH, coupled with smart planning across campaigns, can deliver significant increase in effectiveness and ROI.

Tim Lumb is Outsmart's insight & effectiveness director.

Mediatel operate two essential services for the OOH industry. SPACE is a collaboration between IPAO and Outsmart and is the most comprehensive and up-to-date list of inventory in the UK. The RouteAPI is a SaaS solution that enables easy integration of Route audience data into client's systems. See for more information.

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