Study reveals ROI power of digital OOH
A new econometric study has revealed the profitability of digital OOH campaigns as the medium reaches "critical mass" in terms of reach, audience and location.
Results from a Talon and Benchmarketing study, which aggregated evidence from 112 brands over five years, shows that DOOH delivers "strongly" against its premium price point, with "significant" increases in campaign profit seen when campaigns used a higher share of DOOH.
The study claims 11% for each 10 points of DOOH used as a percentage of OOH, equating to an incremental return on investment of 46p for every £1 spent.
“As digital OOH has expanded quickly, this has led to some questions around justifying screens’ perceived premium price point," said Emily Alcorn, head of insight at Talon.
"The results show that advertisers can be much braver in their use of OOH, but in particular using reach-building, high impact digital formats, that are genuinely delivering profit return for their campaigns.”
Talon said that if a campaign increased its digital share of OOH budget from 60% to 70% the advertiser would expect a 22% increase in profit.
Other insights found in the study reveal that the optimal level of OOH – where profit return is maximised – is 17% of media spend; while DOOH’s optimal level is an OOH share of 57%, which continues to "pay back for brands to 100%".
“The nuanced effect of OOH is rarely measured in marketing media mix studies, however it is undoubtedly there," said Sally Dickerson, CEO of Benchmarketing.
"We set out to prove DOOH’s value and were able to robustly model, using meta-analysis, the campaign and channel ROIs.
"The campaign results were excellent, demonstrating not just the impact that digital has on OOH effectiveness, but how OOH and content/context synergises with other brand channels to amplify campaign effects.”
The proliferation of digital out-of-home screens has helped drive weekly digital impacts to 1.1bn across the UK, according to Route. It means 68% of the population will now see a digital screen at least once, each week.
Earlier this year, GroupM, the investment arm of WPP, said digital formats are "increasingly important" for OOH, accounting for half of spending in the sector during 2018.
Further share gains are still to come as more automation takes root, GroupM said, including the emergence of performance-based targeting and data-driven trading. For now, however, OOH growth is forecast to exceed 3% in both 2019 and 2020.
However, some industry experts caution that the rise of digital at the expense of traditional posters might not always be in the best interests of advertisers.
"Classic billboards, both 48 sheet and 96 sheet, have been in steep decline for several years," the now ex-Kinetic CEO, Stuart Taylor, told Mediatel earlier this year.
"Digital billboards offer stature, impact and huge audience delivery in specific city locations and yes, the transformational advances that digitisation has brought to the medium are rightly applauded.
"But it's classic billboards that allow for a much wider and more comprehensive footprint across the UK, which is the driver for reach, so essential for broadcast brand building."
Industry estimates suggest that 48s have declined from 20,500 across the UK in 2010 to around 12,000 in 2018 a drop of 40%. For 96 sheets the numbers are even worse, from 2350 to 970 in the same period, a drop of 58%.
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 mediatel.co.uk for more information.