MediaPost’s 2009 Digital Out-of-Home
Forum & Expo

NEW YORK, NY— April 24, 2009—Digital out-of-home is a new medium, how do we know? —"Because it's distributed differently," stated Trevor Kaufman, founder and CEO of Schematic. Mr. Kaufman kicked off MediaPost's Digital Out-of-Home Forum & Expo with the keynote address: The Digital Experience: How People Relate To Advertising, Content, and Brands In Out-of-Home Locations. Digital out-of-home has quickly becoming a mass medium projected to expand into a 2.5 billion dollar market by 2010, but with any new medium it's difficult to know exactly how it will evolve.

Mr. Kaufman made a comparison of the current state of the digital out-of-home medium with the early days of the Internet. "1995 was the year I stopped having to explain to people what the Web was," Mr. Kaufman said. That was a time when AOL, Slate, Pathfinder, and Word were considered great examples of what the Web could be. Few of these businesses exist today and they are no longer thought of as innovative. The same holds true for digital out-of-home, while there are innovative examples that we can point to, it's too early in the timeline of this medium to know exactly how it will evolve in the future.

Digital out-of-home has changed the rules. The medium is "unzappable" said Mr. Kaufman. The consumer can't mute it, TIVO it, or change the channel. Rules-based targeting makes the advertising more relevant with the ability to micro-target locations with specific messages. The distribution model has changed, from what was a one-to-many model, has now become a many-to-many distribution model. The change in distribution combined with the platform's inherent interactive capabilities has become a real game-changer for marketers and has upset the traditional media balance. "When a new interactive platform with its own behaviors comes along, it destabilizes the existing media's economics," said Mr. kaufman. Interactive digital out-of-home offers a completely new toolbox for marketers to reach consumers through touchscreens, gesture-based interaction, RFID, bar-code readers, and in the near future we may see facial expression and voice-based interaction.

The economy has been become a factor in slowing down the adoption of digital out-of-home and this became clear after Patrick Quinn, CEO, PQ Media presented an Overview On The Digital Out-of-Home Media Marketplace. Mr. Quinn outlined the current state of the industry by starting off with the fact that we are currently experiencing the worst economic slow down in 60 years. Ad spending has declined by 7.4% in 2009—the largest decline since the 1930's. A trend has emerged where declines in ad spending have become more severe during recent recessions.

Despite these facts, digital out-of-home remains a bright spot in ad spending. Over the last decade, digital out-of-home has been a key-driver for the out-of-home marketplace and is project to continue with a compound annual growth rate (CAGR) of 23.1%. Video Advertising Networks (VANs) are the largest segment of the market with a 60% share of the DOOH sector, however, digital billboards, such as those deployed by Lamar Advertising, are the fastest growing segment of the market. Mr. Quinn projected that digital out-of-home will return to double-digit growth rates by 2010, however the current state of the economy will accelerate the shakeout of weaker players from the market in the near term.

An interesting fact from Mr. Quinn's presentation included that today, the average person will see more than 64 hours of out-of-home content per year. In 1960 only 8% of the population was reported to spend significant time outside the home. Fast-forward to 2008— that average has reached more than 45%. These numbers illustrate that consumers continue to spend more time outside the home as our culture becomes increasingly more mobile.

The MediaPost format consisted of a series of panel discussions. The opening panel: How The Economy Is Impacting Digital Out-of-Home Media brought five industry leaders together on the buying and selling of digital out-of-home media to discuss how the economy is impacting business and investment decisions. The panel consisted of Jim Harris, CEO, Wall Street Journal Office Network; Aileen Lee, CEO, Danoo; Steve Ridley, Global Chief Operating Officer, Kinetic Worldwide; Dennis Roche, President, Zoom Media; and Jack Sullivan, Out-of-Home Activation Director, Starcom Worldwide. Patrick Quinn, CEO, PQ Media served as the panel moderator.

The panel was asked a series of questions to gain their perspective on how the current economy has impacted digital out-of-home media. Their answers varied depending on their business models.   "The economy has absolutely slowed the adoption of the medium, " said Mr. Roche. "Programs have become more promotional because clients are looking for more ROI," he stated. Mr. Sullivan stated that "Clients are asking for more information about digital out-of-home, because it's more targeted...RFP's have tripled within our agency from clients looking for alternatives in this space." Mr. Harris, CEO of the Wall Street Journal Office Network said, "The last 60 days—we've seen explosive growth...we're taking share from other media." he stated.

Are ad agencies adopting digital out-of-home media? "We were set-up to invest in this medium," said Mr. Ridley of Kinetic Worldwide, a leader in out-of-home media planning. "If this medium is to grow it has to be communicated directly to clients to drive their understanding of the medium, that's how change will happen." From the network perspective "In the early days, agencies wouldn’t even meet with us— said Mr. Roche—that's changed. Aileen Lee, CEO of Danoo, a placed-based network stated that it has been easier to market their network to digital and interactive-based advertising agencies, rather than traditional agencies. Agencies with multiple divisions complicate the process.

When asked about the impact of research and metrics—Is measurement the "silver bullet" to speed the adoption of digital out-of-home? Ms. Lee stated that "measurement is not a silver bullet, but it's an accelerator" Mr. Ridley said, "Integration is the key, we need to break the mold at how we look at the audience…We need to understand consumer behavior…What does the consumer do before, and after their interaction with the medium.”

Mobile convergence has become a hot topic within the digital out-of-home space. What impact has mobile interaction had on their business models? "The screen is a discovery vehicle to help introduce consumers to a broad range of products and content," said Ms. Lee. "You need to be careful that the content is good so people will engage with the message," she said.

Joe Mandese, Editor-in-Chief of MediaPost, moderated the next panel on: How Does Digital Out-of-Home Become a Mainstream Advertising Medium? Where do we stand on standardization of formats, metrics buying parameters and organizational issues that will influence the ability of digital out-of-home to become a mainstream media buy. The panel included Mike DiFranza, President & CEO, Captivate Network; Connie Garrido, President, Chrysalis; Tony Jarvis, Former EVP, Global Research, Clear Channel; and Paul Lindstrom, Senior Vice President, Nielsen Company.

"Compared with last year we're a lot closer to establishing standards and metrics for the industry," stated Mr. DiFranza, who serves on the Board of Directors of the Out-of-Home Video Advertising Bureau (OVAB). OVAB Introduced the Average Unit Audience (AUA) Metric last October at it Digital Media Summit in New York with the release of the Audience Metric Guidelines. In addition to the guidelines OVAB has published a Network Planning Guide, and is currently developing creative standards.

At last year's MediaPost DOOH Forum, Paul Lindstrom of Nielsen announced specialty research coverage called “Pocketpieces” would be established for screen media networks on specific video advertising networks such as IdeaCast, covering their health club video network, and Gas Station TV. This was a significant announcement. For media buyers and planners the “Pocketpieces” helped to define the audience, Nielsen's coverage of place-based networks has brought much need research to the digital out-of-home space. Mr. Lindstrom stated that coverage of the space is continuing to expand. "We're in the process of developing the tools that will become the currency for the medium," he stated. "The reports are ongoing...We need to incorporate data into our media mix modeling software within the next six months that ties in transactional data."

"Where do we stand on standardization of formats, metrics, and organizational issues for digital out-of-home?” asked Mr. Mandese. "You need to walk before you can run, and it was important to have a set of standards out there," Said Mr. Lindstrom.

Standards and metrics for digital out-of-home are different for media buyers and planners. "How the data is considered is evaluated differently depending on the criteria for each client...We need the tools to be streamlined to be able to sell venues and networks more effectively," stated Connie Garrido of Chrysalis.
"What happens as a result of putting our message in front of the consumer...did it move the needle?...good audience data is the foundation," said Mr. DiFranza.

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