US digital out-of-home (DOOH) media revenues grew 11% to $2.71 billion in 2015, the fastest growth rate in five years, while consumer exposure to DOOH increased 4% to 54 minutes per week, according to new research from PQ Media. Based on first-half pacing this year, US DOOH advertising revenues are projected to rise another 8.7% in 2016, while consumer DOOH exposure is expected to grow at an accelerated 5.3%, the fastest growth rate since 2011, according to PQ Media’s US Digital Out-of-Home Media Forecast 2016.
PQ Media defines DOOH by two broad media platforms – digital place-based networks and digital billboards.
Overall DOOH ad revenues grew at an accelerated rate in 2015 just one year after recording the second-slowest expansion (3.1%) since PQ Media began tracking DOOH in 2000. Key digital place-based network verticals posted declines in 2014, including the largest, cinema, and retail. But the segment bounced back in 2015, as revenues surged 13.8% to $1.82 billion, the first double-digit increase since 2010, due to the absence of major political and sporting events siphoning ad dollars, the stabilization of management teams, and gradual integration of mobile technology.
Digital billboards revenue growth also accelerated in 2015, rising 5.6% to $894 million, following the slowest growth on record in 2014, according to the US Digital Out-of-Home Media Forecast 2016. The two largest digital billboard operators – Lamar Advertising and Clear Channel Outdoor – reported challenging, but improved market conditions, as Lamar rebounded in low single digits in 2015, while Clear Channel’s results were impacted by the court- ordered closure of 77 digital billboards in Los Angeles. Outfront Media was the primary growth driver among the market leaders, executing on its ambitious plan to double its digital signage footprint.
“While legacy challenges continue to shadow DOOH, such as criticism regarding digital place based networks lack of a solid ROI metric, the positive indicators outweigh the negatives in the long view. Our research shows that DOOH is the second-fastest growing ad-supported medium in terms of consumer exposure time, and it ranks third among ad media regarding operator revenue growth,” said PQ Media CEO Patrick Quinn. “Only mobile ranks ahead of DOOH in consumer engagement. Ironically, we expect better integration of mobile and social media, as well as more programmatic buying and mobile beacons to be key growth drivers going forward.”
Macro trends like consumers spending more time outside their homes and the gradual improvement of the US economy should help brands open their media mix models to include more DOOH during the next five years. Healthcare, transit and entertainment digital placed based networs stand to gain the most from these trends. PQ Media expects digital billboards to track more closely with even-year growth spikes in TV advertising in the forecast period, due to programmatic buying and day-parting, while digital placed based network pacing indicates a converse trajectory of higher growth in odd years. PQ Media projects total US DOOH revenues to grow at a compound annual rate of 9.3% in the 2016-20 period.