In this instalment of our OOH Executive Insights series, Broadsign’s SVP of Strategy, Adam Green, discusses the current state of innovation in out-of-home (OOH) and shares his perspective on some of the key challenges to innovating in the industry today.
When asked to name an innovative industry, Out of Home advertising likely doesn’t land at the top of many people’s lists. Instead, that honour is often afforded to our digital brethren who spend untold billions1 in attempts to disrupt adjacent industries, change society, dent the universe or, failing that, create alternate –verses of their own. While OOH companies may lack the show-horse ambitions of their online cousins, they actually have a great track record of work-hose innovation.
Before we go further, it’s worth defining what I mean by “innovation” because the term can mean different things to different people. The definition that resonates with me is:
Innovation is the arrangement of people, materials, or processes in novel ways to deliver incremental value to stakeholders.
I like it because it separates the dopamine hit we get from experiencing novelty with the somewhat boring bottom-line impact of real innovations and because, by this measure, I think the out-of-home has a pretty solid innovation rate.
The state of innovation in OOH
One of the reasons that OOH doesn’t end up at the top of most people’s innovation hit list is that the beneficiaries of the value created by its innovations are often behind the scenes. The value derived from improvements in network monitoring, billing, lease management or ad-creative sizing is not apparent to the general public. Still, it directly impacts the bottom line of the players in our space much more so than the speculative investments in VR, self-driving cars or phallic rocketry. In fact, as of the time of writing, $1 invested in Meta (formerly Facebook) at IPO would have yielded 20% lower returns than investing the same dollar in Lamar Advertising. Clearly, the team in Baton Rouge is investing in innovations that impact their business, even if most of the population can’t see it.
For non-investors, the most obvious innovations in OOH derive from the digitization of the inventory. Digitization delivers audiences richer and more timely advertisements and content experiences as well as adjunct functionality like emergency messaging, traffic updates or transit schedules. These advancements have contributed to increased interest in OOH among advertisers and real estate holders. I also believe that getting instant updates on when our trains will arrive adds more value to our daily lives than driverless car prototypes or our legless metaverse avatars forgotten in the digital void2.
Behind the scenes, programmatic has been the innovation buzzword in OOH for the last half-decade. Programmatic tools have delivered incremental value to ad buyers through increased labour efficiency, more flexible ad targeting and better campaign reporting. On the sell side, media owners gained access to new brands and new budgets while increasing fill rates. That said, some of the most interesting innovations of the past several years have been in the direct and static booking/charting process. Advancements in machine learning and cloud computing have made it possible to squeeze vastly more inventory out of the same screens and faces simply by juggling campaigns around faster than any human chartist could ever hope to do.
Challenges for innovation in OOH
Despite these and other advancements, the global OOH industry does face certain endemic challenges to innovation, some of which are innate to the medium while others are contextual and hopefully transient. Either way, these challenges are worth understanding in turn:
1. Capital intensity – innate
In the software space, users are responsible for the hardware; you bring your own computer, and someone else makes the app. But in the OOH world, the users don’t bring their own billboard. The media owner has to pay for the billboard—and they’re not cheap or easy to install and maintain.
It’s not just big format screens that pose these kinds of challenges to OOH media owners. Many of our customers who have screens in elevators are only able to access them at specific times (some only once a year) because it involves shutting down the elevator and sending out a certified elevator technician. There are good reasons why that should be hard (you want your elevators serviced by specifically trained people), but it creates a host of logistical and capital-intensive problems that network owners then have to solve. Much of the innovation in the OOH space goes into solving problems like these.
2. Multiple stakeholders – innate
Unlike other media, OOH is inherently part of the public sphere, and thus, deployments of faces or screens or even changes to existing ones often require the buy-in of myriad stakeholders, from landlords to local councils and governments. It is necessary and reasonable to debate the balance between added value and the public impact that a new OOH innovation brings, but it does slow the process of rolling out new concepts. From the first addition of electric lighting for billboards to the digitization of landmarks like Times Square and Piccadilly Lights to the ongoing debate of whether video is safe for roadside signs, almost all visible innovations in OOH face considerable debate and delay of adoption and roll-out.
3. Our smaller sandbox – hopefully transient
Out-of-home holds around 4% of the total global ad spend—in total, global ad spend was predicted to reach $816 billion by the end of 2022—while digital media accounts for about 65% of that number. Carving out 10% of the OOH budget to test a new idea often translates to a dollar amount so small as to be infeasible to conduct the test. This is exacerbated by the capital-intensive nature of deployments and the fact that it’s hard to A/B test a medium that is inherently public by nature.
4. A lack of technical standardization – definitely transient
OOH is a local medium which makes it diverse and great but also makes it uniquely difficult to develop, implement and enforce standards across the industry globally. This pernicious problem affects many aspects of the buying and selling process, including:
Screen IDs: Inconceivably, OOH operators in many countries still lack unique IDs for each face, which makes it unnecessarily difficult to plan and report on campaigns.
Measurement: Each nation has its own measurement body that defines separate ways of measuring impressions, opportunities to see and other relevant metrics.
Creative: Collectively, our clients have literally thousands of screen formats (combinations of aspect ratios, orientations, resolutions, ad durations, file types etc.), many of which are bespoke. This can make it a nightmare for creative agencies and production houses to make the assets necessary for a campaign and makes them less likely to test new things because so much of their time and budget is spent just fulfilling the requirements of a basic campaign.
Transactions: Even within the standardized programmatic ecosystem, we see dozens of different flavours of oRTB implemented by DSPs around the world.
View-sheds: There are substantial differences between buying and selling platforms when it comes to the polygons used to measure attributions and views. Some are painstakingly drawn and incorporate blindspots created by topography, while others are simple radiuses, some of which don’t even vary by screen size or venue type. This makes it very hard to compare apples to apples across platforms when looking at performance reports.
While there is a tonne of work to be done on standardization, there is also much reason for hope. We’ve seen several organizations taking up the mantle to drive standardization, such as the OAAA and several of its member companies taking on changes to the oRTB protocol, efforts by the DPAA to standardize ad units, WOO fostering collaboration between national measurement boards, the Outsmart team’s work on the oDirect OOHbject or even the open source venue taxonomy project that Broadsign embarked on with several other tech firms.
While they can be a drag on novelty, these hurdles to innovation aren’t entirely problematic as they force the industry to focus on delivering value instead of volume. As the medium grows and evolves and the transient hurdles hopefully fall by the wayside, I actually hope that some of the innate hurdles continue to provide a filter that keeps the noise of novelty out and lets through the truly innovative ideas that drive real value and not just whizbangy garbage.
Opportunities for innovation in OOH
Despite having to contend with certain challenges, our industry still has a good number of innovations on the horizon, and I’m confident that we’ll wind up in an exciting place within the next few years.
Looking forward, I would hope to see innovations that will allow out-of-home to be simultaneously more relevant and less obtrusive. That might sound strange because, generally, you want your ads to be obtrusive—you want them to grab people’s attention. But if you can make your messaging highly relevant, you don’t need to be wildly obtrusive. You can be delightful and engaging instead.
I also think sustainability will increasingly play a role in innovation moving forward. To go back to the original definition of innovation—something that delivers incremental value—it’s just a question of what your key stakeholders value. If you don’t value clean air, you can run a network by burning coal or bunker oil or asbestos (which admittedly doesn’t burn very well), but you’ll end up with a terrible environment. As soon as your users put value on sustainability—and studies have shown this is already something they do—then there are many different directions you can take to deliver innovation on that topic.
For instance, the lighting in most OOH screens is controlled either on a timer or on a very basic light meter that adjusts to the level of sunlight. But there are also technologies that work kind of like electronic paper—so instead of trying to overpower the sun with your LEDs or LCDs, you can harness it so that it reflects back to the user’s eyes, thereby reducing your daytime power consumption. As sustainability becomes more important, we could very well see e-Ink displays becoming more commonplace in OOH.
There are a few crucial things I think Broadsign and our competitors can do right now to help with the lack of standardization. One of them is something we started doing during COVID, which is to standardize and open source certain elements of our platforms and systems that we think work really well but don’t necessarily confer a competitive advantage to us. We did this with the venue naming taxonomy within Broadsign’s SSP. If every SSP calls a venue by a different term, it vastly complicates the process of building a campaign plan.
In an effort to help streamline this process, we teamed up with Vistar, Place Exchange, TradeDesk, Hivestack, and Yahoo and made a GitHub open-source project that we’ve all agreed to adhere to. There are dozens of other aspects of the industry that are cloistered inside our proprietary platforms but confer no advantage and only add friction when buyers or sellers have to adopt unique ones. The more we can push these items outside our walls, the better we will all be.
Another thing Broadsign is uniquely positioned to do is share our experiences from around the world. There aren’t that many companies that cross a lot of markets, but Broadsign has clients in >85 countries today. Because of this, I think we have an incredible opportunity to be the honey bees of the industry: we can cross-pollinate good ideas, advocate for them, and then make them easier for clients to adopt when using our systems. We can definitely do a better job within our account management team, our technical teams, and even within marketing to make heroes out of those successful use cases. This was one of the key motivations behind our DOOH certification program launched in partnership with DOOHx in 2020.
The future of out-of-home media is a bright one. Recent innovations in our space are helping advertisers to bring bolder, more creative concepts to life while also enabling more advanced campaign targeting and better performance data. An increasing number of brands are beginning to understand the power and potential of OOH advertising, and I only see brighter days ahead if we do the right things and continue to push the medium forward.
1 Google and Facebook alone spend ~30% more on R&D ($46B) than the size of the OOH industry (~$35B)
2 History may yet prove me wrong on this point … but I’m waiting.