PEDESTRIANS STROLLING down 8th Avenue in Manhattan’s Hell’s Kitchen neighbourhood will be struck by the cast-limestone façade of the Hearst Magazine Building. Commissioned by William Randolph Hearst in 1926, the 40,000-square- foot (3,716-square-metre) art deco building is adorned with fluted columns and statues and topped by a 600-foot (183-metre) glass and steel skyscraper. Another conspicuous feature is a vast digital screen transmitting advertisements from BuzzFeed, ESPN and Vice. This blend of history and modernity is emblematic of the outdoor-advertising business itself, which, despite being one of the world’s oldest forms of marketing is embracing digital technologies.
Most forms of conventional advertising—print, radio and broadcast television—have been losing ground to online ads for years; only billboards, dating back to the 1800s, and TV ads are holding their own (see chart). Such out-of-home (OOH) advertising, as it is known, is expected to grow by 3.4% in 2018, and digital out-of-home (DOOH) advertising, which includes the LCD screens found in airports and shopping malls, by 16%. Such ads draw viewers’ attention from phones and cannot be skipped or blocked, unlike ads online.
Billboard owners are also making hay from the location data that are pouring off people’s smartphones. Information about their owners’ whereabouts and online browsing gets aggregated and anonymised by carriers and data vendors and sold to media owners. They then use these data to work out when different demographic groups—“business travellers”, say—walk by their ads. That knowledge is added to insights into traffic, weather and other external data to produce highly relevant ads. DOOH providers can deliver ads for coffee when it is cold and fizzy drinks when it is warm. Billboards can be programmed to show ads for allergy medication when the air is full of pollen.
Such targeting works particularly well when it is accompanied by “programmatic” advertising methods, a term that describes the use of data to automate and improve ads. In the past year billboard owners such as Clear Channel and JCDecaux have launched programmatic platforms which allow brands and media buyers to select, purchase and place ads in minutes, rather than days or weeks. Industry boosters say outdoor ads will increasingly be bought like online ones, based on audience and views as well as location.
That is possible because billboard owners claim to be able to measure how well their ads are working, even though no “click-through” rates are involved. Data firms can tell advertisers how many people walk past individual advertisements at particular times of the day. Advertisers can estimate how many individuals exposed to an ad for a Louis Vuitton handbag then go on to visit a nearby shop (or website) and buy the product. Such metrics make outdoor ads more data-driven, automated and measurable, argues Michael Provenzano, co-founder of Vistar Media, an ad-tech firm in New York.
As the outdoor-ad industry becomes more data-driven, tech giants are among those to see more value in it. Netflix recently acquired a string of billboards along Hollywood’s Sunset Strip, where it will start advertising its films and TV shows. Tech firms, among them Apple and Google, are heavy buyers of OOH ads, accounting for 25 of the top 100 OOH ad spenders in America.
The outdoor-ad revolution is not problem-free. The collection of mobile-phone data raises privacy concerns. And criticisms of the online-ad business for being opaque, and occasionally fraudulent, may also be lobbed at the OOH business as it becomes bigger and more complex. The industry is ready to address such concerns, says Jean-Christophe Conti, chief executive of VIOOH, a media-buying platform. One of the benefits of following the online-ad trailblazers, he notes, is learning from their blunders.