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Out-of-home advertising lures landlords into digital space

The digital-out-of-home (DOOH) advertising trend is catching on fast among owners of prime real estate, and there’s a good reason for this.

Overview

Ever used your smart phone to interact with a larger-than-life digital screen in a public place and won freebie coupons? Or seen a poster on a school bus or city fire truck for footwear you’ve been eager to buy and been guided to the nearest store for a discount? How about catching up with the latest developments in your organization on the display screen in the lobby or cafeteria?

These examples are variations of digital messaging and advertising that owners of prime real estate, such as public and private infrastructure and facilities, are venturing into. It is a trend that is catching on fast. As companies and public authorities explore new business models and non-core sources of revenue, out-of-home (OOH) advertising, and increasingly digital out-of-home (DOOH) advertising, is becoming more popular.

Properties that until now were seen as just a local square, public carrier, city bridge, train station or airport, have all become potential sources of revenue generation for the owners. With DOOH, advertisers are increasingly willing to rent space on prime real estate for a handsome sum to attract, engage and convert a large number of consumers to their brand.

Background

There is ongoing investment in significant infrastructure projects around the world. By 2020 China plans to build 97 new airports. In preparation for the 2014 World Cup Soccer Championship and the 2016 Olympics, Brazil is expected to invest nearly US$500 billion on highways and other infrastructure.

Several countries in Africa and Asia also have plans for significant investment in infrastructure and transport. While in Russia, an investment of US$11 billion is planned to refurbish existing infrastructure and build new facilities for the 2018 FIFA World Cup.

These developments provide exciting opportunities not only for OOH, especially DOOH advertisers, but also for property owners as they look to maximize the potential of this prime real estate.

Analysis

New projects, especially infrastructure projects will have a combination of private and state funding, but media income will form a major component of the overall revenue for infrastructure owners and city authorities. The money realized from selling advertising space at airports, train stations and other transport hubs will supplement the finances needed to deliver the upcoming large-scale projects.

City authorities and businesses are particularly attracted to digital place-based networks (DPNs) and digital billboards and signage (DBBs) in controlled public environments—public authorities can earn healthy non-core revenue on an ongoing basis and private brands can get wide coverage. By customizing digital media with timely or localized messages to match the demographics and context of the audience passing the screens, for example, advertisers can benefit from real-time, targeted media placement.

Many city authorities in the United States have already started to leverage the OOH channel. For example manholes and school buses carrying fast food ads and transit authorities selling naming rights—Brooklyn’s Metropolitan Transportation Authority (MTA) renamed the Atlantic Avenue subway stop to Barclays Center. In Europe, the Central Station of Warsaw, Poland, made a very innovative move when it allowed McDonald’s to display the train timetable on digital screens not in minutes but in terms of hamburgers, soft drinks, fries and other menu items that can be consumed before the arrival of one’s train.

Recommendations

In the current economic climate, when companies and public authorities are exploring new business models, the potential of DOOH is huge.

  1. Tap into OOH, especially DOOH advertising, as an alternative source of revenue—it is relatively more economical and more effective alternative to traditional forms of advertising.

  2. Maximize the opportunity to engage customers with your brand on the digital playing field as they go about their daily life.

  3. Take advantage of place-based networks and digital billboards and signage in controlled public environments to tailor messages by time of day, specific event or location, delivering a more relevant and interactive experience.