Amid a sharp downturn in global advertising spending and a decline in traditional out-of-home advertising in 2009, digital out-of-home media is among the fastest growing media in the world and will continue on an upward track in 2010, according to a new forecast from PQ Media, the leading provider of media econometrics.
Patrick Quinn, president and CEO, PQ Media released the research findings today at The digital signage Show during a presentation called “Understanding what makes out-of-home digital signage a viable media platform.”
Quinn reported that spending in the emerging media segment of digital out-of-home (OOH) is on pace to increase 2.0 percent to $2.47 billion in the U.S. in 2009, while digital OOH expenditures worldwide will grow 4.7 percent to $6.69 billion, according to the third annual PQ Media Global Digital Out-of-Home Media Forecast 2009-2014.
While the rate of growth in the U.S. and globally decelerated for the second consecutive year, PQ Media forecasts that digital OOH will grow at a compound annual rate of 9.4 percent in the U.S. through 2014 and 10.1 percent worldwide over the next five years.
These numbers are scaled down fromprevious forecasts.
Digital OOH media, which includes video advertising networks (VANs), digital billboards and alternative ambient ads, is being adopted by brand marketers because it engages target consumers in captive locations for extended periods of time. Spending in each of these media platforms increased in 2009, while spending in all but one venue category grew as well — led by VANs in-theater and at-road digital boards, according to PQ Media. Strong secular trends impacting the broader media economy have had a positive impact on the digital OOH industry, as consumers spend more time outside their homes, commute longer to work, use ad-skipping technology and multitask with various media on the go throughout the day.
As the industry continues to emerge and become a larger part of advertising budgets it will struggle with a number of other trends that operators wrestled with throughout 2009. Among these are the lack of scale many operators are able to provide brands; increased competition from other new media; development of engaging, relevant content; measurement and a common currency, and several others. These challenges have led to a consolidation or “shakeout” phase, which the industry — particularly VANs — is going through in 2009 and will continue to endure in 2010, according to PQ Media.
“Our research indicates three distinct phases in the emergence of successful new media — gold rush, shakeout and breakout — and the digital out-of-home business, especially video networks, are in the second phase and will likely be well into 2010,” Quinn said. “This is actually a good thing as it will defragment the industry and create a landscape of strong operators offering better scale, more relevant content and cohesive metrics. This is, of course, if the industry can weather strong economic headwinds, technological shifts and changing consumer behaviors. But our research suggests that brands and investors see digital out-of-home as the next frontier in media, similar to the early days of radio, cable and the internet.”
U.S. spending on video ad networks, the largest segment, is on track to expand by 1.2 percent in 2009. Following a 17.2 percent compound annual growth rate from 2004-2009, PQ Media is forecasting a 5.7 percent growth rate in 2010. Digital billboards will remain the fastest-growing segment, posting growth of 9.1 percent for 2009 and a compound annual growth rate of 31.4 percent during the 2004-2009 timeframe. Digital billboards are expected to grow by 13.2 percent in 2010.
India, China, Brazil and Canada lead the international growth markets. Eastern European and Middle Eastern countries were hurt by the credit crunch and falling oil prices and this will continue to affect them into 2009. Asia/Pacific will be the fastest growing region of global digital OOH, rising 10.7 percent in 2009 to $2.18 billion, an acceleration of the 8.8 percent gain in 2008, when that region already was stuck in a recession before most of the rest of the world.
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