Stop Your Inventory From Losing Value
By Justin Gilfus, 8/22/18
It is hard to believe the scale at which DOOH has grown since the very first digital billboard was was installed in 2005. Since then, we have seen an explosion of 7000 digital billboards and an estimated 1.25 million digital place based screens. The majority of growth is not through new inventory expansion of digital billboards, the majority of growth in the DOOH comes from conversion of existing vinyl billboards to digital.
“We are up to 7,000 units and 90% are upgrades from vinyl to digital faces.” — Paul Wright, SignValue
There are a few factors that are contributing to owners risking their mailbox money assets and investing into their inventory once again. Overall for the outdoor advertising industry, the price of billboard advertising has been increasing at an estimated annualized rate of 1.1% but the average annual inflation is 3.22%. With the average billboard losing almost 2% of its value every year, it is hard not to make the case for more capital investment in order to increase profits.
The second big factor is in order to increase digital signage, owners are doing exactly what they need to do in order to capture as much revenue as possible. In 2015, DOOH accounted for 31% of the OOH advertising spend and is expect to reach 50% by 2020. The pool of revenue for DOOH is growing and Moore's Law is reducing the cost of technology that has allowed these forward thinking OOH owners to spend on new capital expenditures.
According to Gartner,
“Marketing analytics gets the greatest share of (marketing) budget at 9.2%”
The value of DOOH is directly associated with level of analytics that can be reported back to CMOs in order to justify their budget. This is also echoed by Paul Wright from SignValue who co-wrote the book on valuing billboards.
“It is really about what will drive occupancy or rates up. Whether it's from better knowledge of the medium or a point of proof that delivers return.” — Paul Wright, SignValue
Before owners plough money into their networks on DOOH initiatives, they need to understand that the ROI of their investment is increased based not just on the number of additional advertisers that they can support on one digital board, but also by the accompanying analytics that CMOs need to justify their advertising spends.
“Unfortunately, where this data privacy movement in the U.S. is heading is a moving target… Therefore the out-of-home (OOH) advertising industry… needs to be prepared for a rapidly changing privacy environment by engaging with companies that are providing data without relying on another company as their source.” ―Joshua Lawton
The industry of analytics has grown tall but when the winds change direction due to privacy regulations, the industry has to adapt. This has left some without a return on the analytics they invested in.
There are multiple offerings out there touting the benefits of their analytical approach and technology to help OOH owners increase revenue (Abraxas Technology is one of them). Each technology and company needs to be evaluated by OOH owners to insure that the technology and service provided are going to meet their needs..
If you have questions about different technological offerings, please don’t hesitate to reach out to me at firstname.lastname@example.org.
A special thank you to Paul Wright at SignValue for allowing me to interview him for this article.
Justin Gilfus is the CEO and Co-Founder of Abraxas Technology.
7: Billboard Appraisal: The Valuation of Off-Premise Advertising Signs, by Paul Wright, Jeffrey Wright.