WARC asked Stefan Lameire, until recently Chief Customer and Revenue Officer at Clear Channel International, to predict the trends that will shape OOH in the coming years.
Having worked for almost eight years as a senior executive at Clear Channel International – a role I recently left – it left me with some interesting insights into the commercial opportunities of the fascinating industry of outdoor advertising, and how it might develop in the coming years.
1. Data boosts contextual relevance
It comes as no surprise that, besides regulation, data and technology will be at the heart of OOH’s future transformation. The digitisation of media and media buying has turned this into an even bigger opportunity than for any other advertising medium.
The reason is pretty straightforward: outdoor has no content to monetise, content which in other traditional media is now freely available in a digital world. Outdoor is a pure-play advertising platform where content will only be added when contextually relevant for the advertising message or for the build-up of a specific audience or reach.
Even if content can add some value, the biggest value creating aspect for outdoor is probably context: making sure the right advertising message lands at the right time, in the right location and with the right audience. This is where data comes into play. The advertiser which gets most out of its data will have a higher ROI. The media owner that best understands the value of that data will be best placed to obtain higher yields with its limited inventory.
An example I particularly like is from Spain, where the brand achieved a very high ROI. Nivea launched its face care-line Urban Skin using digital outdoor panels near relevant points of sales, and adapted the message based on a few freely available environmental data sets (temperature, air quality and UV-index).
A more recent example in Sweden, widely covered in the press, also used location and temperature to direct homeless people to nearby shelters, showcasing how outdoor advertising can do really good for society. It is no surprise this was one of the most awarded outdoor campaigns of 2018.
Where big advertisers and media agencies have been investing heavily in data, and in the understanding of data, the outdoor industry is still catching up.
Contextual, and especially location, data is starting to be used on a regular base, but the use of more detailed audience data is still in its infancy. Radar (Clear Channel) in the US is probably the exception among media owners, where media agencies have taken more structural actions acquiring major data companies (Dentsu-Aegis acquiring Merkle in 2016 for example, and most recently in 2018 IPG acquiring Acxiom).
Where recent GDPR-regulation is – rightly – aiming for a respectful treatment of the privacy of data, it should not stop the media industry, within those boundaries, exploring the value of using the available data.
2. The value of OOH digitisation: competing while completing other media
With the digitisation of OOH comes not only additional flexibility, but also extra complexity. Managing that complexity is still in the process of being automated. This automation is developing rapidly, and it has to develop rapidly if the outdoor industry wants to capture the value of digitisation and the automation of media buying.
Putting digital panels in the ground, and exploiting the creative value that brings, is one opportunity; entering the world of selling over digital platforms, both for paper and digital assets, is another.
The industry has long hidden in a small, safe OOH ‘village’, where outdoor specialists plan and buy outdoor ad solutions for outdoor advertisers. The first digital panels were seen as an evolution of those solutions, but did not revolutionise the industry overall. Luckily OOH media owners have started to realise it cannot continue to operate in a silo.
The true potential of outdoor depends on how it completes and competes with other media. This is even more valuable in a digital world where the likes of Facebook and Google take away all growth in media spend. Outdoor is the perfect conversation-starter for any advertiser or brand wishing to continue that conversation with consumers via other communication channels. Twitter’s OOH campaign, which won a Cannes Lions Grand Prix in 2017, offered exponential value taking into account all the conversations it provoked on social media.
Platform sales (I prefer not to refer to ‘programmatic’, which is narrower and doesn’t do credit to the value OOH can bring) can facilitate that, with access to different players in the value chain, to different advertisers and ad budgets, adding an extra opportunity for media owners to better meet the needs of new and existing customers, and to further increase yields.
Today, outdoor media owners have access to new budgets from Heineken, for example, which can combine its objectives of acquisition and consumption in one campaign, conditionally triggered by location and audience, using 12 different creatives. That is revenue coming in from an existing advertiser for a campaign which simply was not within reach before, because outdoor media owners were not capable of delivering it. Now they are.
In order to fully exploit the potential, the outdoor industry will have to invest in more sophisticated pricing mechanisms, and in processes which manage at best the opportunity of multi-channel sales. Only then will it be able to sell the right product, based on the available inventory, at the right price, to the right customer via the right sales channel. We just have to look at the hospitality and travel industry to see at the potential value this will bring.
3. Artificial Intelligence at the heart of further value creation
Another source of inspiration for B2C communications industry comes from the Amazons of this world. By using data and AI, they manage to predict my needs as a consumer, and thus upsell their products. I am convinced that the value of platform sales will not only come from managing the sales process, but should evolve into a direction where media owners can predict (and thus steer) the usage of OOH’s limited inventory.
The day an outdoor media owner combines the intelligence of its own inventory data (real time availability, historical seasonality and yield) with more sophisticated audience data (who is reached when and in which mood), contextual data (weather, time of day, events, social media feeds, etc), and with data from existing or potential advertisers, it creates a new paradigm.
That OOH media owner will be able to suggest to Ford, for example, that the brand might be interested in booking a bespoke campaign based on available (or predicted available) inventory for its convertible car model at a certain point in time, because data analytics have shown that consumers tend to be more receptive to buy a convertible within those specific conditions.
Or the platform may decide that would be smarter to make a bespoke suggestion to Benadryl (assuming data would show hay fever season is approaching) because the pharmaceutical industry might tend to pay higher yields than the automotive industry.
The longer this approach is used, the smarter the platform will get, and the higher yields we will see for the media owners, whilst still serving its customers in the best possible way.
The outdoor industry is getting really good at meeting at best customer needs whilst maximising its yield potential by looking backwards at historical data. But if it wants to stay ahead of the curve, really take its share of the growth of media (and not just win share from other media), and further develop profit margins, I think it should radically increase the usage of data, accelerate the investment in tools and technology to manage that data, and start adding AI and predictive modelling.
The time has come to start looking forward, and not only looking backwards.
Customer ownership will determine who is in control
I imagine the outdoor industry would fully agree that this is the right way forward. The biggest challenge might remain who will manage this platform or these platforms. Because there is one other thing we can learn from the big technology players: whoever owns the customer relationship will be in control.