27 February 2019

Digital Outdoor is Threatening Online Media

By Jane Ractliffe


One of the most significant trends to emerge from SMI’s 2018 advertising expenditure figures has been the slowdown in growth of online media revenues while at the same time ad spend onto the outdoor media has soared.


The 2018 year was the first in the eleven year history of the SMI’s database that online media did not report double digit growth in advertising expenditure from media agencies, with its total instead increasing 5.8% (although that level of growth enabled digital to break through the $2bn mark for the first time). In contrast the outdoor media did deliver double digit growth in ad spend (a feat last achieved in 2014/15) with its total agency bookings climbing 11% from CY2017.


Obviously there are other issues at play here, with one of them being the fact that as online media is now the market’s second largest it is clearly more difficult to achieve double digit growth from such a high base.


Even so, this year online’s share of total Australian media agency bookings lifted only 1.5 percentage points to 27.9% while at the same time outdoor’s share of total media agency bookings grew by 10.3 percentage points to 13.8%.


This renaissance in outdoor advertising expenditure has been mostly due to the digitisation of its advertising inventory, and this trend has clearly become a significant threat to the online world.


SMI this year became the first in the world to begin recording outdoor digital and static ad format ad spend, which means we can now pinpoint the product categories driving the shift from online to outdoor.


If we look at the most recent fourth quarter data, we can see that of the ten largest categories spending on digital outdoor, eight of them have significantly grown their digital outdoor investment by a far larger amount than they have lifted their online ad spend.


For example, the market’s second largest category of retail grew its digital outdoor spending by $7.2 million from the third quarter, while at the same time lifting its online spend by only $2.1 million. And the market’s largest category of automotive brand grew its digital outdoor investment in Q4 by $3.8 million while at the same time only lifting its online investment $2.6 million (and also note auto brand is the online media’s largest category).


Other examples include the in home entertainment category with those advertisers growing their digital outdoor ad spend in this period by $2.5 million while at the same time reducing online ad spend by $3.3 million. And media companies grew their Q4 digital outdoor ad spend by $2.9 million while at the same time reducing their investments online by $2.1 million.


SMI’s data shows digital outdoor format bookings now represent 59.7% of all outdoor ad spend, with most of the digital bookings focused on the billboards and retail outdoor sectors. But there’s still plenty of opportunity for further digitisation in the large street furniture (only 45% digital by ad format) and other outdoor sectors.