Three trends — AI, targeting advancements and digital screen conversion — provide an intriguing new frontier for marketers in cities.
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Digital out-of-home advertising has exploded over the past 20 years. Two decades ago, the market basically didn’t exist. Today, according to the OAAA, it accounts for approximately a third of all OOH dollars spent in the U.S. — growing 5% to 10% annually.
In the early part of this growth cycle, the major driver was the conversion of traditional static assets to digital. This digital conversion cycle was fueled by improvements in digital screen technology, increased price efficiency of these screens and regulatory changes that allowed for digital signage to be deployed. But throughout the U.S., we have reached a tipping point, where the majority of traditional screens that are suitable for conversion have already gone digital. Yet, digital OOH revenues continue to grow. What innovations are fueling this new phase of growth?
Here are some of the key drivers and how marketers to can take advantage of these trends to make their brands stand out:
New frontiers for digital screen conversion
The first phase of static-to-digital conversions in the OOH industry were billboards. This made sense, as billboards are by far the largest part of the US OOH market. This static conversion was then followed by massive digital upgrades in public transit systems.
Today, you will see digital screens at stations in every major public transit system throughout the US. The latest large digital conversion of static assets to digital in the US OOH system is on the streets of major US cities. Smaller format street-facing media, like bus shelters and digital kiosks, are highly regulated OOH assets, as they are often owned by or operated in close partnership with local municipalities.
Many of these local municipalities have had longstanding restrictions on digital street furniture for largely aesthetic reasons. That is beginning to change, as cities recognize that digital street furniture signage can provide public benefits — such as providing real-time bus arrivals. For example, Minneapolis recently debuted a new network of digital bus shelters, featuring both real-time transit arrivals/alerts and advertising. Marketers would be smart to jump on this trend for several reasons. First, since they are new and shiny in these cities, people really pay attention to these screens, making them excellent vehicles for brand marketing. In my opinion, digital street furniture is the best vehicle for both reach and frequency in an urban setting. Marketers can use these screens to deliver the exact right message at the right place and time throughout the urban core.
Advances in targeting data and tools
While the first phase of digital out-of-home advancement was marked by technological advances in hardware, the new phase is being fueled by advances in data and software. These advances have made it easier for marketers to use many of the sophisticated tools they have become accustomed to on traditional digital channels in the out-of-home channel.
One of the biggest advantages of digital signage over static signage is that marketers can pick the exact place and time they want their OOH ad to run. There have been many advances in mobile location data over the last decade (even when you consider recent privacy restrictions that have been introduced by mobile phone operators) that give marketers great insights into exactly where and when their consumers are in front of which digital out-of-home screens. Alcohol brands can target consumers outside bars in the evening drinking hours. Sunscreen brands can reach consumers entering parks when the UV index exceeds a certain level.
Some out-of-home operators have tried to restrict how advertisers can purchase their digital screens — requiring brands to purchase a spot in a loop throughout the entirety of a day. But brands are increasingly becoming more demanding of the digital OOH channel, and requiring similar executions to how they are purchasing digital advertising online. The entire OOH channel is rapidly changing to meet these customer demands.
Use of AI for customized creative
Another major technological change that is fueling new growth in the digital out-of-home channel is artificial intelligence. Now that there are scaled networks of digital screens in most of America’s large cities, brands can highly tailor their messaging to individual neighborhoods or blocks.
Historically, this was a very burdensome process, as it required a creative advertising agency to design thousands of unique pieces of content. Moreover, it was difficult to traffic all these unique pieces of creative to individual screens throughout a city. AI is making this much simpler. For example, at Intersection, we recently ran a campaign with a large technology company on our network of 4,000-plus LinkNYC digital street kiosk screens. The client wanted to have unique creative for each neighborhood where the campaign ran and we leveraged AI to accomplish this.
These three trends combined provide an intriguing new frontier for marketers in cities: there are now massive digital networks on city streets where marketers can leverage data and custom creative to deliver the exact right message to users at the exact right time. This trend is what will fuel the next phase of digital out of home growth over the next decade.