Digital out-of-home has finally reached critical mass. For nearly 10 years, there has been much fanfare about a revolutionary digital media landscape where advertisers would be able to post high-definition posters at key times of day, broadcast animated ads on giant outdoor screens or run sequential copy along series of screens. But until recently there has been precious little reality to back up the talk.
However, recent months have seen many of these plans come to fruition and, although the streets of London may not yet resemble the futuristic cityscape of Blade Runner, the UK has become one of the world's most digitised locations almost overnight.
"There is a buzz and clearly digital revenues are set to continue to grow," says Spencer Berwin, managing director of sales at JCDecaux. "In terms of money, digital is the fastest growing part of OOH. But it's important to keep it in context - digital is still a small slice in terms of inventory."
Ivan Clark, managing director of Kinetic's Destination Media Group, clarifies this point. "Digital revenues are going to be about 6% of total revenues this year," he says. "In five years' time, I'd be gobsmacked if digital contributed more than 15% of out-of-home revenues."
Digital may be a small slice of the overall outdoor market, but hundreds of millions of pounds have already been invested in the medium and further expensive developments are in the offing.
The past 12 months have seen the opening of Heathrow Terminal 5 with its vast network of digital sites, the rolling out of more screens across national rail termini and vast networked digital billboards being erected in cities. But with all this investment being made in the medium, are agency planners fully exploiting the potential of digital outdoor?
"I don't think they are yet, because the medium is relatively new and the offers available to people are very varied," says Ian Bohn, director of sales and marketing at City Gateway Media, which owns a digital skyscraper screen in Manchester. "Digital offers the flexibility of a broadcast medium in the high street, but many people are shoehorning existing stuff into digital."
Simon Jenkins, strategy director at MPG, says the medium is not yet sufficiently developed to exploit its potential. "Contractors need to work out what to sell on a network package basis and what they can sell with additional flexibility. We'd like the balance of buying a package and buying bespoke - we'd like to be able to buy outdoor in the way that we buy radio and TV."
Richard Rowley, head of media sales at ATM:ad, which sells ad space on cash-machines to clients including HP, argues that the larger media owners have some catching up to do. "Some of the bigger contractors aren't really helping themselves in terms of presenting outdoor," he says. "If you look at a digital outdoor rate card for two weeks, it doesn't encourage planners to exploit it."
Those advertisers and agencies that are not embracing the arrival of digital outdoor are arguably missing a trick. Or several. For the medium offers advertisers a wealth of new options.
Flexibility and targeting
One of those is day-part advertising - enabling brands to advertise at specific periods of day or night. Nicky Cheshire, sales director of CBS Outdoor's Alive division, says that drinks brands, such as Magners, Stella Artois and Heineken, are making good use of day-part, by targeting consumers at socially responsible and relevant times. "Day-parts are selling particularly well now," she says.
Whereas traditional outdoor requires long lead-times before advertising goes up, another advantage of digital outdoor is that brands effectively have control of the copy at the click of a mouse. For example, Camelot - which could never have used outdoor for tactical ads - is now advertising the details of its rollovers as they happen.
Another innovation on offer is location-specific advertising. Richard Malton, marketing director of JCDecaux's airports division, explains how American Express ran specific copy outside different stores across Heathrow's Terminal 5. "For example, shoppers outside Thomas Pink were told they could use their Amex card and get a free pair of cufflinks," he says.
Cider brand Magners has been quick to engage with digital outdoor. The firm has been running day-part, location-relevant advertising across digital media including London Underground LCD screens, escalator panels, cross-track and on Clear Channel's Piccadilly Lite. "We're on pretty much all the digital platforms we can be," says marketing manager Scott Fairbairn.
Honda is another advertiser that sees potential in the medium. The car brand recently broadcast its "Problem Playground" TV ad on CBSO's London Underground escalator panels. "But we have no specific metrics to say that it delivered fantastic results," says Ian Armstrong, Honda's customer communications manager. "We'll be looking at all sorts of different stuff - anything that makes the experience a bit richer - and we will continue to look at opportunities as they come up."
But in the current economic climate, marketing budgets are being cut, as outlined in last month's IPA Bellwether Report, which revealed that budgets in Q2 fell the most since 9/11. This begs the question: is digital outdoor easier on the wallet than traditional outdoor?
"It's a premium medium," says Cennydd Roberts, national sales controller at Clear Channel. "But for it to work as a premium opportunity, the price doesn't necessarily get more expensive, because advertisers who bought static sites now share the time. So in one way the cost has gone down. But it's important that digital remains a premium product so it remains in premium locations."
Jon Slatkin, chief executive at Titan Outdoor, elaborates. "There's no question that it costs a lot of money to post a traditional outdoor campaign every two weeks," he says, citing the fuel, labour and printing bills. "With digital, a lot of that cost does go away. But the flip-side is that these digital signs are a lot more expensive."
This has not deterred Magners' Fairbairn, who acknowledges that digital outdoor is not a cheaper option than traditional outdoor, but feels it is worth the extra cost because "its focus and targeting is much greater than before".
Another burgeoning area for digital outdoor is deals enabling screens to carry third-party content. Titan has a deal with Sky to run news and weather items across its Transvision screens at stations and other media owners are nearing similar agreements. "We've had discussions with interested parties," says JCDecaux's Berwin. "Something will happen in terms of content soon."
City Gateway is also nearing a deal. "It's waiting with the lawyers," says Bohn. "It will allow us to put news, business news, sports news, entertainment news and weather up on the screen. Our research identified that people want to see more than just advertising on digital outdoor and we will allocate 30 seconds of every four-minute cycle to content."
Inevitably, the spread of new digital formats will lead to the reduction in the number of traditional paper-and-paste poster sites. But will this lead to a future where all outdoor is digital?
ATM:ad's Rowley thinks not. "Posters will still have a role," he says. "I think it's naive to think that digital will take over."
CBS's Cheshire concurs. "Our overall digital estate is less than 5% of the total," she says. "Digital is a growth area, but we don't see it replacing traditional outdoor. Putting a screen everywhere is not a sensible use of technology. It would be visual noise."
Slatkin, however, believes digital will one day supersede printed billboards. "But we're talking 2020," he says. "We're not talking 2012 or anything like that. The cost of digital units has to come down."
Although media owners do not want to cannibalise their own traditional poster businesses, they are clearly excited by the prospect of taking money from other media.
"In five years' time, when TV viewing becomes more fragmented, and more people go on the web, digital out-of-home will be the one place where advertisers can still get people in big groups, so outdoor will get stronger and stronger," says MPG's Jenkins. He also reckons digital will make outdoor more accountable. "Historically, outdoor doesn't come out well in economic modelling - it doesn't compare to radio and TV. So in the future, if you start buying outdoor on a day-part basis, it becomes easier to understand sales drive. If we see a peak in sales, then we can correlate that with outdoor."
Garry Lace, new managing director of ambient media specialist Admedia, is watching the developments with interest and is not ruling out moves into digital. "There are three critical factors that will drive the success of digital out-of-home," he says. "The first is the extent to which the technology is going to become affordable. The second is the extent to which the creative community gets its head around writing work for the medium. The third is the degree to which advertisers continue to embrace digital out-of-home as the innovative medium it is."
There is clearly a palpable sense of excitement about digital outdoor - both in terms of what it offers advertisers now and what people imagine it might be capable of in the future.
Magners' Fairbairn sums up: "The challenge for advertisers is to learn exactly how consumers are interacting with the medium and how we can communicate with them more effectively."
TOP 10 UK DIGITAL OUT-OF-HOME FORMATS
As chosen by Kinetic's Ivan Clark
1. Digital Escalator Panels, CBSO.
With the roll-out of DEPs on London Underground nearing completion, this is without doubt the number one most demanded digital OOH format in the UK. The creative community has risen to the challenge and produced some stunning content. Cost: £94,000
2. Transvision, Titan.
High quality LED screens overlooking the concourse at mainline rail termini. If editorial content is part of the screen time, it must be compelling and appropriate to the audience. Sky's bite-sized chunks of news, showbiz, sport and weather (above) delivers on both counts. Cost: £89,500
3. LED 48-sheet, JCDecaux, Clear Channel, Titan.
Situated on busy arterial routes in and around London, these LED screens brought the advantages of digital - quick and efficient copy changes and flexible buying periods - to the mass audience roadside advertiser for the first time in 2008. JCDecaux may have the advantage on screen quality, but Clear Channel has the best locations. Cost: £55,000
4. London Transport LCD six-sheet, CBSO, Titan.
High footfall sites, often near station exits, where full animation and high contrast work best at attracting the eye. Although both CBSO and Titan are still in build mode, this will soon be the digital OOH format with the biggest audience. Cost: £91,000
5. LED special formats, JCDecaux, Forrest Media, Ocean Outdoor, City Gateway, Clear Channel.
The JCDecaux Torch offers a premium audience; Forrest delivers large audiences in the hearts of Glasgow and Manchester; Ocean has the UK's biggest LED media wall in Liverpool; City Gateway is popular for brands targeting Manchester's funky crowd; and CC's Piccadilly Lite delivers tactical campaigns at the iconic London West End location. Cost: £122,000
6. Cross-track projection, CBSO.
The recently launched XTP is a milestone for CBSO when you consider this format had initially been promised almost 10 years ago. Advertisers can display full-motion video in HD to passengers waiting on Tube platforms. Some teething problems with projector reliability must be resolved for this format to really take off. Cost: £40,000
7. Cabvision, Digital Media Sales.
One thousand London black cabs fitted with an audiovisual system in the back. Passengers can choose which channel to watch and TV-style commercials run before and after programme segments. Bespoke channels can be created with advertiser supplied content. Cost: £21,500
8. Cash machine ads, ATM:ad.
Those of you who have seen The Real Hustle on TV will know to not get distracted when withdrawing cash from an ATM. Cashpoint advertising makes for one of the most engaging screen formats in digital OOH. Cost: £80,000
9. Healthclub Channel, Boomerang.
Keeping in shape is an imperative for many urbanites and explains the explosion of heath and fitness centres. Brands wanting to reach the audience can run TV-style commercials or create advertorial content. Cost: £24,000
10. Heathrow Express six-sheets, JCDecaux.
Airport. Historically, airport advertising attracts international budgets. With the launch of Heathrow Terminal 5, there are now high-quality LCD six-sheets positioned on HEX platforms. These can be used to reach high-end leisure and business travellers - the most upmarket audience available to out-of-home advertisers. Cost: £16,000
- Cost figures are based on a standard campaign run over a normal two-week period