30-second summary:
- The winds of advertising have changed, with disruption to traditional formats such as broadcast TV and radio already written large
- However, the move to online advertising is not without its complications. Factors such as privacy regulations are limiting the value of online advertising
- Matthew O’Connor, CEO & Co-Founder of AdQuick, sheds light on the uncertain landscape of advertising and the part out-of-home (OOH) will play in the digital future
Modern advertisers are navigating the choppy waters. Some view the prospect of facing dramatic shifts as a distant possibility. But all it takes is a closer look to realize big, industry-shattering changes are already taking place. Disruption across newspapers needs no explanation. Streaming audio is already eliminating radio. Broadcast TV is quickly diminishing due to a lack of viewership, cord-cutting, and the rise of more sophisticated content subscriptions. Subscriptions, ad-blocking, and online privacy requirements are quickly and unceremoniously eroding the value of online ads. While OOH has made some ripples in the past, will this be the year it really matters?
Consumer behaviors are changing the world and the internet advertising model is rapidly losing its grip – full stop. This is a bold, audacious claim, but critical for the advertising industry and its practitioners to come to terms with. Here’s a look at what’s taking place and where out-of-home (OOH) advertising comes into play:
Broadcast TV dollars shifted to OOH and other mediums, but to what end?
That broadcast TV is on the decline is straightforward enough, but the numbers tell a deeper story. Consider where this medium falls in the ~trillion-dollar advertising landscape.
As if to underscore this, Bob Iger recently said traditional TV is going to head off a precipice.
This begs the question: is there any imaginable future in which linear TV doesn’t go to zero? It doesn’t look likely. So how much of this spend will go to Connected TV (CTV) and streaming? With the prevalence and consumer preference evolution for subscriptions, there’s a strong case that streaming content won’t have the capacity to support these advertising inflows.
At the same time, industry leaders point to Netflix for getting into advertising as proof others will follow suit. But this is a grasp at revenue growth for a platform that has stalled on user growth. The valuable demographics brands pay to reach will simply not be in the ad-supported tier. This will play out on every streaming service. Consumers who can afford $10 – $20 per month will simply opt out of commercials, leaving the remaining viewers relevant to only a subset of advertisers. But why would any premium product, the lion’s share of ad budgets, want to advertise to this demo? However, this is another of several pressing issues advertisers must face.
Lowering expectations for online advertising
The meteoric rise of programmatic online advertising upended the advertising world in just 15 years. Two factors drove this growth. Firstly, the explosion of internet usage and secondly, the MVP monetization model of online advertising. Few accounted for this in their prior models of the world because it was just too ambitious a call. Everyone from newspapers to traditional media to large businesses missed it. As did many investors, journalists, and analysts.
As things stand, internet usage will continue to grow, but the monetization model of the internet can change just as quickly. Companies and consumers are increasingly willing to pay for content. An illustrative example is The New York Times’ subscription revenue surpassing advertising revenues. Other evolutions in their early innings are YouTube paid subscriptions, Twitter blue, and Patreon. Some may call it hype, but Web3 technologies can power online micropayments, creating a more aligned model for creators and platforms. But whether it is Web3 or databases that don’t use blockchain, the winds are changing direction. Marketers need to adapt, or the world will leave them behind.
Another thing to consider is a future where ad support doesn’t drive the internet. It sounds healthy, user-friendly, monetizable, and sustainable. There is a non-zero chance this is the reality within 10-20 years, and we’d all be better for it.
As other mediums crumble, OOH advertising will stand
Outdoor advertising may be among the oldest forms of advertising, but it is anything but archaic. Unlike data surrounding TV and digital advertising, OOH is on the rise, seeing a 40.5% increase in Q1 2022. There are multiple layers behind this growth.
On the surface, online OOH buying platforms now offer resources to help brands plan, buy and measure their campaigns quickly and easily, so they are taking advantage of this format more often. Another reason is consumers’ widespread screen fatigue. Burned out from television and computer screens, post-pandemic, consumers are paying more attention to their outdoor surroundings than ever before. Research from the Out of Home Advertising Association of America (OAAA) confirms this, showing there’s been heightened receptivity to OOH messaging, especially in urban areas. There have also been advancements in targeting capabilities. On a broader scale, OOH is an especially effective vehicle for reaching Millennials and Gen Z. But new audience-based buying features also means advertisers can reach their audiences down to the very streets where they work, play, and live.
As advertisers come to terms with big industry shifts and declining results via their broadcast and digital campaigns, OOH proves to be the most dependable of all formats.
Advertisers cannot change the wind but can adjust the sails
Advertisers are facing major shifts. They can take advantage of this sea change by implementing contingency plans, such as pumping the brakes on ineffective formats and giving OOH a larger slot in their media mix. As with all large trend shifts, chance favors the prepared. Will you be at the head this time or a laggard?
Matthew O’Connor is the CEO and co-founder of AdQuick.com.
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