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Ad Spending on Out-of-Home Media Grows

Growth in this broader advertising category nicely tracks the presence of affordable flat panel displays used for digital signage and the slow decline newspaper circulation and advertising.

The U.S. Census Bureau's recently released "Statistical Abstract of the United States" reveals interesting statistical trends about a variety of aspects of life in this country, including where spending stands for out-of-home advertising in comparison to other popular media like newspapers and broadcast television (Section 27 Accommodations, Food Services and Other Services, Table 1261). Part of the abstract is a table from powerhouse ad agency Universal McCann New York that shows spending growth of nearly 20 percent for out-of-home advertising from 2000 to 2005 -the last year for which statistics are available. That compares to a decline in newspaper ad expenditures of about 2.5 percent and a slight increase of 1 percent in TV ad spending for the same period. On a percentage basis, the statistics show a slightly greater portion of dollars spent on out-of-home advertising among the three media - 5 percent in 2000 versus 6.1 percent in 2005. However, in terms of raw dollars, television and newspaper advertising continue to dominate, accounting for $45.261 billion and $47.898 billion, respectively, versus $6.149 billion for out-of-home advertising. While it's important not to overstate the increase in ad dollars being spent on out-of-home media, the up tick indicates the growing stature of this media among advertisers and marketers. Interestingly, the growth since 2000 tracks the broader availability of flat screen LCD and plasma panels as well as increasingly sophisticated digital signage hardware and software. To be sure, out-of-home advertising encompasses much more than digital signage -things such as billboards, transportation, bus shelters and kiosk. Still, the emergence of digital signage as a viable component of the sector surely contributed to this growth. What this means precisely to marketers and advertisers is as varied as the Census Bureau's statistical abstract. However, there are a few generalizations that can be made based on the data: -The number of dollars spent on out-of-home advertising is growing; -To the extent that digital signage is a component of this type of media it is benefiting from the category's success; -Dollars spent on newspaper and TV broadcast advertising dwarf the category; -The relatively small percentage being spent on out-of-home advertising may indicate a smart effort on the part of marketers to protect their ad investment in newspapers and television by carrying their marketing and advertising messages over to the retail store and the point of decision where a consumer selects which product to buy. Advertising and media are experiencing an accelerated rate of change as marketers turn to relatively new alternatives -like the Web and digital signage networks- to reach their intended audience. The signs of this change are everywhere. For instance, this week Media Holdings, owner of the Philadelphia Daily News and The Philadelphia Inquirer, announced it would lay off 71 journalists -about 17 percent of the Inquirer's editorial staff- to trim costs in light of declining circulation and ad revenue. Another is newspaper publisher McClatchy, which announced plans shortly after Christmas to sell The Star Tribune in Minneapolis for $530 million and a tax benefit of $160 million, or $690 million. That's a little more than half of what the publisher paid to purchase the paper in 1998. Television isn't immune to these turbulent times, either. The New York Times Co. in September 2006 announced its intention to sell nine network affiliate television stations throughout the country to improve its financial position and strengthen its core property. What these moves and the U.S. Census Bureau statistics indicate is declining newspaper ad revenue, flat television ad revenue and a small, but growing pile of cash being spent for out-of-home advertising, and the rippling consequences thereof. As marketers and ad agencies evaluate media, they would do well to keep in mind these trends which track changing media consumption patterns and look for ways to reinforce their ad buys in television and newspapers with advertising that grabs and influences shoppers where they make their purchasing decisions and reach for their wallets.

Author:David Little Category:Advertising Published: 8-Apr-2010 Tags: out-of-home advertising, ad spending, ad dollars, marketers, LCD and plasma panels, digital signage