The shifting sands of macro advertising and where OOH fits in

The shifting sands of macro advertising and where OOH fits in
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The following is a version of a column we recently contributed to ClickZ we feel is important for advertisers to understand, and so are re-sharing with readers here in case you missed it.

Modern advertisers are navigating the choppy waters. For some, the prospect of facing dramatic shifts are viewed as distant possibilities. But all it takes is a closer look to realize big, industry- shattering changes are already taking place. Disruption across newspapers needs no explanation. Radio being eliminated by streaming audio is already a done deal. Broadcast TV is quickly diminishing due to lack of viewership, cord-cutting and the rise of more sophisticated content subscriptions, and online ads are being quickly and unceremoniously eroded by subscriptions, ad-blocking and online privacy requirements.

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 really taking place and where out-of-home (OOH) advertising comes into play:

Broadcast TV dollars are shifting, 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:

Source: Statista

As if to underscore this, Bob Iger recently said traditional TV is going to head off a precipice.

Source: ARK Investment Management LLC, Television Broadcasts Limited (TVB), Cartesian, nScreenMedia

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 – but this is actually a grasp at revenue growth for a platform that has stalled on user growth. The valuable demographics that 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? This, however, is another of several pressing issues advertisers need to face.

Lowering expectations for online advertising

The meteoric rise of programmatic online advertising upended the advertising world in just 15 years. That growth was driven by a) the explosion of internet usage and b) 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.

Krugman and many others were famously very wrong in 1998, but what if the reverse is true now for advertisers? What if we all believe in a trend that’s about to break?

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 that create a more aligned model for creators and platforms. But whether it’s Web3 or databases that don’t use blockchain, the winds are changing direction. Marketers need to adapt or get left behind.

Another thing to consider – an internet that's not driven by ad support: 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 remain standing

Outdoor advertising may be among the oldest forms of advertising, but it’s 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’re 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, of all the formats, it’s OOH that proves to be the most dependable.

Advertisers cannot change the wind, but can adjust the sails

Advertisers are facing major shifts. They can take advantage of this sea change by putting contingency plans into place, 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 co-founder and CEO of