April 17, 2007

Video ads move outside the home.

If you think you've been seeing more ad-plastered plasma screens in malls and subway stops, you're right.

Spending on alternative out-of-home media, which includes video networks and digital billboards, grew 27% to $1.69 billion in 2006, according to PQ Media's "Alternative Out-of-Home Media Forecast 2007-2011."

US Alternative* Out-of-Home (AOOH) Advertising Spending, 2001-2006 (millions, % change and % of total out-of-home spending)

Patrick Quinn of PQ Media said, "Ironically, the trends impeding traditional media — consumer fragmentation and control, advertising accountability and the emergence of digital technology — are the very catalysts stimulating the tremendous growth in alternative out-of-home advertising. Unlike its mass media peers, alternative out-of-home advertising is impervious to channel or Web surfing and is immune to audience fragmentation."

US out-of-home ad revenues overall rose to $6.8 billion in 2006, up from $6.3 billion in 2005, according to the Outdoor Advertising Association of America (OAAA). PQ Media put the 2006 out-of-home ad spending total at just over $7 billion.

US Out-of-Home (OOH)* Advertising Spending, 2001-2006 (millions and % change)

It is unclear exactly how digital billboards will contribute to out-of-home advertising in the future.

On the one hand, the signs let multiple ads run on a single billboard, and can be sold at different rates at different times of day. Rush hour ads can therefore bring in more than those shown in the middle of the night.

According to the OAAA, there are currently some 400 digital signs across the country, but within 10 years there will be about 4,000, and they each can generate three to five times more revenue than a conventional billboard. iSuppli is even more bullish than the OAAA, estimating the 2010 total at 75,000 digital billboards.

Number of Digital Billboards in the US, 2006 & 2010

Skeptics note that cost may keep the signs from spreading that much, since each one costs about half a million dollars.

Some city governments also think they are too distracting, and have enacted temporary freezes on the signs in the name of safety.

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