Tech, Regulatory Hurdles Hamper Digital Out-of-Home Growth

Ad Platform Resists Programmatic But Mobile Offers Promise

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Buying ads that target audiences in real time has colonized all forms of digital display advertising -- except one. Out-of-home advertising, that amalgam of digital billboards, gas-station TVs, screens in elevators and on treadmills, has proved resistant. The Outdoor Advertising Association of America counted 4,400 digital billboards by midyear, but the path to programmatic is riddled with tech and regulatory roadblocks.

Finding ROI proposition is tricky.
Finding ROI proposition is tricky. Credit: Courtesy of Lamar

Tracking and measuring audiences on foot is more difficult than tracking audiences online, said Patrick Bonomo, chief operating officer of WPP's Spafax Networks. In January, Spafax launched a marketplace for out-of-home inventory called SN: Xchange. Mr. Bonomo said he'd like for 10% of WPP's spending on out-of-home to go through the programmatic buying process. But "that's not happening," he said. "It still needs more work. Right now we're at about 4%."

The closest digital out-of-home players have come to tracking the kinds of conversions that make programmatic buying so attractive to advertisers is through call-to-actions on mobile phones. Mr. Bonomo's group recently placed a client's ad that included "text here for more info" across various out-of-home screens. It also directed consumers to a landing page. "We saw a 40% uptick in engagement based on benchmarks we established," he said.

The time it takes to wait for click-through, gather updated audience data, optimize an ad message and buy media can be hours compared to conventional digital, in which real time can mean nanoseconds.
"Every single media owner has a home-brewed CMS and it was built just to manage consistent delivery of ads to a server without the foresight of connectivity," said Mike Finnegan, director-product development at WPP digital-buying platform Xaxis, and the lead on digital out-of-home buying that Xaxis places.

Clear Channel Outdoor is working to build case studies that show ROI for digital out-of-home, said President and Chief Operating Officer Suzanne Grimes. "We're coming up with the data to support an ROI proposition we haven't captured in the past, whether it's automated or not," she said. "It's tricky."

Xaxis places a minuscule amount of out-of-home. The group has run fewer than 10 campaigns with a total of six figures' worth of ad dollars against them. Yet Mr. Finnegan foresees long-term growth. "One day it will be something we can buy next to display, digital video and mobile. It will get there," he said.

Mobile will help. Late last year Verizon launched a tool called Precision that sells insights based on data about phone owners and their whereabouts to buyers. AT&T has a similar offering. An outdoor company can use these tools to track users from their home to the point they pass a billboard or digital sign, send a targeted ad to that outdoor screen through a programmatic transaction and track exposure and response. Still, those tools are expensive and progress is slow.

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