The Future of DOOH

Signage Solutions talks with Patrick Quinn, President & CEO of PQ Media, the leading provider of global media econometrics and pioneer of emerging media research.  Patrick gives insight into the growing digital signage industry and looks at some specific growth areas to watch. 
 
Q:      What do you think is the current driver of growth for the digital signage industry?
 
A:      The growth of digital out-of-home media (DOOH), including digital place-based networks and digital billboards and signage at various venues and locations, is being driven by several key trends, according to PQ Media’s new research included in the 4^th edition of our Global Digital Out-of-Home Media Forecast. Among them, more media is being consumed outside the home than ever – 44% in 2010; DOOH remains attractive to brands because it can engage target audiences in captive locations for extended periods of time and seed the next buying decision; DOOH needs to and is gradually becoming part of integrated media solutions, complementing and activating other media; Market leaders are focused on consolidating and expanding their footprint in order to provide more scale; Operators are also investing in sales and marketing staff, and strategic and tactical improvements; Brand recall remains high, standard audience metrics continue to be pursued.
 
Q:      How are Digital Out-of-Home platforms changing the way companies engage their audience vs. the traditional means of print and online.  Can it maintain the level of innovation is has experienced in the last decade?
 
A:      PQ Media tracks all 20 major segments and more than 100 sub-segments of the media, entertainment and communications industries worldwide and there are very few that have equaled the drive, investment and innovation of DOOH over the past decade. We expect this to continue in the foreseeable future as this industry continues to develop, the number of operators consolidates, the number of networks expands, market leaders targeting specific demographics through various venues emerge and DOOH becomes either a more regular component of integrated media solutions or part of a whole new medium comprised of multiple platforms converged, such as DOOH, mobile and social media.
 
Q:      What are the largest areas of growth for digital placed-based networks and DOOH?  Why are these positioned for such growth?
 
A:       PQ Media defines the global DOOH sector through two major platform segments – digital place-based networks (DPN) and digital billboards & signage (DBB) – and six venue and location categories, including cinema, retail, office, entertainment, transit and roadside.
 
Global DPN revenue, the larger of the two platforms, grew 14.5% to $5.06 billion in 2010, driven by strong double-digit rebounds from the 2009 malaise in key leading markets in all four major regions – the Americas, Europe, Asia/Pacific, and Middle East & Africa, according to the PQ Media Global Digital Out-of-Home Media Forecast 2011-2015.
 
The U.S., the world’s largest overall DOOH and DPN market, as well as Brazil, the U.K., Russia, China and India each expanded at double-digit rates in 2010. These markets are expected to post similar growth again in 2011, when PQ Media projects global DPN revenue will increase 15.2%.
 
U.S. DPN revenue bounced back from a slight decline in 2009 to post a 15% gain to $1.54 billion in 2010. U.S. growth is forecast to accelerate to 16% in 2011, driven by double-digit expansion in all five venue categories, including the largest, cinema, and the fastest-growing.
 
Meanwhile, global DBB revenue growth jumped 23.2% in 2010 to $1.41 billion, fueled by accelerated double-digit growth in all four regions. The U.S., U.K. and the emerging BRIC markets each produced faster double-digit growth in 2010 and are projected to generate similar increases in 2011, when PQ Media anticipates global DBB revenue will rise 23.1%.
 
U.S. DBB revenue increased 15.4% to $532 million in 2010 and is expected grow at an accelerated 18.8% in 2011, fueled by gains in all four location categories, primarily roadside, the largest. 
 
 
Q:      How are digital billboards affecting the historic industry of roadside signage?  Is it needed and are advertisers receiving a better ROI?
 
A:      Even without elaborate new technology-based metrics, DBBs have been attracting local and more national advertisers for a number of years due to a several factors, including their location in the most desirable DMAs and in the best locations within those DMAs, their ability to carry multiple brands and change ads remotely, and because operators can charge CPM rates at multiples of traditional boards, which all translates into higher and higher-margin revenue per board. Operators can do that math all day long.  
 
Q:      From a global view, what region has the largest footprint of DOOH adoption?  What makes that region such a market for early adoption?
 
A:       The U.S. is the largest DOOH market and continues to grow at low double-digit clip, but the big growth opportunities are in the BRIC countries – Brazil, Russia, India and China – particularly Brazil and China, where upcoming events, deflection of economic crisis, rising middle classes and cash hoards bode well for the development of DOOH in these markets.
 
Q:       Within the digital signage industry, there are continued talks of industry consolidation where only a small number of large solution companies will prevail.  Do you agree with this or foresee a boom in technology, innovation and start-ups in the near future?  Please explain position.
 
A:       As an example, the U.S. DPN landscape continues to be very fragmented, as PQ Media’s research identified 220 DPN operators running 468 networks in the U.S. at year-end 2010. The relatively few DPN operators offering national scale was also cited by agencies and brands as a challenge.
 
While there were dozens of mergers, acquisitions and bankruptcies from the start of 2008 through year-end 2010, PQ Media estimates that over 90% of U.S. DPN operators generate less than $10 million in annual revenue. But further consolidation is expected and necessary over the next couple years to defragment the DOOH network landscape, provide brands with more national scale and to incorporate mobile, social and interactive media enhancements. This is part of an historical pattern PQ Media has identified in all successful new media evolution: Gold Rush-Shakeout-Breakout. DOOH, particularly the DPN segment, is in the shakeout phase and will continue to be for some time as its direction develops through convergence with other media, such as mobile, or DPN operators prove to be successful at engaging key demographics in contextually relevant environments when they’re more receptive to advertising, seeding the next purchase decision.  
 
BIO
Patrick Quinn is the President & CEO of PQ Media, the leading provider of global media econometrics and pioneer of emerging media research. PQ Media's proprietary research methodology and modeling system delivers the most comprehensive and actionable strategic intelligence to executives in the global media, entertainment and communications industries. As part of PQ Media’s Alternative Media Research Series, Mr. Quinn is co-author and publisher of the acclaimed Global Digital Out-of-Home Media Forecast series, which is recognized as the authoritative source for data, insights and predictive econometrics on the emerging global DOOH industry, including digital place-based networks, billboards and signage at cinema, retail, office, transit, entertainment and roadside venues and locations.