By: Ari Buchalter, CEO, Place Exchange
I once predicted I’d never write one of those articles making predictions about the future. This article renders that prediction wrong, but contains other predictions – about what the coming year will bring for the burgeoning programmatic OOH category – that may or may not be correct, but at least hopefully provide some useful food for thought.
Prediction #1 – Omnichannel DSPs get serious about programmatic OOH.
While the buzzword of “programmatic” has been around OOH for years, it’s now getting real. Education of programmatic buyers in 2018 and 2019 led to omnichannel DSPs entering the space, alongside the pre-existing “point solution” DSPs that focus solely on OOH. 2020 and 2021 were crossover years, where we saw not only proof-of-concept test budgets executed programmatically from digital teams that had never bought OOH before, but more and more “always on” programmatic OOH campaigns running at significant spend levels. The pandemic accelerated that trend, emphasizing benefits of programmatic execution such as workflow simplification, increased flexibility of delivery, and greater ability to measure business outcomes – benefits that are here to stay.
Estimates from eMarketer and others put 2021 programmatic OOH spending at hundreds of millions in the US alone and growing at a significant pace. That is now meaty enough to attract not just attention, but dedicated focus and investment from omnichannel DSPs. 2022 will see a lot more activity from those players in the OOH category, in terms of both spend and feature development. Unlike point solution DSPs, omnichannel platforms unify all aspects of OOH campaigns with other channels – planning, targeting, execution, optimization, measurement, and reporting. That also means they can easily facilitate shifting of spend to OOH from other (much larger) digital channels such as online, mobile, social, and CTV, which is something we should all be excited about.
Prediction #2 – Increased focus on transparency around programmatic OOH.
Hand in hand with attention from large omnichannel DSPs will come a greater emphasis on transparency, both around media and economics. Unlike OOH-only platforms that play both sides of the transaction as both a DSP and an SSP (and therefore have the opportunity to take hidden fees or markups and/or engage in opaque arbitrage through practices like media bundling), omnichannel platforms like The Trade Desk, MediaMath, and others – as well as OOH-focused DSPs like Quotient’s Ubimo platform – place paramount importance on transparency. MediaMath’s SOURCE initiative is a prime example of that.
In the early days of programmatic, non-transparent business practices were common. Entities that played both sides of the transaction were able to extract hidden fees through so-called “black box” or “undisclosed” models which the ANA defines as arrangements where an intermediary entity “does not disclose the actual closing/winning bid prices of media purchased, instead providing only a final price which includes margin and fees… [which] are unknown and undisclosed to the client.” It wasn’t uncommon for large percentages of media budgets to end up in the hands of intermediaries, with only a minority going to publishers. Ironically, these platforms were often able to advertise low base fees for their offerings, as their profits were padded by these nontransparent activities and myriad fees for other services that accrued atop the actual media cost.
There is no doubt that programmatic technology and services bring massive benefits for both buyers and sellers, such as automated execution, more flexible and granular campaign management, enhanced data-driven targeting, machine learning optimization, improved yield, and more direct impact measurement. The technology and resources that enable those benefits cost money, and the platforms that provide them must earn a fair profit in the process – but not a windfall.
The natural maturation of programmatic in other channels brought a healthy focus on transparency, but programmatic OOH is just getting started. As more OOH dollars transact programmatically in 2022, buyers and sellers will increasingly demand to understand, at the individual transaction level and for all transaction types, the end-to-end economics from the initial advertiser budget through to the spend realized by the publisher, including any additional fees or hidden economics along the way. For platforms not willing to provide that transparency, the question will be “why not?”
Prediction #3 – Programmatic OOH targeting and measurement becomes front & center.
Targeting and measurement are the twin cornerstones on which the juggernaut of digital advertising (which now stands at over 60% of US ad spend according to MAGNA) was built. However, most of the actual effort and focus in programmatic OOH has historically been around the table-stakes processes of planning and execution, i.e., figuring out which screens to deploy budget against and then actually making that happen. And for good reason…
In the digital world, the technologies and processes that govern delivery of ads on websites and mobile apps are fairly well-developed and standardized. By contrast, OOH involves a diverse array of assets and technologies spanning billboards, street furniture, transit, and screens in elevators, taxis, gyms, supermarkets, restaurants, movie theaters, doctors’ offices, and more – often running on customized closed networks, each with their own capabilities and limitations. It took some doing, but solutions to integrate those diverse technologies have been developed and are now in place. With the press of a button, campaigns can now be seamlessly planned and bought across any mix of OOH media.
That means more attention will now turn to overlaying audience targeting and performance measurement capabilities for OOH. To be clear, those capabilities aren’t new; they’ve existed for a while, but were not implemented in practice on every campaign, as is usually done with other programmatic channels like online and mobile. Of course, unlike online and mobile, OOH isn’t a 1-to-1 medium, and so the techniques brought to bear are a little different (and far more privacy friendly!). But with planning and execution now sorted out, the ability to select the OOH displays that index highest against an advertiser’s target audience, and the ability to measure the business impact of OOH advertising – from upper-funnel brand awareness to lower-funnel CPA and ROI metrics – will be leveraged on more and more programmatic OOH campaigns in 2022.
Prediction #4 – Programmatic OOH will increasingly intersect with retail media.
Retail media will continue to be one of the hottest categories in 2022, with virtually every retailer already leveraging their media and data assets to stand up an advertising platform. Whether and how these platforms interact with each other, or form a “closed grid” (a honeycomb?) of walled gardens, remains to be seen.
While the standard retail media network involves marketing on the retailer’s digital properties such as their website and mobile app, many if not most of these retailers also house large networks of screens in their physical stores, and are continuing to invest in more advanced in-store media technologies. Those screens can be leveraged for a variety of shopper marketing applications, one of which is advertising. When it comes to the proverbial objective of putting the right ad in front of the right consumer at the right time, it’s hard to beat the relevance of in-store screens (and speakers) delivering display, video, and audio messaging to consumers right as they are making purchase decisions. Not to mention that these networks come with large repositories of consumer data, something that will be increasingly hard to come by in the post-cookie world.
Some of the largest in-store advertising networks are already integrated with leading OOH SSPs and more will follow. Programmatic OOH offers the ability to seamlessly deliver ad campaigns to in-store retail networks, overlay precise POI and location targeting down to individual screens, and leverage audience targeting and performance measurement capabilities (see above).
But retail media networks including in-store assets to capture their share of growing OOH budgets is only one use case we’ll see in 2022. In addition, they will look to enable audience extension for their advertisers to reach consumers not just on their digital properties and on the open web, but in real-world physical contexts outside their stores, where they can leverage billboards, street furniture, transit, and placed-media to engage consumers throughout their daily journeys between home, work, shopping, and entertainment.
Prediction #5 – Programmatic OOH will attract more TV and video dollars.
The reach of linear TV has steadily declined while prices have sharply increased, leading to a dramatic reduction in the cost-effectiveness of that channel. While CTV consumption grows, streaming services simply don’t offer comparable advertising scale. Other digital video channels, such as online and social, come with challenges around brand safety, viewability, and fraud. There is now a surplus of video advertising budgets looking for scaled, high-quality, brand-safe video supply at reasonable prices.
Digital OOH is fundamentally a video channel, with over one million screens in the US alone. Digital OOH can generate tremendous reach and frequency at a fraction of the cost of TV and other video channels. It engages consumers not in “couch potato” mode in the living room, but on their active daily journeys when they are forming opinions, making decisions, and buying products. It’s been proven to generate higher recall, engagement, and trust than other digital channels, and offers audience targeting and performance measurement capabilities far beyond those of traditional TV. Unlike traditional TV, Digital OOH ads can’t be skipped or paused, and they don’t suffer from bot fraud, viewability, negative content adjacency, or other brand safety issues prevalent with other forms of digital video.
Add to that the fact that new solutions are enabling measurement of reach, frequency, GRPs, and TRPs for OOH comparable to traditional TV metrics, the ability to easily repurpose existing video creatives, and the ease and automation of programmatic execution, and it’s no surprise that OOH has started to attract spend from TV and other video channels. 2022 will see that trend accelerate, not just with verticals that have traditionally spent in both channels, such as Entertainment, Insurance, QSR, and CPG, but also with traditional TV spending categories that previously did not spend as much on OOH, such as Pharma, DTC, and political advertising.
We’ll see how my first foray into prognostication goes… but whatever happens, one sure-fire prediction is that 2022 will see programmatic OOH reach new heights.