What you need to know:

• Australia's out-of-home operators have invested tens of millions in digitising screens. Now they are ramping up programmatic capability.
• Early signs are that Australia is tracking ahead of international markets in terms of adoption and growth.
• If that trajectory continues, the programmatic digital out of home (pDOOH) market, could grow faster than some predict.
• Programmatic capability delivers both brand and performance aspects to marketers.
• Challenges remain on the buy-side, and robust like-for-like metrics remain a work in progress.
• But pDOOH operators say they are beginning to attract a new class of advertiser – and the market is starting to move.

Buy signals

Programmatic digital out of home makes for a questionable acronym (pDOOH) but unquestionable opportunities for advertisers. After significant cross-industry investment in digitising out of home networks and building out programmatic trading infrastructure, the market is starting to move.

While early days, media owners, demand-side platforms (DSPs) and supply-side platforms (SSPs) have all reported strong take-up by advertisers, with the IAB finding that three quarters of advertisers and agencies tried pDOOH in 2021. Agencies predict strong growth from here on in.  

Mass adoption will not come overnight. But international experience suggests hockey stick growth potential once the building blocks are in place – and Australia’s growth curve is already steeper than more advanced markets.

The appeal for marketers is high; pDOOH combines the targeting and flexibility of programmatic ad buying with out-of-home's effectiveness and mass impact. The opportunities for contextual audience-based campaigns and location-targeted messaging are a welcomed addition to the media mix.

Prepare for mass adoption

Nearly three-quarters (73 percent) of agencies have used programmatic DOOH, and a further 24 percent intend to use it for the first time in the future, according to the IAB’s Attitudes to Programmatic DOOH 2021 report. What’s more 34 per cent of agencies claim they are regular users.

The numbers are promising, however, pDOOH is not without its challenges. The education gap between digital and OOH planning and buying, the lack of robust audience measurement and consistent standardisation across media owners, and the logistics of dynamic creative, are key hurdles the market must overcome.  

Yet as one of the most developed DOOH markets globally, Australia’s programmatic play is poised for significant growth, says John McNerney, director of Ad Platforms, ANZ, Yahoo. 

"We're at that inflexion point where programmatic out of home is ready for mass adoption, and it's ready to be a business-as-usual channel, in line with other emerging channels or screens," says McNerney. 

“We're seeing massive growth from large brands, and performance brands as well as B2C type brands. They're leaning into and understanding the value of programmatic OOH … That lightbulb moment is definitely here.”

Verizon’s DOOH DSP has notched triple-digit growth quarter-on-quarter since Q3 2020, with McNerney forecasting that trajectory to continue through 2021.  

That growth curve is consistent with other OOH majors, with all reporting double- to triple-digit growth for pDOOH – albeit off a low base. Most state programmatic is sitting at 3 – 5 per cent of DOOH revenues, forecasting it will hit the 12 – 15 per cent mark in 2023.

Eyes on bigger prize

Some firms are more bullish. JCDecaux CEO Steve O'Connor claims the firm is already outperforming forecasts after launching its programmatic platform in April.

“We had aspirations to trade 15 per cent of our digital revenues by 2023, which we thought was a pretty lofty sort of target within three years of launch. We set what we thought was a conservative target for 2021, to trade at between 2 per cent to 4 per cent of our revenues this year. At the end of June, we were sitting at 5 per cent of our digital revenues traded programmatically, and in June alone, we traded 9 per cent. You suddenly get a feel for the trajectory that we're on, and all things being equal, we’ll blow that 15 per cent out of the water in 2023.”

International comparisons suggest O’Connor has good cause for optimism. German OOH firm Ströer, which operates across Europe, told Mi3 that it took three years from launch in 2015 to reach 3 per cent of trades done programmatically, but just another two years to get to 25 per cent and the firm now hopes to catch up with broader programmatic penetration.

Christian Schmalzl co-CEO at Ströer said the push has also brought additional growth that OOH firms would not traditionally attract.

“We have a lot of ‘pure’ digital agencies that had never dealt with traditional media, and I think that opens up more avenues,” said Schmalzl. We have a lot of e-commerce clients that also do most of their media buying directly, especially in the online world. They are suddenly buying through programmatic opportunities digital out of home directly, in combination with their online spend.”

He thinks that the digital category itself is the biggest prize for OOH operators.

“It opens up all the money pots that sit in the digital space, because out of home is not like a separate category with digital out of home and the programmatic access, it's part of the complete digital universe,” says Schmalzl. “Globally, that is 35-40 per cent of total ad spend. And I think that's the really interesting opportunity.”

Early mover advantage?

JCDecaux takes a similar view, hence adopting an aggressive strategy, says O’Connor. Some 80 per cent of its 1,200 signs already digitally enabled and are plugged into six DSPs, with a further four to follow by the year-end.

While the IAB reports most of the market has at least tried pDOOH, O’Connor says that has yet to translate to consistent uptake. But he thinks that will change over the next 12-24 months as trading desks plug in and buyers increase operational sophistication.

“The market sentiment been strong, but so far, we've only traded programmatically with 23 per cent of the ad agencies. We've traded with three out of the five holding groups; there's another couple coming online soon, we're on a very aggressive digitisation investment program over the next few years, and we are yet to turn on environments like rail and airports, which have always been pretty fertile ground. We've been on this journey for a while, and we want to consolidate ourselves as the industry leader in programmatic,” says O’Connor.  

Other OOH firms players are also jostling to claim first-mover advantage.

VMO operates screens in shopping centres, gyms and petrol convenience locations. Managing director Paul Butler says pDOOH uptake has been stronger than forecast.

“We were looking at maybe around 5 per cent of our revenues this year, and we're far exceeding that at the moment - and that's with a lot of buyers still sitting on the sidelines.”

"We've had close to 100 clients that have invested with us to date this year – the majority of which we don't normally get spending with us through direct channels.

David Sutherland, GM – Large Format & Programmatic at QMS also predicts growth.  "We're a digital business, with around 90 per cent of our revenue written in digital out-of-home. So, you'd expect us to be front and centre when it came to looking at new ways of selling, and programmatic has been performing relatively well,” he says.

"While a few people were playing with it last year, this year, we've seen more consistent adoption, and it is representing about 3 per cent of our total revenue now. It is very much on that exponential growth curve."

Ben Allman, sales director, APAC at Broadsign and Chair of IAB Australia DOOH Taskforce, predicts pDOOH’s growth will follow a similar trajectory to that of audio.

“It's very much a nascent market. At the moment, you look ahead, and think we've got a hell of a lot of work to do. But if you look back 12 months, things have evolved a lot.”

He concurs with Ströer’s Christian Schmalzl.

"It's worth keeping in mind that we're not focused on taking all the digital out-of-home revenue and transacting that programmatically,” says Allman. “The idea is that by enabling digital out-of-home to be purchased programmatically, you're opening it up to all these new types of buyers and businesses and budgets that weren't in the digital out of home space before.”

Blending brand and performance, gaining new advertisers

Taking budget from other digital channels is key to avoid “cutting our own lunch”, says QMS’ David Sutherland.

“Out of home has always been an expensive medium to buy, particularly for smaller-scale businesses, whereas programmatic enables them to get into out-of-home relatively easily. They can buy what they want, how they want, when they want, rather than being subject to big deals, market by market or vendor by vendor; with programmatic, they can look at their specific requirements and build out from there,” says Sutherland.

In short, he says, “programmatic is opening out-of-home to the masses and making it a lot more accessible.”

But pDOOH is also changing the way larger advertisers use the channel, from pure brand building to hybrid brand and performance.

"OOH has always been great at the top end of the funnel, from an awareness and consideration point of view. But then it would stop; we could never get into retail dollars or performance dollars because we could never demonstrate anything,” says Sutherland.

“Now we're in a position where we're seeing the likes of Volvo investing retail dollars in programmatic for local area marketing. So, we're getting into individual dealers, working out what their requirements are, and pushing out relevant local offers – doing all the things that retail and performance channels deliver that historically out of home could not,” says Sutherland.

Better attribution, higher confidence

New categories of advertisers, notably B2B technology brands, are testing out-of-home for the first time due to its new programmatic measurement and attribution capabilities.

“We've had advertisers like IBM, Slack and Cisco that would not traditionally advertise via OOH,” says Hivestack ANZ/SEA managing director, Matt Bushby.

“They are looking to target a predefined audience, and we have an efficient way of being able to target them when and where this audience will be likely be present. If we can provide an outcome or attribution piece, they are all for it. It does encourage spend from categories that don't traditionally spend on out-of-home,” he says.

“Encouragingly, it's bringing back advertisers that may have moved away from outdoor because it wasn't as accountable as other digital formats.”

JCDecaux chief commercial officer Max Eburne agrees. He says while 67 per cent of the company’s Q2 revenues were new budgets, these came from a mix of new advertisers and existing clients, which found incremental budgets to invest in programmatic.

“There's still a lot of advertisers who probably considered OOH either to be too blunt or too expensive who are now using the data to accurately engage with specific audiences. For example, streaming TV companies, who have existing spend invested in out of home, but we're using data to identify homebound locations, and then just dial-up programmatic for just increased frequency between 4pm and 7pm.”

Like Hivestack’s Bushby, Eburne says programmatic is providing advertisers with confidence about out-of-home in general.

“One retailer, who was a lapsed out-of-home user, came back in recently and utilised programmatic out-of-home to do quite a lot of tracking and attribution. They determined, off the back of the programmatic campaign, a 26 per cent uplift in-store footfall. So they have come back with a budget ten times the size.”

Eburne says advertisers opted to trade traditionally via direct insertion order, following its initial programmatic trial. “It felt like they'd used programmatic and the attribution study to understand the effectiveness of the media channel, and it's given them the confidence to come back in wholesale to the media channel.”

O’Connor agrees. "I think that's significant because a lot of people said that programmatic is going to cannibalise the traditional outdoor buying. And that's not our findings.  People are still committed to the outdoor channel in terms of their broader media mix, but then supplementing it with programmatic out-of-home to do different things, like upgrading in specific areas to reach specific demographics. And that’s translating into incremental revenue.”

Which is why pDOOH revenues are unlikely to overtake direct OOH investment, any time soon, according to VMO’s Paul Butler.

"Certainly not for the next few years,” he says, “but it's going to play a massively important role in the way outdoor is transacted in the longer-term.”

The Covid accelerator

OOH revenues plunged 39.4 per cent in 2020 as lockdowns decimated audiences and advertisers pulled back dramatically. But the upshot was that digital revenues climbed as an overall proportion of DOOH revenues, accounting for more than half (56 per cent) across the year.

Marketers began planning and embracing test and learn scenarios. Attracted by the ability to pause, up-weight and shift markets based on rapidly changing restrictions across the country, pDOOH’s trajectory began to take shape, according to VMO’s Paul Butler.

He thinks that exercise has helped reduce advertiser pullback during current lockdowns.

“If you look at the challenges that Australia is now facing, with different markets closing down for different periods of time – sometimes with less than 12 hours notice – you can see the benefits of programmatic just in terms of admin. If you're already using programmatic outdoor and you want to dial up open markets and dial down markets that are in lockdown, you've got complete control to do that with no penalty. It offers advertisers real flexibility and control,” says Butler.  

Nearly one quarter (23 per cent) of agencies traded programmatically in the first half of this year, according to the IAB’s Attitudes to Programmatic DOOH 2021 report. 

“That's obviously a decent chunk of the market,” says JCDecaux’s Steve O’Connor. “We're seeing a lot of those advertisers who invested in a test case scenario come back and spend more money. Our sense is [Covid] probably accelerated the appetite for uptake.”

Covid also provided the sector with an opportunity to get its ducks in a row regarding programmatic and DOOH, with OOH firms educating marketers on the opportunity arising as states reopened, according to Yahoo’s John McNerney.

“As soon as we came out of lockdown, we had a pipeline of programmatic out-of-home budgets from so many brands that had previously never even thought about it. We're seeing that now in the pipeline for Q3 with a stack of briefs lined up and ready for execution,” he says.

The education gap

All that said, education remains a significant stumbling block for pDOOH, with most market participants forecasting a 12-18 month period before the market is fully up-to-speed.  

The IAB report found agencies and brands rated their understanding of pDOOH advertising at less than 7 out of 10. “Addressing a lack of advertiser and agency understanding is the greatest opportunity to ensure pDOOH can attract a larger proportion of advertising spend,” per the report.

IAB Outdoor Taskforce Chair, Ben Allman, says there is much work to bridge traditional and digital skill-sets.

"All of the out of home people are completely new to the programmatic space, while all the online and programmatic buyers are less familiar with the out-of-home world,” he says. “It's a massive knowledge gap to close.”

JCDecaux’s Max Eburne says there is a lack of clarity in agencies about who is responsible for planning and buying programmatic out-of-home. A recent survey found 41 per cent of people believe the offline agency personnel were responsible, 11 per cent believed digital teams, 15 per cent nominated trade desks, while 34 per cent said they didn’t know.

“The overarching sentiment there is that even on the buy side, I don't think they've worked it out,” says Eburne. “But the same is true in radio, as it starts to transition from a traditional offline medium into audio. Where does the delineation sit between radio and audio? It’s the same with television and connected TV. Agencies are going to have to work out new structures, new responsibilities and ensure there is clarity about who is responsible for planning and buying programmatic assets,” says Eburne.

The IAB's pDOOH report revealed that only 37 per cent of agencies are using the same team to plan and buy OOH and pDOOH, while nearly half (49 per cent) of pDOOH decision-makers/influencers plan and buy programmatic DOOH independently from other media.

Hivestack’s Matt Bushby agrees that planning remains a challenge. “Outdoor has always been planned in isolation, and digital has never really embraced broadcast formats where there's more than just one person at the end of that phone. They’re both quite complicated formats to plan and buy, and there's a lot of friction on both sides to be able to get impressions and audience numbers consistent and robust enough that everyone feels comfortable that they're real numbers.”

Measurement and standardisation

With media owners using different sources for audience data, there is no standardised metric, meaning advertisers cannot compare like-for-like across DOOH networks.

“That’s a friction point for digital buyers,” says Bushby. “They’re used to one device equalling one person, rather than one screen representing multiple people. Plus, that multiple changes at different times of the day based, for example, audiences will vary at 5am compared to 11am.”

He says the IAB and Outdoor Media Association are building solutions, “but there’s a bit of work to be done in that area”.

As such, standardisation and audience measurement are significant hurdles for pDOOH. While cross-industry audience metric MOVE 1.5 is due to launch imminently, it offers only interim solutions. The robust audience measurement that Move 2.0 aims to deliver is still 18 months away – if all goes to plan.

“The OMA has been on the journey to try and standardise terminology, sign types and all the bits and pieces that go along with understanding out-of-home,” says JCDecaux’s Steve O’Connor. “I think the multiplier factor is something that we won't have a lot of accuracy with until Move 2.0 is launched. But we've done a pretty good job of building a stopgap measure in the meantime. “

But Yahoo’s John McNerney argues that the standardisation issue is not unique to programmatic and should not hamper the channel's growth.

"Programmatic requires a greater level of transparency, but the measurement on digital out-of-home is equally not there,” says McNerney. “The reality is that there’s a lot more transparency than there was before. Buyers have the ability to receive reports on the hour, understand and verify the loads of screens, and advertisers can ask the media owners what ingredients or signals they are putting into their multiplier to justify the price of that screen on any given hour,” he adds.

“Move 2.0 is the standardised currency that everyone's aiming for, and the industry bodies are doing a great job of working on what the standard currency ingredients for the multipliers will look like. This will continue to evolve, but it shouldn't be the reason for not doing programmatic out-of-home, and many agencies are still trying to understand what this means,” says McNerney. “But, if they don't have their toes in the water, they’re falling behind.”

Building brand and performance hybrid

Out-of-home has always been a strong brand awareness platform and pDOOH now adds performance capability with data and targeting.

Interestingly, the IAB report revealed brand awareness remained the number one objective of pDOOH followed by incremental/extended reach; however, reach is more often used as a campaign measure of success rather than brand metrics.

VMO’s Paul Butler believes it's not a case of one or the other. "I think the best way to describe it is mass targeting. Because you can do performance, driving path to purchase and sales and position screens outside supermarkets to influence the path to purchase and those sorts of things,” he says.

“But you can also do brand awareness through a normal, planned approach, and you can use programmatic for amplification. For example [TV networks] might have a new show launching, and require a short, sharp audience jolt to create mass awareness. But they might not want to invest for a month, and instead go hard for four days leading up to the launch. So it affords a different flexibility," says Butler.

Hivestack’s Matt Bushby says a major opportunity for marketers is to harness the contextual targeting elements of pDOOH, with recent studies suggesting that even simple adaptions to creative to better reflect time and place deliver up to 38 per cent effectiveness gains.

Mi3 unpacks precisely how dynamic creative and pDOOH can deliver more powerful results for brands in part two of this series, published next week.