Out-of-home (OOH) Advertising comprises the net advertising spend (excluding agency and production costs) for non-digital OOH media, such as posters (billboards, paper placards of various formats), public transport (leaflet holders, lettering and painting of rolling stock, banners, etc.), sports and stadiums, and digital OOH (DOOH) such as ad screens, beamers and electronic billboards.
The Swiss Out of Home Advertising Market
Switzerland’s OOH is dominated by APG and Clear Channel Outdoor. There are a number of smaller players in the market, especially in the digital out-of-home market (DOOH) segment, of which Neo Advertising, Goldbach and passengertv are the most significant.
The entry barrier to the OOH market is high, due to high investments and time needed to establish a meaningful network. Nonetheless, Neo Advertising and passengertv have demonstrated impressive growth in niche markets. Future developments are heavily dependent on market leaders’ investment capabilities and small player’s abilities to identify and establish new markets.
In Switzerland and around the world, the OOH market is transforming from conventional poster advertising to digital billboards. Many conventional billboards are being augmented with backlit displays and, later, replaced by digital screens. Price declines in large plasma and LCD screens support the growth. However, due to regulatory restrictions in public areas and the associated sizeable investments, conversion is going slower than expected. Meanwhile, non-digital OOH remains lively and presents innovative settings.
DOOH is more eye-catching, and it meets demands for better targeting and feedback. Each advert can be displayed at a time best suited to reaching its target audience, for example at airports, in public transport vehicles or train stations (narrowcasting). DOOH billboards can change with the weather, e.g. from showing umbrellas and gloves to sunglasses or ice cream. Or they can enhance interactivity with the viewer through the use of QR Codes, NFC (Near Field Communication), beacons or live screening of viewer content.
DOOH benefits location owners and advertisers alike in being able to engage customers and/or audiences and extend the reach and effectiveness of marketing messages. The advertising industry is convinced that the broadcasting environment is becoming increasingly important, because it can affect customer perception positively.
Advertisers prefer to book campaigns with certain coverage across regions. Current DOOH-networks allow this only to a limited, but growing, extent (e.g. at airports, train stations, bus stops or shopping malls). Display boards at 17 Swiss train stations are digitized – the largest boards are the eBoards of APG | SGA Rail, which are largest electronic, indoor advertising spaces in Europe. They display a mixture of animated adverts – so-called "PosterSpots" – as well as news, business, sports and culture.
At the end of 2014, the first LED board was installed and tested at the Neuchâtel Station. Tests included the playing of commercial DOOH content. Since then, Rail eBoards have gone up in major stations in Switzerland, offering up to 60-m2 display, with high image quality and high color intensity. DOOH’s attractiveness is increasing thanks to its ability to make use of streaming video as an alternative to television (and there are online and cinema advertising formats). Its only constraint is that DOOH usually cannot make use of sound, a disadvantage compared to TV or cinema. Current DOOH screens are used with limitations to stream video broadcasts rather than to allow more frequent board rotations and “light animated” images. Light animation, such as a certain amount of motion in a picture, appears less disturbing to the public and therefore might face lower regulatory restrictions.
Switzerland’s non-digital OOH is saturated. Outdoor advertising instruments (poster panels, poster stands, advertising towers, mega posters on buildings or other suitable public surfaces) are fully exploited, and governed by regulations. OOH advertising companies are therefore very keen to acquire further space from private individuals or investors (e.g. on buildings, malls, business centres, ski areas, privately owned car parks and public transportation), and are focused on efficient, profitable contracts. Swaps of locations, such as cities, transportation networks, airports or malls, between the advertising companies are frequently seen.
We do not expect long-term growth in non-digital OOH. Downward price pressure due to high capacities, changes in the market mix and replacements to digital products is the main influencing factor. Certain effects, such as federal elections or votes (e.g. parliament in 2019), will occasionally result in higher spending. The transportation market will remain stable, supported by increasing passenger volumes and lengthening commute times.
We expect DOOH advertising to show annual growth rates of more than 10 per cent. Regulatory restrictions, cost-intensive trial periods and related investments resulted in slower growth than originally expected. However, the development of interesting networks (e.g. bus stops) and declining costs support the transformation from non-digital to DOOH.
The OOH market is being transformed by the deployment of digital billboards, other digital screens, as well as the expansion of captive video networks such as in buses, stores or railway stations. As well as being more eye-catching, DOOH enables each advertisement to be displayed at a time best suited to reaching its target audience and will thereby enhance the cost-effectiveness for the advertiser.
The cost of enlarging DOOH infrastructure continues to decrease, and larger DOOH networks stretch the reach of campaigns. This is why DOOH is growing, also because digital signage offers flexibility in displaying sequential ads, part-day bookings, pricing schemes based on effective audience, interactivity and the enhanced measurability of advertising impact.
Advertisers are aware of the value of OOH advertising and improved measurement techniques provide accurate reach and frequency data comparable to other media. So, advertisers can measure the cost-effectiveness of OOH versus other media and integrate it into their media plans. Improved audience measurement usually increases spending, both in total and as a way of justifying price premiums. Not only due to the enhanced measurement possibilities, but also due to the growth in DOOH, the cost-effectiveness of OOH is increasing.
OOH media in combination with the wide distribution of smartphones and technologies like Beacons, NFC or QR codes are leading to enhanced interaction possibilities with the audience. This will ultimately result in more engagement and more effectively stimulate people to purchase products. Furthermore, this will provide valuable feedback to advertisers on consumer behaviour. Typical interactions are calls to action via votes, polls, sweepstakes and promotions, call-back requests and text-for-info, as well as mobile coupons and games via mobile devices.
Compared to other media like TV, radio, newspapers and magazines, both digital and non-digital OOH advertising offer a range of possibilities to create inspiring, head-turning campaigns. In a world with an overabundance of information and amenities, it becomes ever more difficult to get attention, be eye-catching and standing out from the crowd. Advertisers’ creativity is inspiring, what has been realised is tremendous, and it includes: full station branding, integration of billboards in surroundings, 3-D billboards, 4-D billboards with sound or smell, live-screening of viewer content and interacting billboards.
New technology and its anchoring in society drive innovation in the OOH industry. Such technologies are Beacons, NFC or QR codes.
Placed in a strategic area, Beacons send out simple messages to any smart device in the surrounding area without depending on an internet connection. NFC or QR codes work similarly, by either touching or taking a picture of the code. These technologies allow brands to transmit tailored information and match the target audience with the right message at the right place and time. Possible applications would be for restaurants to promote their daily menu, for shops to give away vouchers to passers-by or to show departures and delays to people waiting at a bus stop. Ultimately, they lead to an enhanced interaction with the target audience and provide valuable feedback to advertisers on consumer behaviour. After various trial phases across the world, Beacons and NFC have been employed in various projects, also in Switzerland.
Another development to target key audiences better (narrowcasting) are programmatic platforms. This approach aims to dynamically sell and display the most appropriate ads, in the style of Internet advertising. A key challenge for such dynamic applications of DOOH is gathering the real-time information needed to target viewers accurately. For example, two recent tests were made of feeding data such as flight arrival times into its displays, and placing cameras on the billboards to attempt to analyse the gender and age of viewers.
Comparison to Western Europe
The highly developed Swiss OOH market is the fourth largest in Western Europe. It is expected that Switzerland will show lower annual growth rates, compared to Western Europe.
The UK is the largest OOH market in Western Europe, with revenues of CHF 1.8 billion, followed by France with CHF 1.4 billion. The UK also leads in DOOH advertising (ca. 30 per cent of OOH spending). We expect continuing strong growth in DOOH; it should surpass physical OOH by 2020.
Germany, the third-largest market in Western Europe, is expected to grow more than 2 per cent per year and to reach CHF 1.2 billion by 2020. Compared to Switzerland, the German market is quite decentralised and focuses on the big cities and the Rhine-Ruhr region. Ströer, the market leader, is continuing to expand its network across the country to provide more comprehensive coverage.