moving minds

The future of Out of Home media in the UK to 2020

July 06, 2011

Kinetic Worldwide’s report: On the Threshold of Change –The Future of Out of Home Media (UK)

The Future of Out of Home report On the Threshold of Change is available here.

Introduction

The Out of Home industry in the UK is characterised by a long, creatively prosperous history and has adapted well to change in recent years through the application of high investment levels from media owners and attempts to be more accountable, measureable and flexible. It is still delivering all of these elements to satisfy client demand and must now deal with how to effectively embrace technology as consumers get smarter and technology provides a fully interactive experience.

Kinetic’s Future of Out of Home project focuses on how change can be clearly and successfully implemented by the industry, but also outlines how client, consumer and commercial needs will test the resolve and the creativity of the industry as it adapts to change.

Our research began in January 2011 by conducting several interviews across the industry with investors, consultants, media owners, media agencies, creative agencies and manufacturers – whilst adding our own perspective – on what faces the industry over the next ten years.

We also conducted consumer research into expectation, technology take-up and the perception of an industry in the process of change. The findings delivered a number of themes, spanning the commercial, developmental and technological aspects of Out of Home. There was consistency of perspective, particularly from within the respective quarters of the industry. There was also much debate and some conflicting expectation. What we have done is bring that perspective and consensus together into a viewpoint and a forecast of how the industry will change in the next ten years.

The road to 2020 will be one that seizes on the considerable change and initiatives already underway. Our view is that we are on the threshold of change now and that this is an exciting time for a media sector that embraces consumer mobility, technology and communication response at its heart.

Executive summary

• Out of Home media revenues to see continued growth over the next decade, reaching £1.15bn by 2020.

• A re-appraisal of the value of the Out of Home media sector will be justified by robust long-term growth and a rising share of total media expenditure.

• Digital OOH revenues will account for a quarter of total OOH revenues by 2020.

• Out of Home will segment into two dual sectors; Broadcast OOH and Targeted OOH.

• Interactive OOH (iOOH) and Poster to Mobile will emerge as new specialisms.

• Specialist OOH agencies and media owners will embrace mobile, social media, digital content creation and online advertising expertise, reflecting the change in the medium towards lifestyles and environments.

• Consumers do want to interact more with digital screens.

• Daypart, retail proximity and real-time planning will revolutionise the relationship between Out of Home and advertisers.

• NFC and RFID have the potential to transform the relationship in the short term.

• Smart posters capable of recognising and reacting to consumer type will become commonplace.

• Digital poster networks will become more widely visible across at least 30 major cities within 10 years.

• Digital screens in established Out of Home locations will double over the coming decade; significant impetus will be given to some roadside and bus 6 sheets after 2015.

• The total Out of Home advertising universe will increase dramatically with very limited rationalisation of traditional static billboards.

Overview: Technology to Revalue and Reshape Out of Home Media by 2020

An exhaustive study of the future of poster advertising in the UK by lifestyles and environments agency Kinetic Worldwide, reveals Out of Home media will not only increase its market share as a result of digital technology over the next ten years, but its structure will change significantly too.

The transformation of Out of Home as an advertising medium will be matched by the changes digital posters bring to urban environments and interactive communications with consumers out of the home.

Kinetic has analysed industry data, consulted around  20 media and advertising experts and carried out new research to draw a series of conclusions including:

• Digital technology will grow Out of Home’s (OOH) total share of media:
Total OOH media spend to see continued growth from £880m (2010) to £1.15bn by 2020. Digital revenues will reach almost £260m accounting for approximately a quarter of total OOH spend.

• The total OOH site universe will grow with digital adding additional sectors:
Kinetic’s analysis reveals that digital sites will not simply replace static posters, but will create additional levels of consumer reach. Digital poster networks will be visible across 30 cities nationally with almost 110,000 screens in use. Aggressive digital expansion expected for 6 sheets and bus shelters after 2015. Only a limited rationalisation of static posters is expected.

• The medium’s operational structure to evolve:
Two broad OOH sectors will emerge: Broadcast and Targeted. Broadcast will include large numbers of well-positioned static sites and premium digital sites. Targeted will include national networks of digital sites capable of time-flexible distribution and real-time reactive campaigns.

• Dynamic use of digital sites to create a powerful high-street direct response medium:
The deployment of national digital poster networks in proximity to retail locations and the integration of day-part flexibility; real-time planning and new audience-based trading systems will unlock the potential to drive “smart” retail promotional marketing.

• NFC and social media likely to transform relationship between posters and consumers:
Some urban areas will deliver a multi-media experience. Instantaneous download capability within a growing number of smartphones, matched by NFC or RFID interactive technology in posters, could transform promotional marketing and the distribution of social media and entertainment content even in low-dwell time urban environments. In addition a significant number of sites are expected to be capable of recognising consumer types and moods.

• Research indicates consumers already want to interact with posters:
New research by Kinetic reveals that half of consumers already see the value of interacting with posters and 20% even expect to be recognised by posters in the future; 75% expect to carry a smartphone or tablet computer; 66% expect to see digital screens in most city centres; 70% think digital posters beneficial in high-dwell time locations.

• Technology will not only re-value OOH but will forge a far closer relationship with other media and with technology sectors:
Kinetic’s analysis suggests OOH will develop a symbiotic relationship with mobile marketing and internet based campaigns, opening up new revenue streams. Content will play an increasing role in OOH media and billboards are likely to become a distribution point for digitised news and entertainment content.

James Copley, COO UK at Kinetic Worldwide comments: “Rather than being a disruptive force, digital technology will create enormous opportunities for Out of Home media. Our analysis, consultations and research suggest the poster industry is entering a transformative period; one in which it will gain market share by integrating technology and delivering a wider range of effective and engaging propositions.

The Future of Out of Home report On the Threshold of Change is available here.

Kinetic, June 2011