Media spend on digital media networks growing at double-digit rate

Alternative out-of-home advertising is one of the fastest-growing segments of the media industry, expanding at double-digit rates every year from 2001 to 2006 and posting compound annual growth of  22.6%, according to the PQ Media Alternative Out-of-Home Media Forecast 2007-2011. Alternative out-of-home media are distinguished by the use of innovative technology and concepts, such as video advertising networks and digital billboards, to connect with more elusive consumers in captive environments, including retail, transit, cinema and office locations.

“Alternative-out-of- home media is being electrified by what could be dubbed a perfect storm,” said Patrick Quinn, President and CEO of PQ Media. “Ironically, the trends impeding traditional media – consumer fragmentation and control, advertising accountability and the emergence of digital technology – are the very catalysts stimulating the tremendous growth in alternative out-of-home advertising. Unlike its mass media peers, alternative out-of-home advertising is impervious to channel or web surfing and is immune to audience fragmentation.”

The growth of alternative out-of-home media far outpaced that of the overall advertising industry as well as the total out-of-home media sector, which was one of the fastest-growing advertising sectors in the 2001-2006 period. The overall advertising industry expanded 6.4% in 2006, while total out-of-home advertising increased 10.6%, amplified by the 27.0% growth in alternative out-of-home media, according to the report.

Among the key trends PQ Media cites as driving the rapid expansion of alternative out-of-home media are: 1) the perception among advertisers that these media provide high engagement, targeting options, proximity to point-of-sale, measurable impact and cost effectiveness; 2) data indicating that exposure to and recall of these media is growing as Americans spend more time commuting to work, walking in urban areas, waiting in transit hubs, and shopping at retail outlets; 3) Research suggesting that the vast majority of consumers view alternative out-of-home media as favorable and educational; and 4) new technology enabling companies to launch digital advertising platforms that generate higher revenues than the conventional formats they replace.

“Digital technology and creative positioning enable alternative out-of-home media to stay in tune with today’s fragmented and fast-paced consumer market,” Quinn said. “Americans spend twice as much time outside their homes and workplaces today than they did just a few decades ago. As a result, the ability to reach target audiences in attentive venues through non-intrusive media has become very important.”

Spending growth in each of the three subsegments of alternative out-of-home media – video advertising networks & screens, digital billboards & displays, and ambient advertising – accelerated in 2006 with even faster double-digit upside projected in 2007, PQ Media found.

Video advertising networks is the largest subsegment, accounting for 60% of total spending, led by companies like National CineMedia, Premiere Retail Networks and Captivate Network. Spending on video advertising networks & screens grew 28.0% in 2006 to $1.01 billion, with high double-digit growth in all four markets – in-theater, in-office, in-store and in-transit, according to the PQ Media Alternative Out-of-Home Media Forecast 2007-2011.

Digital billboards & displays is the fastest-growing subsegment, as spending soared 55.4% in 2006 to $233.2 million, PQ Media found. Each of the four markets – at-road, at-retail, at-transit and at-events – expanded at accelerated rates, fueled by companies such as Lamar Advertising, Clear Channel Outdoor, and Reactrix Systems.