Out of Home Advertising and Performance

Sudeep Kumar Jain is the President and CEO of tefoLOGIC. He graduated with a degree in mechanical engineering from Pondicherry University and worked at Best & Crompton before starting his career as a corporate marketer in the IT and ITES industry. He earned his Executive MBA with a specialization in Executive Leadership from Liverpool Business School. He has been pioneering the cause of data aggregation from the real world using computer vision since 2016.

A word that has haunted the out-of-home industry, yes, its ‘performance’. In the 21st century, it shouldn't be a challenge, especially when performance marketing across digital advertising media is all the rage. Let's find out what's stopping the advertising industry from adopting a methodology that's well-tested and currently in use by their digital peers.

What's the key metric?

Impressions are everything when it comes to the out-of-home advertising medium. The term CPM (cost per mile or thousand impressions) was coined by the out-of-home advertising industry. CPM is a French abbreviation used to refer to what we call in English “cost per thousand.”

The original version is “coût pour mille impressions”. Currently, CPM has become a key measure of performance for content monetization on the internet. Since the 20th century, out-of-home advertisers have used it as a metric to determine the cost of advertising.

The idea was to estimate the value of an ad based on 1000 viewers since many news outlets didn't have research data about their audience.

(Total number of Impressions ÷ 1000) x CPM = Total cost of campaign

Today, this metric is still used by out-of-home media, but the rise of the Internet and social media have shaken up the revenues of their industry. Before online content, there was no efficient and consistent method to verify if an advertisement was seen by 1000 users.

Right now, the only metric available consistently over time is POP (Proof of Performance) – Proof of Performance reports typically include the vendor name, structure number, advertiser name, flight dates, products advertised, summary of message played, times message played, and photos of the ad being played on the specific billboard structure.

Why data?

Measuring impressions is just the tip of the iceberg for the out-of-home advertising industry. Measurement is the first step and not the ultimate goal for judging the performance of a campaign over time and locations. Availability of time-series data before, during, and after a campaign will lead to performance reporting.

The industry needs to start with campaign performance reporting as a standard offering before jumping onto the planning bandwagon. Many peers offer planning-as-a-service but with poor data sets that are not directly aggregated from the inventory itself but from all around it. Only inventory-specific data will help in computing performance and eventually reassure brand owners that their campaign budgets are being spent judiciously. There have been countless incidents in the past that have created rifts between brand owners and media buyers regarding WRT assessment of impressions for a particular city or locality.

Today, only a few brand owners fully trust the media plan devised by their advertising agencies, which are primarily responsible for the creative development of campaigns. Further, much to their dismay, most advertising agencies play the role of a media buyer for their clients to this day. Today, CMOs are flush with performance marketing data and insights pertaining to a particular creative that was published online. The same cannot be said about the out-of-home advertising medium.

The biggest issue for media buyers (independent or agency-affiliated) is providing campaign performance reports to their clients. Clients who expect to gather insights from their advertising spending are moving their budgets to online media, where the process of buying and reporting has almost become seamless; not that it's perfect in every way. However, the brand owners can gain a fair understanding of both impressions and attribution a campaign gained and created. The lack of such data has also caused immense grievance in the closely-knit community of media owners, as they’ve become accustomed to losing business to the online medium; now they are having to either rely on discounting tactics and/or appeal to the fancies of a client to sell available space/inventory.

Reliable and consistent data aggregated from the real world can alleviate the friction that’s evident after the media planning process ends at the brand owners' or advertising agencies' end and fill the gap left wide open in the buying and reporting process.

What has the out-of-home advertising industry been doing all this while?

Leaving aside a plethora of media planning tools that have been developed in the past and are currently in use, not much can be said about campaign performance reporting. There have been multiple attempts to tame the data cliff in the past decade, yet the budget allocation for out-of-home advertising campaigns has seen a constant decline from over 12% to 5% in 2022, as per the Pitch Madison Advertising Report of 2023.

It's safe to say that the out-of-home advertising medium hardly receives the attention it deserves from brand owners in terms of budgetary allowance. Not for lack of want, but more from the perspective of ease of use and consistency, campaign performance reporting is still a grossly unserved market.

In my conversations with CMOs across the world and specifically in India, I discovered a general lack of enthusiasm and respect for the medium. When asked why? I received only one answer, which was a lack of credible performance reporting. There is no dearth of creativity and willingness to execute large nationwide campaigns by agencies for national accounts/clients. The only impediment seems to be the availability of inventory-specific data for computing the effectiveness of a campaign at a particular location.

Advertising agencies responsible for media buying have to make combo deals with media owners to justify the CPM being agreed on and paid as a rental to media owners. This approach is not only causing a loss of revenue for media owners but has also resulted in a lack of trust on the agency side with their client, the brand owners.

What is the future?

In an online context, programmatic advertising generally refers to the automated buying and selling of digital advertising space through real-time bidding (RTB) on ad exchanges. Programmatic advertising uses algorithms and technology to streamline the ad-buying process, allowing advertisers to target specific audiences with greater precision and efficiency.

The future of out-of-home advertising is programmatic, as portrayed by many companies in the fray, including tefoLOGIC, Quividi, PROOH, Lemma, and others. But the programmatic being offered today is more on the supply side and pertains to inventory availability rather than making the buying and reporting process seamless.

Only when the industry embraces measurement and campaign performance reporting can programmatic buying become a reality for the out-of-home advertising industry.