Exclusive interview for Digital Signage Pulse.
Ahead of the OAAA-TAB National Convention + Expo in San Diego, which will take place on May 11-13, I spoke with one of the featured speakers, Mark Boidman, about the state of the DOOH industry.
Mark Boidman is a Managing Director at independent investment banking firm Peter J. Solomon Company (PJSC). He is widely recognized as a leading OOH Media and Digital Signage M&A advisor.
NU: What are the latest trends in media and how do they affect digital out-of-home advertising?
MB: The biggest trend is mobile advertising, and we’re certainly seeing an explosion in both mobile and online video. Both of those developments are going to help the digital OOH industry. A lot of that relates to DOOH being the bridge between the digital and physical worlds. We also see beacons as being a big trend in ad tech. Gimbal, for example, where I serve on the Advisory Board, is now deploying its beacon solution as a way to engage mobile users and also as a method of attribution and showing that DOOH works.
NU: What role does digital out-of-home media play in the overall media landscape?
MB: Unfortunately DOOH advertising is not a major segment of the media spend yet. That’s part of the problem and also the reason why we spend time in this industry. We believe in it, and we see it as something that should be a lot bigger. OOH advertising, depending on where your data comes from, is somewhere between a $7 and $7.5 billion industry, and digital OOH is a subset of that, call it $2.5-$3 billion in the US, depending on the source.
Being a small component of the overall $170-$180 billion US advertising spend, DOOH doesn’t play a large enough role in the media landscape. But our view is that over time, with technology being a friend to the industry and with other, traditional media channels continuing to fall out of favor, digital OOH should benefit from those trends and grow its share of the market.
NU: Why, as an investment banker, are you interested in the DOOH media market?
MB: We think there’s an opportunity here for growth. This is a sector that has been misunderstood and undervalued. It also has not had the full benefit of mobile and online video dollars that we think should shift over time into DOOH, as people expect more mobile and contextually relevant content while they are on the go.
We also think, frankly, that it’s an industry that’s ripe for consolidation. We’re M&A advisors, so industries that are consolidating are very interesting to us. But for us digital OOH or OOH media is more than just advertising. We also cover all the software and hardware solutions, services, providers to the industry, and we see those companies coming together, consolidating as well. Whether it’s digital signage hardware or software solutions providers, including content management systems, systems integrators, programmatic – supply side or on the demand side – all of that is very intriguing to us as well.
NU: What is the current investment climate in the DOOH media market? Your view on recent market deals, valuations?
MB: The climate is good. Attractive equity valuations in the marketplace, access to debt capital, the fact that there’s a lot of money on the sidelines, and the fact that the industry is poised for growth and consolidation are all positive indicators for us. We’re seeing that there are many more transactions happening today than there were even a year ago. There are also a significant number of companies that should be combined. We won’t name any particular businesses here, but there are certainly many companies in the sector for which it would make sense to be merged.
NU: What, in your opinion, are the factors preventing DOOH advertising from occupying the place in ad budgets it deserves?
MB: DOOH ad space needs to move from being a tactical buy to a strategic buy, from marginal to mainstream – meaning it can’t just be seen as a way to fill in the edges around a media plan. Instead, DOOH has to be an integral aspect of the media strategy. For this to happen it needs to be better understood and data needs to be readily available to prove the ROI and other benefits (such as branding, etc.) to advertisers. If you can do that, I think more dollars will flow into DOOH ad budgets.
I also think if stakeholders can create an automated marketplace that would bring buyers and sellers together more efficiently, level the playing field with online video and mobile, it will further boost the influx of ad dollars into this sector.
DOOH networks reach at least 50 percent of the US adult population; however, digital OOH is the first thing cut from media plans. It is true that we are starting to see digital OOH gradually occupying a more prominent place in ad budgets but this process needs to accelerate. As digital OOH embraces mobile and online video more openly, and the lines continue to blur, I think digital OOH should be able to take dollars from those buckets.
Strangely enough, despite the obvious advantages of DOOH, not all ad agencies are facilitators of its adoption. This is largely due to legacy agency structure that makes it easier for them to pitch and sell less efficient ‘good old’ media than offer their advertisers better options with DOOH or a combination of DOOH and mobile, social tracking.
But in time, markets will respond in the right way. Some of those agencies will adapt to change to remain competitive or will risk losing revenue. There are, however, forward-looking agencies that specialize in OOH and DOOH and those will reap the benefits when the DOOH market matures.
NU: What do you see as the most promising methodologies and technologies for delivering ROI metrics for DOOH advertising?
MB: In terms of ROI metrics for DOOH campaigns – it’s third party data, beacons, mobile integration, Wi-Fi technology – all those things that prove that people not only see the ads but also act on them. Since it’s all digital, DOOH is potentially more measurable than traditional OOH, and this is what should be delivered.
I would argue that DOOH advertising is considerably more effective than online. We know that online advertising is plagued with fraud and uncertainty about whether content is viewed, while these concerns are non-existent in DOOH. In addition, DVR-type technologies that allow consumers to skip ads in online and mobile video are already available.
By contrast, DOOH ads cannot be skipped; they do not interrupt any activities and they reach people when they are most responsive to relevant info about products, services or events.
NU: What, in your opinion, is the proper name for the industry that now goes by several different names: digital signage, digital out-of-home, digital outdoor, screen media and digital place-based media?
MB: I sit on the board of the Digital Signage Federation, which gives me a good vantage point. We think the term ‘digital signage’ covers mostly kiosks, interactive signage and two-way communication. In that sense we feel that “intelligent visual communications” (IVC) is a more accurate name for the medium.
We do like “Out-of-Home” media, we think OOH media covers everything that is outdoor and in-venue – so we usually go with “OOH media”. We do not use the term “digital place-based” as often because we view it as a subset of DOOH media.
Often some of these ad networks prefer to be named by their venue category – e.g., cinema network, doctors’ offices, point-of-care, etc. – everyone wants to have their own label for their specific sector. I think over time you will see that it will become more simplified.
Whatever we call it, we want to see dollars flow out of other media channels into OOH media.
This is inevitable, and we work to make it happen sooner. We intend to outline our thoughts on how we help do that next month at the OAAA / TAB National Convention where we are looking forward to raising important issues for the industry and offering our insights and solutions.