PrDOOH 2.0: What is the Future of Programmatic Digital Out of Home?
The world of digital transactions has undergone a seismic shift in the past decade. Programmatic advertising, including digital out-of-home (DOOH), is quickly taking the lead in the advertising space. According to JC Conti, CEO of VIOOH, programmatic display and video advertising now dominate over 90% of the market, and programmatic digital out-of-home (prDOOH) is gaining significant traction. In this blog, we explore everything you need to know about prDOOH and its future in the advertising industry.
The Rapid Shift Towards Programmatic Advertising
In just 12 years, digital transactions in the U.S. have shifted dramatically. Programmatic display and video advertising, which once accounted for less than 10% of all digital transactions, now represent over 90% as of December 2023, according to Insider Intelligence. This rapid evolution highlights the transformative power of programmatic technology, signaling that the future of advertising is increasingly automated and data-driven.
The Rise of Programmatic Digital Out-of-Home (prDOOH)
Among the areas experiencing growth is programmatic digital out-of-home (prDOOH) advertising. Although its adoption rate in the U.S. is still accelerating, markets like Germany are already seeing higher levels of adoption. PwC forecasts that programmatic will surpass direct-sold DOOH in Germany by 2024, and it’s expected to overtake traditional out-of-home (OOH) advertising by 2030.
While the slower adoption in some markets can be attributed to the cookie-free environment, this could ultimately be an advantage. By using the same inventory for programmatic as direct-sold, prDOOH maintains high-quality perceptions and commands premium CPMs—typically 30% higher than direct sales. This flexibility and data-driven approach attract performance-driven budgets, as well as new clients who value the ability to reach highly targeted audiences.
Buyers See the Value of Trading Programmatic DOOH
The VIOOH State of the Nation 2023 report reveals that 33% of executives have added incremental budgets to their prDOOH spending, with expectations for further increases in 2024. Additionally, 73% of programmatic DOOH budgets now come from digital or other channels, showcasing the shift toward prDOOH as advertisers increasingly allocate net new budgets to the space.
Integrating DOOH into omnichannel campaigns amplifies the effectiveness of media strategies. According to Kantar research, campaigns with spend spread across multiple channels can be 2.6 times more effective. A report from Digizuite further supports this, noting that advertisers with strong omnichannel strategies experience a 9.5% increase in annual revenue compared to those with less integrated approaches.
How Cookie Deprecation Creates an Opportunity for OOH Media Owners
The deprecation of third-party cookies presents a unique opportunity for out-of-home (OOH) media owners to leverage their data assets. As digital buyers rely more on data to target audiences effectively, the loss of third-party cookies poses a challenge. However, this is where media owners can benefit. DOOH has never relied on third-party cookies and instead uses latitude and longitude data to target audiences. This positions DOOH as an attractive option for media buyers looking for reliable data sources.
A 2022 McKinsey report found that 41% of U.S. consumers are opposed to tracking cookies. The potential loss of ad spend in Google Chrome alone could reach $10 billion in the U.S. The end of third-party cookies further strengthens the position of media owners who can provide high-quality, privacy-compliant data.
Programmatic: A Key to Driving Incremental Growth for OOH
As media agencies continue to shift toward audience buying across multiple channels, DOOH is catching up by refining its targeting capabilities. The desire for multi-channel buying has led to increased interest in programmatic DOOH, and simplifying the buying process through curated inventory across multiple media owners will make certain SSPs (Supply Side Platforms) the preferred platform for agencies.
5 Future Trends in PrDOOH
The future of prDOOH is shaped by emerging trends that enhance customer experience, efficiency, and the relevance of advertising. At VIOOH, we’re seeing key developments that are expected to drive the next phase of prDOOH growth.
1. Dynamic Creative Optimization (DCO)
Dynamic Creative Optimization (DCO) enables real-time messaging that adapts to consumer behavior, mindset, or the stage of the customer journey. For example, in retail media, sequential messaging can guide shoppers from external ads to targeted in-store ads. A 2020 study by IAS found that 70% of UK consumers are more likely to remember ads that are contextually relevant. By enhancing relevance and improving customer experience, DCO also boosts advertising efficiency.
2. 3D Creative
3D creative is revolutionizing advertising. According to Forbes, 3D ads can increase conversion rates by 40% compared to traditional formats. With technological advancements, 3D content can now be delivered across all DOOH screens, making ads at iconic locations even more impactful. This new approach to advertising resonates deeply with younger, tech-savvy audiences, such as Gen Z.
3. Sustainability
Sustainability is becoming an integral aspect of modern consumer behavior. According to Sharethrough’s May 2022 report, 80% of consumers prefer brands that work to reduce their carbon footprint. PwC’s 2021 Global Consumer Insights Survey also found that 81% of people expect companies to be environmentally conscious in their advertising.
VIOOH’s collaboration with Cedara highlights the growing importance of sustainability, revealing that VIOOH’s carbon emissions were only 0.28 grams of CO2e in 2022, well below the industry benchmark. This industry-first initiative sets a high standard for sustainable practices in digital out-of-home advertising.
4. DOOH & Retail Media
Retail media and DOOH have evolved into key players in omnichannel marketing strategies. By leveraging data and automation, these media tools deliver targeted, effective messages that resonate with consumers. Retailers have access to valuable first-party data, including insights from loyalty programs, which can be used to power prDOOH campaigns.
5. The Role of Data and Automation
The continued reliance on data and automation will only increase as advertisers refine their targeting capabilities. Data-driven strategies are the key to unlocking incremental growth, and prDOOH's integration into omnichannel campaigns will enhance its effectiveness.
Conclusion
The programmatic revolution in DOOH is well underway, providing new opportunities for growth, innovation, and sustainability in the advertising space. By embracing data-driven strategies and integrating DOOH into omnichannel campaigns, advertisers can unlock significant value and drive more effective, impactful advertising. The future of prDOOH is bright, and staying ahead of these emerging trends will ensure success in the evolving digital advertising landscape.
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