Out-of-Home

Digital Out-of-Home media open the way to enhanced eye-catching ads and direct interaction with the audience.

Segment definition

Out-of-home (OOH) advertising comprises the net advertising spend (excluding agency and production costs) for non-digital OOH media, such as posters (billboards, paper placards of various formats), public transport (leaflet holders, lettering and painting on rolling stock, banners, etc.), sports and stadiums, and digital OOH (DOOH) such as ad screens, beamers and electronic billboards.

Over 40% of all consumers are influenced by OOH ads an hour before shopping online

Business innovation

In February 2018, Clear Channel Outdoor launched 100 dynamic IP addressable HD screens in the urban metro area of San Francisco, allowing advertisers to connect with the consumer in a highly targeted and innovative way. The street-level medium is capable of reaching audience based on their consumer travel patterns and behaviours derived from mobile data. The network allows advertisers to benefit from several features such as conditional triggers which react to changes in weather, time of day, traffic and even pollen counts. The screens also allow data integration (e.g. sport scores and breaking news) and social integration in the form of hashtag aggregation and social media content which can be placed in the network, all while being tailored to the various pedestrians.

The company also offers a product complement that provides a sophisticated visualisation platform, which allows advertisers to optimize their OOH campaign by entering campaign-specific information like demographics, audience segments or locations to reach consumers along their usual pathways. As a result, marketers are able to address niche clients and improve their ROI. Clear Channel Outdoor is also present in the Swiss OOH market. Along with digitalisation of mobile and OOH advertising, various opportunities open up for new and creative ways to reach people.

Engaging the audience is increasingly gaining importance across the OOH industry. Improvements in technology and infrastructure, as well as a shift to digital and interactive advertisements further this trend. It’s a matter of time before the lines between OOH, mobile and digital merge to create a mixed experience of DOOH and the real world as well as cross-channel optimisation.

The Swiss OOH market

Market overview

In recent years, the OOH market was mainly dominated by APG and Clear Channel Outdoor, with a couple of other smaller players also in the market. In 2017, APG claimed about 65% of the Swiss OOH market. The company holds important mandates in the private sector and in early 2018 won the SBB’s tender for exclusive advertising rights for the next five to ten years. A decline is not in sight, but a higher volatility of the portfolio has to be expected. APG faces fiercer competition and shrinking margins and has lost bids for public transportation companies in major cities like Zürich, Luzern and Geneva.

Smaller players are primarily active in the digital out-of-home (DOOH) segment, of which Neo Advertising, Goldbach and Livesystems are the most significant players. The convergence in the media sector doesn’t stop in the OHH market. In late 2017, Neo Advertising as well as Goldbach were taken over by Tamedia to create synergies and to form a company with a 360-degree solution for customers. The digital trend strengthens Tamedia’s position for bigger market shares with its newly acquired competencies in digital advertising. This engagement might pose a challenge to APG as market leader in the coming years.

"Large international advertising companies will also enter the OOH market and this must not be forgotten or by any means underestimated. The risk of this market entry comes in the form of an overflow of supply, pricing and programmatic know-how.”

Olivier Chuard, CEO, Livesystems dooh AG

In 2016, the Swiss physical OOH market declined slightly while the smaller digital OOH segment grew by 16.7%, resulting in a stagnation of the overall OOH market. The decrease in the physical channel was an anticipated return to normalcy following the election-related strong growth recorded in 2015.

In 2017, the decline in the physical segment persisted with a drop of 1.0%, but according to experts this was caused more by heightened price competition, which resulted in smaller margins. The physical market is expected to stagnate, however without losing share to digital offerings. The DOOH segment is still in a strong uptrend, growing to a total of CHF 49 million, as it strives to compensate shrinking physical advertising revenues in a saturated market. Overall, the Swiss OOH market grossed a total of CHF 452 million in 2017 with a year-on-year growth rate of 0.7%.

"The classic analogue OOH market will stagnate in the near future. Cannibalisation by the digital OOH market will not take place in this context. This is because the digital offerings open up new customer categories.”

Markus Ehrle, CEO, APG|SGA

In Switzerland and around the world, the OOH market is transforming from conventional poster advertising to digital billboards. Many conventional billboards are being augmented with backlit displays and later replaced by digital screens. Price reductions for large LCD screens support the growth, and many large screens are installed on private property. Due to the regulatory restrictions in public areas and the associated sizeable investments, widespread conversion is taking place more gradually than expected. Meanwhile, the non-digital OOH market remains lively and adverts are being presented in innovative settings. But the benefits reaped through digitalisation make the medium more efficient and effective in a variety of ways. DOOH allows dynamic and eye-catching ads, and this opens up a wide range of opportunities for advertisers to better engage with customers by displaying the ads at a time best suited to reaching their target audience. Where physical OOH ads stay the same during their display span, DOOH can address the current needs based on actual conditions, for example the weather – from showing umbrellas during rainy hours, to sunglasses and ice cream on a sunny day. They can also enhance interactivity with the viewer through the use of QR Codes, NFC (near field communication), beacons, AR or live screening of viewer content.

Media placement will be influenced by data from our phones, smartwatches and other wearables, input that can be used to create adverts with high impact on passers-by. The feedback loop allows advertisements to be more measurable and powerful than before. Alternative recognition technologies will also play a major role in the evolution of the DOOH market in Switzerland. Already applied tools like gender or gesture recognition, eye tracking and vehicle recognition in combination with facial expression tracking, heart rate and mood awareness allow advertisers to sense a person’s emotional state and display a currently relevant ad.

DOOH advertising continues to gain popularity thanks to its ability to make use of streaming videos as an alternative to television, although the lack of sound in this format is a clear disadvantage compared to TV or cinema advertising.

Principal drivers

OOH is becoming more flexible and connected

Instead of adjusting the campaign planning in terms of the two channels, the focus will shift more to consumers’ needs at the different stages of their daily routines. By defining clear goals for both media channels, advertisers will tailor the content to each of the channels in a more contextual, interactive and useful way for the consumer. Improved audience metrics justify price premiums and usually lead to increased client spending.

Transformation to digital billboards

Non-digital billboards are increasingly being replaced by their digital counterparts. Other digital screens, along with the expansion of captive video networks like those in public transport vehicles, retail space or railway stations, are also seeing more adoption. As well as being more eye-catching, DOOH enables each advertisement to be more versatile, interactive and generally better suited to reaching its target audience. However, non-digital OOH advertising is not expected to be cannibalised by its digital counterpart in the near future.

Physical presence is eye-catching

In a time when advertising is omnipresent across all media channels, OOH has the advantage of being non-skippable and not easily avoidable due to its physical presence, and it is therefore still able to reach a wide audience. Moreover, the increasing usage of smartphones and wearables fosters interaction with physical and digital OOH advertisements through creative and appealing ways and enhances a cross-media presence.

“OOH is a unique opportunity for advertisers, as it combines all the strengths and the potential of digital media while retaining the abilities of traditional media. The combination of both is extremely strong.”

Christian Vaglio-Giors, CEO, Neo Advertising SA

Compared to other media like TV, radio, newspapers and magazines, both digital and non-digital OOH advertising offer a range of possibilities to create inspiring, head-turning campaigns. In a world with an overabundance of information and amenities, it becomes ever more difficult to attract attention, be eye-catching and stand out from the crowd. Advertisers’ creativity is inspiring, and what they have realised is indeed impressive: full-station branding, integration of billboards into surroundings, 3-D billboards, 4-D billboards with sound or smell, live-screening of viewer content and interacting billboards.

Engagement through OOH

OOH media in combination with today’s ubiquitous smartphones and technologies like beacons, NFC or QR codes are leading to enhanced interaction possibilities with the audience. This will ultimately result in more engagement and the more effective stimulation of people to purchase products. Furthermore, it will provide valuable feedback to advertisers on consumer behaviour. Typical interactions are calls to action via votes, polls, sweepstakes and promotions, call-back requests and text-for-info, as well as mobile coupons and games via mobile devices.

Market growth

Switzerland’s non-digital OOH market is saturated. Outdoor advertising instruments (poster panels, poster stands, advertising towers, and mega posters on buildings or other suitable public surfaces) are fully exploited and governed by regulations. OOH advertising companies are therefore very keen to acquire further space from private individuals or investors (e.g. on buildings, malls, business centres, ski areas, privately owned car parks and public transport vehicles), and are focused on efficient, profitable contracts. Swaps of captive locations, such as cities, transportation networks, airports or malls, between the advertising companies are taking place more frequently.

The total OOH market is expected to grow at a CAGR of 1.3% over the next five years. Although influences like shrinking margins due to increasing competition and changes in the marketing mix challenge this advertising medium, the overall OHH market is still expanding mainly due to digital OOH as its growth driver. Certain effects, such as federal elections or votes (e.g. parliament in 2019), will occasionally result in higher spending. The transportation market will remain stable, buoyed by increasing passenger volumes and lengthening commute times.

It can be assumed that the DOOH market segment will record annual growth rates of about 13.4% through 2022. However, regulatory restrictions, cost-intensive trial periods and the related investments could restrain the growth potential. Nonetheless, the development of interesting networks (e.g. bus stops), new formats and channels, combined with declining costs, should spur the transformation from non-digital to DOOH.

Comparison to Western Europe

The highly developed Swiss OOH market is the fourth largest in Western Europe. Like most countries in Western Europe, growth is coming only from digital OOH, while non-digital is on the decline everywhere except in Germany. Switzerland’s shrinkage in physical OOH is expected to continue at a slower pace than the majority of countries in this comparison.

France is the largest OOH market in Western Europe, with revenues of CHF 1.35 billion, followed by the UK with CHF 1.25 billion and Germany with CHF 1.15 billion in 2017. Compared to France and Germany, the UK is by far the leader in DOOH with 45% of overall revenues coming from the digital segment. France’s DOOH market is expected to grow in excess of 25% annually and triple its digital revenues by 2022.

Germany, the third-largest market in Western Europe, is expected to grow close to 3% per year and top the CHF 1.3 billion mark by 2022. Compared to Switzerland, the German market is decentralised and focuses on the big cities and the Rhine-Ruhr region. Ströer is the market leader with more than 300,000 billboards and is continuing to expand its network across the country to provide more comprehensive coverage. This results in Germany being the only country with increasing physical OOH revenues in Western Europe.