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Is Out-of-Home Media Too Expensive and Does Cost Concern Hinder Results?

May 13, 2024

Originally published in ANA on May 6th, 2024

"Price is what you pay. Value is what you get." This is one of my favorite quotes by Warren Buffett, and the retort I provide to marketers who state that out-of-home (OOH) media is expensive.

The other response is, "Compared to what?" In the United States, OOH accounts for just over 2 percent of ad spend, but this number is larger in other parts of the world, such as 15 percent in the United Kingdom. Is there a similar perception of OOH in these markets? If so, it doesn't seem to impede budget allocation to the channel.

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OOH pricing is largely consistent across the globe, differing based on variables such as format (static, digital), size, location, demand, and seasonality. OOH CPMs are amongst the lowest of all media types, with an average of $2 to $9.

It can be argued that multiplying a low CPM by the scale and flight duration needed for a specific campaign is what makes OOH a wallet-busting undertaking. I call this "OOH commitment issues." The commitment to media in the remaining 98 percent of an American marketer's budget is still higher than that made to OOH, so why the double standard?

My guess is that the misperception that OOH is not measurable. Largely seen as a brand medium (which is measurable via brand studies), OOH is frequently ignored in performance marketing initiatives, despite being measurable across lower funnel KPIs. As marketers lean into the idea of brand as performance, OOH should be a prime candidate for budget allocation. Also, isn't brand as performance (or what I recently saw referred to as "brandformance") simply... marketing? A thought for another article.

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A pricey medium should be worth the commitment if marketers can prove value. If whatever was spent on advertising delivers a positive return on investment, it makes the price itself redundant and negates the hesitancy to invest in an expensive medium. Simply add measurement for everything from brand lift to sales lift, and website conversions and app downloads.

Measurement is the logical response to a discussion around OOH costs, but the psychological side of advertising is just as important. A consumer perception that OOH is expensive can benefit marketers. Mass media can be perceived as more expensive to buy than other channels. Consumers' assumption of advertising costs can have a positive, direct implication on their perception of the quality of the product being advertised. This perception influences assumptions about an advertiser's size, spending power and trustworthiness.

The "IRL" physical, contextual, unblockable, and non-skippable qualities of OOH are also worth mentioning in terms of trust and value for money, as these traits lend to source credibility. Source credibility is created by the perceived expertise and trustworthiness of a message, with higher credibility contributing to higher persuasiveness. When it comes to OOH, 65 percent of respondents to the Edelman Trust Barometer report in the U.S. and Canada trust traditional media compared to 61 percent search and 34 percent social media.

In considering attitude toward media, OOH is viewed positively: 85 percent of consumers find OOH ads useful. Of the 57 percent of consumers who have recently engaged with an OOH ad, 43 percent visited the advertiser's website, and 39 percent made a physical purchase.

Attitude toward media can have a direct, positive relationship with attitude toward the ad and brand opinion, and there are similar implications for upper-funnel on lower-funnel metrics, meaning effective OOH advertising can influence sales while reinforcing branding.

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According to the OAAA, OOH investment should be 13 percent of advertising spend for optimal results, based on a study of successful brands' media mix. So instead of being concerned about the expense of OOH, perhaps increasing the budget, and measuring OOH's contribution to campaign metrics will bring a new perspective. Possibly, "OOH, you get (more than) what you pay for."


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