Waiting for DOOH

Is digital shaking up outdoor in Central-Eastern Europe?

Though OOH seems to be a relatively calm segment compared to the booming online sector and its close competitor, TV, change is on its way in this field as well. Experts anticipate that digital will leave its mark on outdoor ads, but will this happen in the CEE region anytime soon?

Digital transformation doesn’t leave outdoor intact: LCD and other digital technologies have started to appear in the streets and DOOH (digital out-of-home) will continue expanding with the advance of programmatic. Last year, the estimated size of the DOOH segment reached 5.7 billion dollars globally and experts claim it’s just the beginning. 

Trendsetting West

Out-of-home is praised for its great targetability, high contextual relevance and outstanding results. As we spend 50% more time outside home than before, outdoor ads are great means to grab our attention. Apparently, they are very good at the job even in the digital age: in the US, OOH generates about four times more online activation than TV, radio or print.

So it comes as no surprise that even the biggest tech companies are interested in OOH solutions. In the US, four of the ten largest spenders on billboards are tech firms (namely, Apple, Google, Amazon, and Netflix). Tech giants make good use of the medium recognizing that, on the contrary to online space where their ads can easily be avoided with an ad blocker, the audience can’t filter out what they see in real life.

Consequently, outdoor advertising is regaining momentum. “OOH is the only traditional media channel likely to post net revenue growth this year (+21.9 to $8 billion),” Magna reported about the US ad market last year. The reason behind the increase? “…further organic growth in digital/ambient OOH inventory,” – the company explained.

 Photo by Paweł Czerwiński on Unsplash

Photo by Paweł Czerwiński on Unsplash

Where does Europe stand?

The trend is similar in Western Europe. According to PwC, digital seems to slowly outpace traditional OOH: in 2018 DOOH was anticipated to take over the ‘offline’ counterpart in the UK. Booming popularity is backed by impressive results. A recent study conducted in the British market shows, that “by adding Full Motion Digital OOH to a social campaign, effectiveness across the brand funnel increased on average by 23%.”

So the number of digital screens is expanding and advertisers find more and more ways to use them. And while investing in digital outdoor is still costly even in Western markets, the solution is within arm’s reach. “… ad buyers are starting to see outdoor media as just another screen they can buy, while media owners look to programmatic as a way to recoup the costs of owning pricey digital screens” – writes Digiday.

The advent of disruption

So DOOH is knocking on the door in the digitally most developed advertising markets, but what about Central-Eastern Europe? In the CANnual Report 2018, we asked weCAN’s media experts to share their prognoses about the development of different media types in CEE. The result is a mixed picture of DOOH’s future in the region.

“Wide trends such as establishing synergy between digital and OOH advertising – where OOH as a media is a trigger for further and more detailed online search – are very much expected” – wrote Ljiljana Grmuša, Account Director of New Moment Belgrade, Serbia, in anticipation of a more radical digital shift in the East. Costin Grigoras, Media Director, Media Investment (thegroup), Romania went further saying “digital outdoor formats reach the level of sophistication of programmatic planning and buying by real-time booking and monitoring (as well as audience measurements)”. But are we there yet?

 Entry works on outstanding.si, the website of the Outstanding Awards for OOH solutions organized by Europlakat in Slovenia

Entry works on outstanding.si, the website of the Outstanding Awards for OOH solutions organized by Europlakat in Slovenia

The harsh Eastern reality

Though local experts have wide knowledge of digital out-of-home solutions, the emphasis is on waiting for the digital break-through to happen rather than rolling with it. “Digitalization is the buzzword in OOH right now, even though reality is somewhat different from the expectations. At the end of the day, we are a small country of 2 million people and the start-up costs of OOH digitalization are much harder for the providers to cover in such a small market,” explained Bojan Popović, Media Director at Ascanius Media, Slovenia.

The DOOH segment is not suffering from teething problems only in small countries like Slovenia. Poland has the second largest OOH spending in the region (114 M EUR in 2017), but local outdoor media companies agree that digital is not very popular in the sector yet. “The main reason is that the Polish OOH market is still waiting for clear regulations concerning digital screens before making major investments” – says Stöer Group, one of the leaders of the Polish OOH market.

According to Anita Király, Media Director of Café Communications, Hungary, the low number of DOOH screens affects severely the ROI as well. “Digital has not yet become a determining trend in OOH because of the low number of devices and its relatively high cost. Besides, it does not have that remarkable results: beacon [a digital solution built in OOH formats that sends silent notifications to phones within close proximity via Bluetooth] has 3%, which is the same as what a unique online ad has.”

Citylight with beacon solution by ODEX

Citylight with beacon solution by ODEX

A bumpy road to development

Another factor that may set back the development of digital outdoor in the CEE region is the legislative environment of OOH markets. “By 2020, probably the whole sector will be brought under full control of the state” – wrote Anita Király regarding a new law adopted in Hungary. In Sofia, Bulgaria, the municipality has started to adopt regulations that are believed to limit the market inventory and can lead to the rearrangement of the whole market. Future prospects for the sector aren’t any brighter in Russia either. “The State Standard for placement of outdoor advertising (currently depending on the decision of the regional authorities) that should come into force in 2019 will outlaw about 80% of the outdoor spots within the territory of Russia,” wrote Vladimir Shmalenyuk, Non-TV Buying Director of Mediaplus (Serviceplan), in the CANnual Report 2018.

To conclude, digital is a buzzword in OOH and is tantalizing Eastern markets, but it faces many challenges in the region. Even in the West, the entry cost of digital billboards is high, so it comes as no surprise that the digital OOH boom is still pending in an economically less developed region. The markets are small for large investments and changing unclear regulations can also be a headache to all actors in this field.  

Dora Pethő