Why billboards and outdoor ads are booming in a smartphone age

Netflix produces content, namely billions of dollars worth of documentaries, series, and cooking shows every year. But, like any tech firm, it’s also heavily invested in advertising, promotion, and market research. How else would it understand viewers, attract new ones, and give them a sense of the wealth of available shows and movies?

When the company was looking to attract new writers, directors, and actors interested in pitching ideas and working for the site, it had plenty of options. But the company decided a $150 million billboard buy on the Sunset Strip in Los Angeles was the best way to go. In a world of targeted advertising—in some cases, uncannily and uncomfortably accurate—a big, bold ad, positioned above the street where your desired audience walks by everyday, still delivers results.

“In the entertainment capital of the world—where your waitress could be producing a movie—Netflix chose to buy billboards,” Nancy Fletcher, the president and CEO of the Outdoor Advertising Association of America, told Advertising Week.

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In a smartphone world, the biggest screens still matter

Netflix’s strategy is being adopted by many of the world’s biggest brands during a resurgence in outdoor advertising. The growth of billboards and digital signage, known within the industry as digital out-of-home (DOOH) advertising, comes in large part because of, and not despite, the overall shift towards digital advertising.

Ad targeting, mobile technology, and ad-supported online media mean most of the industry’s audience is buried in their smartphones, clicking past banner displays and skipping pre-roll commercials. But real life has no skipping or ad-blocking. In a world with an abundance of screens, large, uncluttered, mostly static images still have the power to grab our attention. Factor in location and contextual area data, industry advocates say, and you have ads with actual relevance to people’s daily life. Today, four of the 10 largest spenders on billboards are tech firms (Apple, Google, Amazon, and Netflix).

Jen Hensley, president of Link, which runs a network of hundreds of smart kiosks and digital billboards in New York and 15 other cities, told Curbed that the ability to provide neighborhood data sets her company, and other smart digital signage, apart.

“These screens are in a fixed physical location, on a specific street or corner, and around a certain transit access point, which lets us surface information people want and need at that station at that time,” she says.

That’s why this sector has been such a comparative bright spot for advertising in recent years; screens are getting cheaper, and it’s increasingly easy to fill them with dynamic, competitive content. Digital outdoor ad spending has grown 15 percent annually in recent years, according to PricewaterhouseCoopers, 35 percent since 2010, and will overtake traditional outdoor ad spending by 2020. In fact, outdoor ads were the only traditional media category to show growth this year, hitting an estimated $33.5 billion in revenue; the digital variety, which grew 16 percent, was the main driver.

Outdoor signage gets a digital upgrade

It’s easy to mock outdoors ads as the provenance of ambulance-chasing lawyers, but one of the oldest forms of advertising, which came to prominence when highways were first taking shape in the early 20th century, still offers a great return. For every dollar spent on OOH ads, it delivers $5.97 in ROI, 40 percent more effective than digital search, according to research by Outdoor Advertising Association of America. Factor in the wealth of location data enabled by the widespread adoption of smartphones—even older billboards are being outfitted with sensors and tech to help analyze and better target pedestrians—and suddenly there are ways to make physical ads surprisingly nuanced.

Bigger, higher-resolutions screens, as well as better contextualization, mean billboards will become even more effective. We haven’t reached Blade Runner-esque streetscapes just yet, but the increased integration of technology, and programmatic ad buying—computers deciding when and where to place digital ads automatically—means the signs in your city will become more and more interactive, responsive, and relevant.

The Link network in New York allows advertisers to target specific locations, and update ads in real-time as a promotional campaign evolved. Project X, an outdoor media agency, ran ads during a Chicago snowstorm that directed consumers to the nearest Kmart to buy snow shovels.

Big tech has taken notice. Many of the globe’s biggest tech firms are making moves. China’s Alibaba spent $2.2 billion on Focus Media, a Shanghai-based company, as part of a “New Retail” push, an offline-to-online strategy meant to capture the attention of the Chinese middle class.

Google is testing technology in Germany that would apply the company’s expertise in targeted advertising to outdoor ads; with all that location data from Android users, the company can grab extensive demographic data about who passes by particular street corners.

Ad giant Clear Channel’s Radar program uses global positioning data from mobile apps to gain a better understanding of who’s passing by signage. Alexis Ohanian, co-founder of Initialized Capital and Reddit, invested $2.1 million in AdQuick, a startup developing new targeting and measuring tools for outdoor ads, including integrating digital voice assistants so those passing by billboards can “ask” for more information.

“You used to put glue on the back of a piece of paper and stick it up on a wall for a month,” says Link’s Hensley. “Now, what we’re seeing with the advent of digital displays and ubiquity of real-time data about places, weather, and events, we’re able to surface that in a way that’s useful and increases the utility of screens overall.”

Standing out in a digital world

Part of the push into the real world is a response to digital overkill. Many newer brands, especially the current wave of direct-to-consumer companies, have been plastering subways, or setting up physical retail locations, as a means to break out of the “internet silo” and attract new customers.

Another part is the increasing ability to make the public screens we pass by every day more responsive, and therefore more valuable to advertisers, as the outdoor ad world has become more technically savvy to stave off irrelevance.

Google has even started to test its DoubleClick ad technology in London, allowing ad buyers to programmatically purchase ad space on screens above roads, city centers, and transit hubs. Right now, it’s a proof of concept test, attempting to work through some of the tricky issues of measuring impressions and serving appropriately dynamic creative, but there seems to be promise, especially when it comes to responding to real-time events such as flashing ads for a beer company just as workers jump on the train to head home in the evening.

This new generation of smart ads can also get very personal. During Fashion Week this past August, New Balance ads placed in New York’s SoHo neighborhood and outfitted with cameras used computer vision to analyze the outfits of passersby. If an AI system determined there was a particularly stylish outfit, it would flash an image of that particular person under the heading “exception spotted.”

Fighting for a scarce resource, attention

In addition to the expanded investment in new technology to make these new screens more reactive and interactive, there will simply be more outdoor screens to look at.

Established outdoor advertisers, including JCDecaux, Clear Channel, and Lamar, plan to add hundreds of new digital screens in big cities where they operate. California is testing a digital billboard program on its highways that the state estimates could bring in millions every year.

And, perhaps ironically, as we leave more and more data and digital crumbs via our online activities, that data can be utilized to make these outdoor ads more targeted and relevant. Already, firms that operate highway billboards are using mobile data to measure dwell time on our increasingly congested roadways. Research also shows that physical billboards and phones actually work well together. Mobile click-through rates increase 15 percent when supported by OOH ads, according to ad consultancy WARC, and 46 percent of U.S. consumers used a search engine after seeing an OOH ad.

Today’s digital advertising needs to continually strike a balance between being relevant to consumers and lucrative for advertisers, all without violating privacy concerns. Outdoor ads believe they can cut through the clutter.

“What’s going to engage and delight other people?” says Link’s Hensley. “To us, it’s about the commitment to what’s real and what’s local. Link should be a break from technology.”