Letter to the editor
By: Jeff Gunderman, Founder, DOOH Academy
www.DOOHAcademy.com
Digital and Programmatic Education and Advisory
In response to Robert Macmillan’s article: Programmatic As A Growth Driver – Fact Or Fiction?
Published in OOH Today on August 21, 2024, Robert ends with 3 questions for which, I want to offer an alternate perspective…
The questions challenge the growth power of programmatic and suggest it is simply shifting the way advertisers transact as opposed to generating advertiser growth.
Robert makes a well supported argument that local advertising is strong and “The rise of programmatic is simply not translating to growth of the OOH pie.” I don’t actually argue these specific points. The flaw in Robert’s argument is using historical performance as an indicator of future opportunity. In an industry undergoing tremendous technology shift, the opportunity can not be defined by pre-technology metrics. Using this logic, we would all still be shooting film, hailing cabs, and cooking dinner at home every night! I consider myself a very good cook, but I don’t think my kids would eat half the time If we did not have Seamless or Grubhub!
Robert then leaves us with three questions:
1. Is programmatic really attracting new advertisers who are spending meaningful new money or is it just the same advertisers executing via an automated platform?
2. If programmatic is driving meaningful new revenue, where is it going? As its not showing up the numbers?
3. Programmatic is not driving meaningful total revenue growth, given this, is their fee extraction worth it for both publishers and advertisers or is this a market inefficiency, a tariff or tax if you will, that dilutes the effectives of each dollar spent via this channel?
Robert has started to offer answers to these questions already. These become less questions and more statements. If you look at historical performance in an out of home media market that is growing by single digits but not today keeping up with inflation. There is limited support to take an alternate position today. But, the issue is not really about historical performance, it is about future potential. Out of home media is hard to buy and very fragmented by the long tale of 100’s (1000’s) of media operators, non-standard formats, and a very manual buying process. Programmatic solves all of these challenges efficiently.
Robert’s questions imply that programmatic is not attracting new advertisers who are spending meaningful new money and it is just the same advertisers executing via an automated platform?
Robert may be correct as you look at previous and current performance, but maybe the questions are not the right questions to ask.
In 2023 it has been estimated that $450MM in out of home media was transacted programmatically in the United Stares. This is 15% of the total digital media revenue. Double digit increases are expected to continue in 2024 growing to an estimated 18% of the digital OOH media revenue (6% of total OOH media). Contrast this to other forms of digital media that are much further along the programmatic curve at more than 90% transacted programmatically, and you begin to see the numbers are not large enough in DOOH to contribute meaningful growth yet. The key word is “yet”.
In 2023, over 90% of US digital display ad spend or over $150bn (yes with a “b”) was transacted programmatically. That alone is one of the single strongest arguments, and why our industry needs to embrace programmatic. We are simply not far enough along the adoption curve to make the assumptions that Robert is making.
I will end with these three questions:
1. Is out of home media today as easy to plan and transact at scale as other forms of digital media?
2. Can all out of home media be planned today with the same levels of data marketers rely on in buying all other digital media where they spend the majority of their budgets?
3. Does programmatic make out of home media easy to transact at scale using advanced audience data and measurement?
Once you answer these questions honestly, it is hard to argue that programmatic is not transforming the industry and enabling a real future share gain opportunity. It is also logical to argue that without technology transformation the industry would be in decline with no real opportunity for significant future growth.
By: Jeff Gunderman, Founder, DOOH Academy
Digital and Programmatic Education and Advisory
+1 917-592-5852
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