What’s Happened? —Just 1% Growth in the US in Q1 2023
Hearing the distant shrill of alarm bells ringing
—US OOH Ad Revenue Up in Q1 2023 in Midst of ‘Challenging Economy’
by Kevin Shute, Founder Rainmaker Media
Earlier this month, the OAAA, the trade association of the US OOH ad industry released Q1 2023 revenue figures for the sector revealing the second largest first quarter volume in the history of the medium coming in at $1.82bn, outpacing even Q1 2019 and suggesting, at a casual glance, that Covid, and the disruption it wrought across 2020 and 2021 in the US and for longer in UK & Europe , is now firmly in the rearview mirror.
Commenting on the performance, Anna Bager, President and CEO of the OAAA, said “Out of Home’s resilience continued in the first quarter despite a challenging ad marketplace. Our medium is well positioned to connect with consumers at the most critical moments to drive awareness and engagement, which is why OOH continues to thrive”.
Thrive? US OOH revenue in Q1 2023 might have hit $1.82bn but it grew by only 1% versus Q1 2022. That equates to about $18m, give or take. To put that figure in context, its probably less than has been spent on CapEx collectively by media vendors and speculative infrastructure owners on more, bigger and upgraded digital screen technology and higher lease costs in only one US city, New York, in and around what used to be confined to Times Square. You could make a reasonable case that growth of 1% is in the realms of rounding or collating errors rather than a meaningful sign of market resilience.
You could make a reasonable case that growth of 1% is in the realms of rounding or collating errors rather than a meaningful sign of market resilience.
Why? Look at the previous market update for US OOH ad revenue from the same organization, for the Full Year 2022 versus 2021, released less than two months ago, on 28th March 2023. This release shows true market resilience and robust revenue growth. Amongst key indicators are;
-US OOH advertising revenue in 2022 increased by +20.7% versus 2021, to $8.6bn.
-Key driver for growth was #DOOH +24.2% Year on Year
-Double digit growth recorded across all 4 formats-Billboards, Street Furniture, Transit and Place-Based in 2022
-88% of top 100 OOH advertisers increased their OOH spend in 2022 over 2021
-24% of the top 100 OOH advertisers more than doubled their spend in 2022 over 2021
So what’s happened in the US in Q1 2023 , to bring stellar 20.7% OOH sector revenue growth over four consecutive quarters across 2022, to a shuddering halt in only one? Is it a one-off, an aberration? A blip rather than a trend? And why am I, sat here in London, curious and concerned more than critical, seemingly alone in hearing the distant shrill of alarm bells ringing after reading these updates?
So what’s happened in the US in Q1 2023 , to bring stellar 20.7% OOH sector revenue growth over four consecutive quarters across 2022, to a shuddering halt in only one? And why am I, sat here in London, curious and concerned more than critical, seemingly alone in hearing the distant shrill of alarm bells ringing after reading these updates?
And finally, I stand to be educated on a few curious intra-sector anomalies;
–#DOOH increased its contribution to Q1 2023 sector revenue by 4.3% to 31% of the total. But in a quarter recording a mere 1% revenue growth, that’s hardly blowing the doors off. Billboards grew too, by 1.9% in Q1 2023, double the national growth rate for the entire sector and suggesting there’s life in the old US Billboard yet. Or higher costs for #DOOH screen technology, leases, power and connectivity are passed on as higher media costs for advertisers. Or both.
-Advertiser Category Spend: Five of the top 10 OOH product categories produced increases of 25% or more compared to Q1 2022. So how come overall sector growth was only 1%? Clearly a much longer tail of advertiser categories in the US OOH market than the UK, and stronger local and hyper local advertisers.
-Programmatic #prDOOH. Despite the volume of noise, in neither the Q1 2023 or Full Year 2022 revenue press releases, is there a single mention of the contribution made by programmatic transacting to the revenue totals? More a nascent prospect than substantial source of incremental revenue at present?