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Out-of-home spending up 5.5% in first six months of 2014

Digital leads the way as advertisers look to reach always-on consumers

Buoyed largely by digital advances, out-of-home spending is trending upward this year according to new data from the Out-of-home Marketing Association of Canada (OMAC).

Out-of-home spending increased 5.5% in the first six months of 2014 according to Nielsen, more than double the 2.5% increase posted during the corresponding year-earlier period.

Meanwhile, the share of media dollars spent against out-of-home increased from 6.8% to 7%, with the largest spending increases coming in the telecom, financial services, media and alcohol categories

OMAC called digital a “key growth area” for its member companies, with double-digit increases across its three main business lines: outdoor, place-based and transit networks.

OMAC president Rosanne Caron predicted continued growth for digital as more companies invest in technology aimed at always-on consumers. “What we’re seeing is a significant change in how out-of-home can be used for marketers,” she said. “We’re going to see a lot more mobile and social activation in campaigns.”

While recent initiatives such as a McDonald’s test campaign promoting its French fries in Toronto’s Dufferin Mall show the level of interactivity and engagement digital can offer, Caron said there remains room for improvement in how the medium is deployed in Canada.

“I think there’s generally more experimentation in markets like the U.K., for example, but part of that is due to fact a lot of Canadian companies report into the U.S. or U.K., and sometimes don’t have the same opportunity to do tests,” said Caron.

“It’s not at the same level we’ve seen in other countries, but it’s starting to increase,” she said. “It’s an exciting change we’re seeing.”

While companies are converting many boards in high-traffic locations to digital, Caron said that static boards continue to play a vital role in the industry. “I don’t think static is going disappear,” she said. “Marketers are realizing the power of digital, but they still are using static out-of-home to give them the branding.”

Caron said that out-of-home is playing a key role in multi-media marketing approaches, noting that 92% of the shortlisted campaigns in the Creative Effectiveness category at this year’s Cannes Lions used the medium. Only 58% of the shortlisted campaigns used TV, down from 83% in 2013.

There are some potential roadblocks to the industry’s continued growth however, with Caron noting that the full impact of the 2009 Toronto sign bylaw – and its accompanying “billboard tax” – has not yet been felt in the country’s biggest ad market.

“Some boards have come down, but it will be a year or so before we see the full effect because many of those leases will be coming up for renewal,” she said. “Given the taxes and different things, [out-of-home companies] will have to make a judgment on whether they’re valuable or not.”

After several years of legal wrangling, the out-of-home industry’s fight against the billboard tax came to an abrupt end in late 2012, when the Supreme Court of Canada refused to hear an appeal to eliminate the tax. The tax, which ranges from $1,000 to $24,000 per year per advertising face, is expected to cost Toronto’s out-of-home industry up to $10.4 million per year.

The industry is embarking on a key selling period, with October to December accounting for 26.9% of all out-of-home revenue in 2013 according to OMAC.

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