What are DOOH Ads? The Definitive 2022 Guide

Traditional out-of-home advertising spans highway billboards, movie posters in subway systems, taxi top promotions, and much more. These ads, however, are increasingly turning digital, with digital out-of-home projected to account for 38.3% of out-of-home advertising, and the DOOH industry valued at $16.75 billion in 2019.

It’s not just traditional advertising platforms integrating DOOH ads. While billboard companies like Lamar and Clear Channel are moving digital, non-traditional publishers are monetizing their digital screens, for instance, TouchTunes inserts ads into their digital jukeboxes and Xevo monetizes their in-car dashboards. Any digital screen can potentially monetize with ads.

In this article, we discuss what DOOH ads are, how to implement them, and why they are beneficial.

What are DOOH ads, and who uses them?

Digital out-of-home ads is a term broadly encompassing digital screen advertising outside of computers and mobile devices, including digital billboards, digital signage, ads on IOT devices, and more. These ads can be public-- like highway billboards, but could also be private (even in-home), such as ads within your Keurig’s digital screen. Traditional and non-traditional publishers alike use DOOH ads, including:

1. Lamar: Lamar is the largest outdoor advertising company with 3,800 billboards. They’ve digitized many of their billboards, rotating ads in and out of screens.
   
2. Touchtunes: Touchtunes, the largest in-venue interactive music and entertainment platform, has digital jukeboxes in over 75,000 bars and restaurants. To drive additional revenue, they insert interactive ads into their machines, which users see while selecting songs.
3. Uber: Uber launched cartop advertising, allowing drivers to monetize as they drive.
4. MTA: 7.9 million riders use the MTA (New York City Transit) daily. With billboards, in-transit screens, and more, the MTA has an extensive DOOH ad network.
5. Walmart: Walmart plans to implement ads within their smart, digital cooler screens around their store. Soon, many retailers will adopt similar in-store advertising.

Why monetize with DOOH ads?

Why exactly you monetize depends on if you are a traditional or non-traditional DOOH publisher. Lamar’s company, for instance, hinges on selling ad space, making them a traditional publisher. Their DOOH ads monetization impetus is:

1. Easier ad rotation. Using a digital ad server, you can upload creatives and set rules for when ads start and stop. Then, ads rotate automatically, cutting down on labor costs and increasing efficiency by eliminating physical, manually implemented banners. Additionally, you can show more banners - such as one per hour, versus one every week.
2. Real-time targeting. Manually-placed ads rotated periodically lack real-time optimization. With digital ads, you could add targeting rules analyzing the local time or weather, and target ads, say, by whether it’s morning-time or it’s raining.
3. More revenue through better pricing dynamics. Advertisers could bid in real-time what they are willing to pay, and using auction pricing, the highest bidder wins. This could be substantially more profitable than standard, pre-booked banner rate cards.

The digital disadvantage is mainly the high cost of transitioning in bulk to digital screens. Digital ads also require a new selling paradigm, which may unfortunately upend your workforce. Finally, powering these screens has incremental energy costs over the one-time cost of adding/removing paper ads.

Meanwhile, “non-traditional” DOOH publishers are companies that don’t need ad revenue to monetize, but want new revenue streams. Often, these companies fall under the “internet of things” bucket. Whirlpool, for instance, could insert ads for food-related CPG items within their refrigerator’s smart screens.

Such brands should turn to ads mainly for incremental revenue. These DOOH ad formats are the next frontier in advertising, and advertisers pay premiums to reach such audiences in engaging experiences. In fact, online advertising pain points are DOOH ad advantages. For example:

• No banner blindness: We often gloss over banner ads while browsing the web or using apps. Well-placed DOOH ads are hard to miss, and you can charge premiums for advertisers to reach new audiences.
• Engaging ads: Like the ad below, you can literally reach out to your customers. Standard banner ads can be limiting; DOOH ads, meanwhile, play with space and movement to create engaging ad experiences.
• No ad blockers: The only way people don’t see DOOH ads is by actively looking away. DOOH ads are never ad blocked.

The difficulty for non-traditional publishers is ads potentially hurting user experience. Nobody wants to wake up to their Keurig machine flashing an irrelevant movie promotion. That highlights the importance of ads native to the user experience, such as Whirlpool’s ads being sponsored food items within recipes on their smart screen. Finding ways to seamlessly integrate ads without disrupting the user’s product experience is paramount.

What are DOOH ad platform targeting options?

Unsurprisingly, DOOH ad targeting options are limited compared to standard digital advertising, predominantly around the use of first-party data and intent.

Many publishers personalize ads using data they have on consumers, such as their browsing experience and demographics (household income, workplace, etc). Thousands of people pass traditional digital billboards a day; there’s no way to personalize those ads in real-time without engaging in facial recognition (which still only provides limited targeting ability).

Additionally, many publishers with search results - like eBay, Amazon, etc - monetize by letting advertisers promote their products for relevant searches (like “new shoes”). This intent-based targeting is highly valuable, but with DOOH advertising, there’s little knowledge of passerby’s thoughts or intentions.

(The exception to this would be personal IOT devices. Using the Whirlpool example, the smart fridge may over time understand that owner’s behavior and tailor ads as such).

However, there are targeting options that DOOH publishers can offer, including:

1. Day/hour: You can target ads based on the local day and hour. Starbucks, for instance, may choose to bid more in the morning to win those ad auctions.
2. Geolocation: You can target brands/products based on the user’s location, like city or zipcode. Local products could be targeted just to local people.
3. Screen location: Physical retailers showing ads on digital screens throughout the store could have different ads in, say, the electronics aisle versus the cleaning items.
4. Weather: Adding weather targeting lets advertisers show ads based on the local weather around the screen, something of interest to, for example, a raincoat or sunscreen manufacturer.
5. Ad frequency capping: Add this feature so the same ads aren’t promoted over and over on your screen.
6. Limited first-party data: IOT devices with more of a 1:1 relationship with users (such as car dashboards) have opportunities to store and target by past actions of users.

Even if you can’t identify your audience in real-time, you can target their surroundings. Target based on location, weather, and more to show the right ad at the right time.

What about DOOH ad exchanges and networks?

The DOOH ad tech space is rapidly growing, with plenty of existing DOOH ad exchanges providing instant access to advertisers willing to buy your DOOH inventory.

By necessity, these exchanges operate under server-side models, compared to the plug-and-play, client-side SDKs, and ad tags of traditional ad servers/exchanges. Generally integration involves hooking your in-house content management system to their ad system.

For traditional DOOH publishers, these ad exchanges could be a valuable first-step to finding demand and earning revenue, especially if your screens follow standard DOOH ad formats, such as rectangular billboards or other signage. Such ad units can be streamlined and sold programmatically.

That said, the downsides to sourcing all demand through an ad exchange include:

1. Middleman fees: There’s a hefty ad tech middleman tax. By taking a cut of your revenue, these platforms limit your revenue potential.
2. Lost control: Using an ad exchange means you lack control over which ads are displayed, which could cause you to display off-brand advertisers.
3. Lower ad rates: Beyond the fact exchanges take a cut of your revenue, they also won’t offer as many targeting options as you could offer with a custom platform. Given this, your effective eCPMs (revenue per every thousand impressions) will be lower than your potential earnings with a full-featured in-house program.

For non-traditional DOOH publishers with native ad units, these DOOH ad exchanges are effectively a non-starter. Given the demand follows standard DOOH rectangular formats, anything custom like sponsored food listings or interactive jukebox ads don’t connect with the exchanges. As such, you’ll need to build out your own direct-sold platform anyway.

How much can I make with DOOH ads?

Your ad revenue is dependent on many factors, including your viewer size, product, amount of ads, fill rate, etc. Industry standards, however, put the eCPMs for DOOH ads around $6-$12. This will be highly variable, though. Engaging ad units targeting high-value locations could make significantly more.

These values are much higher than standard online banner ads averaging $0.50 - $1.50 -- highlighting DOOH publishers’ opportunity to monetize their screens.

Why many DOOH brands have been slow to build digital ad products

Building a DOOH ad server from scratch can take years, hundreds of thousands of dollars, and dozens of ad engineers. Maintaining this ad server, moreover, requires even more time and resources. With server costs, engineering resources, certification fees, refunds for bugs, and so on, the costs involved can scale greatly over time.

Additionally, building out needed targeting for a truly effective ad server can be challenging. You’ll want these features sooner rather than later to drive revenue.

Unsurprisingly, many companies stick to their non-digital ads or choose to not monetize with ads at all.

How do you integrate DOOH ads?

DOOH ads are a great opportunity for monetization; however, their integration can be challenging. Obviously, DOOH ads require out-of-home digital screens. But after this step, what comes next?

Besides digital screens, you need ad serving tech to store, serve, and report on these ads. While third-party ad serving tools exist for display ads, there is no turnkey solution for DOOH because vendors require JavaScript ad tags or mobile SDKs, which don’t integrate with DOOH screens.

Given this, to serve ads across your DOOH properties, you’ll need to build a custom ad serving solution. There are two ways to do this: build from scratch, or build faster with ad APIs. Here, we’ll weigh the pros and cons of both:

1. Building your own DOOH ad server from scratch

Building from the ground up means full control over your ad platform’s scope and vision, but requires a large team and resources.

You might consider building your own ad server if:

• You want something that you own 100%.
• You want control over feature prioritization.
• You don’t want to pay vendor fees.

You might think twice if:

• You can’t wait years. Building from scratch can take years, meaning no revenue in the meantime.
• You don’t have the engineering resources. A successful roll-out requires many experienced ad engineers. This is costly and drains your resources.

2. Ad Infrastructure APIs

Your main alternative is still building the ad platform yourself, but using ad APIs to speed up the time to launch, similar to building your communications solution on top of Twilio. With an ad infrastructure partner, you integrate via APIs for instant access to the building blocks needed to design a DOOH ad product, including ad decisioning, tracking, targeting, management, and reporting.

You might consider using ad APIs if:

• You want an ad platform sooner than later. Infrastructure APIs can decrease build time by 90%.
• You don’t want to spend a fortune. Rather than paying engineers, server fees, and other expenses, these solutions charge a set SaaS fee.
• You want a full-featured ad product. You’ll get turnkey access to pacing, decisioning logic, and an ability to target by geo, weather, time of day, and much more.

You might think twice if:

• You don’t want any vendor involved. Whether it’s a company policy or a desire to own your ad platform entirely, an ads API partner does require a third-party integration.

How to begin

DOOH advertising can be highly profitable. If you’re a traditional DOOH publisher, going digital can drive more ad revenue and simplify ad rotation. If you’re a non-traditional IOT brand, ad monetization presents a new revenue opportunity without hurting the user experience.

If you’re looking to launch your own DOOH ad server quickly, Kevel’s APIs can help you get there in just weeks. Kevel is the leader in ad infrastructure APIs and has helped DOOH brands like TouchTunes, Lamar, and Xevo build flexible ad platforms in a fraction of the time and cost as doing it from scratch. Let us know how we can help you start today!