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.
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:
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:
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:
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.
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:
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.
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:
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.
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.
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.
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?
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:
Building from the ground up means full control over your ad platform’s scope and vision, but requires a large team and resources.
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.
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!
Sarah is an experienced writer with a software background, allowing her to translate between ad tech experts and lay readers. As Kevel's Associate Product Marketing Manager, she helps broadcast new products and features.