What Is Digital Out-of-Home (DOOH) Advertising and How Does It Work?

The offline advertising industry is slowly but steadily catching up with technological innovation, introducing capabilities like geofencing and beacons to offer tracking and personalization that were considered impossible in years past.

The domination of online media spend could be about to shift, thanks to a new take on an old classic: digital out-of-home (DOOH) advertising.

What Is Out-of-Home (OOH) Advertising?

Out-of-home (OOH) advertising is traditional — non-digital and non-programmatic — outdoor advertising. Also known as out-of-home media or outdoor media, OOH advertising is about messaging to consumers when they are in public places, commuting to work, waiting (e.g. in elevators), or in specific commercial locations.

Typical OOH formats include billboards, on-car ads, bus-stop shelters, and similar placements.

Digital out-of-home (DOOH) is essentially OOH powered up with AdTech capabilities: geofencing, tracking, retargeting, personalization, attribution, and measurement.

From OOH to DOOH

Consider a world where billboards dynamically display ads targeted to each individual walking past them. Ads sold in real-time auctions, deployed across an entire city or country within minutes. Outdoor real-time marketing that is genuinely real-time — billboards changing dynamically based on the time of day or current weather conditions.

The transition stands to reshape the traditional out-of-home ad-buying process. DOOH, as opposed to conventional OOH, reduces human intermediaries and the slow, manual insertion-order workflow. The industry is moving toward a reality where machines are programmed to buy ads automatically.

It's Already Happening

Given the current state of advertising technology, the transition from OOH to DOOH is not only possible — it is arguably inevitable from a business perspective. It is already under way and gaining momentum.

International OOH providers like Clear Channel Outdoor, Lamar, and Outfront Media are currently making significant investments in new technology to enable DOOH.

Other notable examples of DOOH activity include:

• Broadsign launched the first programmatic exchange for OOH media in Canada.
• Vistar Media, which owns approximately 90% of US digital OOH inventory, uses an exchange platform to automate buys of unsold inventory programmatically.
• Clear Channel launched a private marketplace (PMP) with Rubicon Project, opening inventory on almost 1,000 digital boards to programmatic buyers through real-time bidding (RTB).
• Outfront Media is building a supply-side platform, and Lamar is exploring the same possibility.

These developments are significant, but many advertisers still know relatively little about what DOOH is and how it actually works.

What Is Digital Out-of-Home (DOOH) Advertising?

Digital out-of-home (DOOH) advertising is one of the fastest growing forms of advertising today, largely because it sidesteps several of the most persistent problems in online advertising.

DOOH offers some of the advantages of online display advertising technology — targeting capabilities and enhanced traffic data — while being completely immune to ad blockers. OOH ads cannot be skipped by the user, and the format inherently demands a higher degree of creative execution to grab attention, something that has eroded steadily in online display over time.

Media-Buying Processes Available in DOOH

DOOH may seem unfamiliar at first, but understanding it is easier when mapped against the media-buying methods already established in the programmatic advertising industry:

• RTB (real-time bidding) is an auction-based bidding protocol in which advertisers compete against each other to display ads to specific users. RTB offers extensive data capabilities, a wide variety of inventory types, and is widely considered the most flexible model on the market.

• Programmatic direct is a one-to-one media-buying process similar in structure to the traditional model where salespeople met directly with advertisers to negotiate deals. Advertisers and publishers agree on specific inventory at a fixed CPM rate.

• Programmatic guaranteed (private marketplace / PMP) is an invite-only auction process in which a select group of advertisers bid against one another for a publisher's premium inventory. This model is typically offered by publishers with highly sought-after placements — think major media properties like Forbes, the Wall Street Journal, or The New York Times.

• Non-programmatic guaranteed (direct) is a manual insertion process requiring significant human effort: understanding client needs, negotiating prices, and producing the insertion order (IO). Inventory is sold at a fixed CPM rate and is "guaranteed" or "reserved" for the buyer. Advertisers are sometimes required to pay a premium in return for specific exposure conditions.

Challenges With Digital OOH

Pricing models differ from online advertising

The pricing models and metrics of DOOH differ from those in programmatic display, and for good reason.

To integrate fully into the programmatic ad-buying ecosystem, outdoor media sellers would need to convert to cost-per-mille (CPM) pricing — which is complicated by the fact that a single DOOH ad impression can be seen by multiple people simultaneously.

Other pricing models common in DOOH include share of voice, where advertisers pay for a set percentage of the ad inventory across a given network of digital displays, and loop frequency, where advertisers purchase multiple spots within a single content loop.

Viewability is harder to measure than in online advertising

In DOOH, each impression can be observed by many people, but the exact number is rarely known — which makes it difficult to compare prices with digital impressions on a like-for-like basis. While sellers armed with mobile location data can estimate foot traffic near a given outdoor ad, it remains a ballpark figure.

The fact that a person was standing near a board does not mean they actually saw the ad. Attempts to incorporate facial recognition as a way to identify the gender and age of viewers have already experienced fierce backlash.

As the industry matures, some form of standardized measurement will likely emerge — but for now, DOOH viewability remains far less precise than its online counterpart. Companies such as Posterscope USA and partners Quividi, EYE Corp Media, and Engage M1 are actively developing measurement solutions in this space.

DOOH occupies physical — and premium — real estate

Because DOOH is physical media, it is by nature limited and inherently more premium than online inventory. This is one reason why DOOH providers have been reluctant to put their inventory into RTB auctions, where it can be commoditized and priced accordingly.

DOOH inherently carries higher value than online media, which keeps costs more stable. There is a genuine concern within the industry that opening inventory to RTB could trigger the same race to the bottom observed in digital display media.

Targeting, measurement, and attribution are more complex

Because OOH ads are physical media operating in a one-to-many environment, it is not possible to target individuals or conduct advanced attribution in the way online advertising does with cookies and device IDs.

DOOH targeting typically involves reaching a specific demographic at a particular time, based on data collected from the surrounding environment — rather than targeting individuals directly.

On the attribution side, marketers can look at the number of impressions an OOH ad received and compare that to conversions across the various stages of a campaign. The data sources typically used for DOOH targeting and analytics include:

• Ticket sales from concerts, sporting events, and similar gatherings
• IR sensors placed near the entrances of buildings (e.g. shopping malls)
• Third-party measurement companies such as Nielsen
• Sensors and cameras from companies like Quividi
• Mobile location data from ad exchanges and data brokers

DOOH campaigns can also be tied to weather conditions and time-of-day data — for example, showing an ad for soup on a cold afternoon.

As DOOH matures, improvements in targeting and attribution methodologies will likely follow.

Supply significantly exceeds demand

The supply of digital out-of-home media still far outstrips demand, leading to widespread underselling and underpricing. This supply-demand imbalance is another reason why open auctions remain difficult to run effectively. A guaranteed approach — whether non-programmatic or programmatic direct — makes more practical sense until demand grows to match available inventory.

Real-time delivery introduces technical lag

Serving a DOOH ad requires some lag time to pre-cache and load the creative, as these formats are significantly heavier than standard digital or mobile banner ads. This makes precise audience targeting at the exact right moment more challenging than it is in online environments.

What Is Possible With Digital Out-of-Home Today?

Despite the challenges outlined above, a number of companies are actively exploring and implementing programmatic technology within their DOOH media offerings. Here is a look at the capabilities available today.

Targeting

While it is not possible to target a DOOH ad exclusively to a narrow audience of, say, a dozen specific individuals (rather than 100 random passersby), programmatic approaches do give DOOH the ability to display ads at times when the target audience is most likely to be present — potentially offering meaningful efficiency gains and more favourable media pricing.

Measurement

In digital advertising, buyers follow cookies or device IDs to track individual users. That approach does not translate directly to digital OOH. Instead, location data from opted-in audiences plays a central role in DOOH planning, targeting, and measurement.

Many OOH media sellers, buyers, and vendors use mobile location data to measure DOOH media effectiveness.

Tamoco, a data company specializing in location-based advertising solutions, helps companies measure the effectiveness of DOOH campaigns by drawing on GPS, Wi-Fi, and Bluetooth data points and sensors.

Placed — a location-based data company currently owned by Snap, Inc., the parent company of Snapchat — offers matching of opted-in users' location data with online advertisements to assess their success rates. By tapping into its user data, Snap, Inc. can track the activity of approximately 150 million devices and see how ads displayed across its media translate to purchases.

One of Snap's cross-channel attribution capabilities was an early DOOH attribution implementation: Snap to Store, which attributes retail foot traffic to ads displayed on its platform.

Retargeting

While individual-level targeting is not possible with DOOH, the medium does enable effective mobile retargeting. OOH media providers can use geofencing — creating a virtual geographic boundary around a billboard using GPS or RFID technology (or both) — to trigger a response when a mobile device enters or leaves the vicinity of the board.

This enables providers to send retargeted, personalized messages to consumers who passed by the board. Clear Channel has been doing exactly this through its Radar program, which uses aggregated and anonymized mobile data from privacy-compliant, third-party data providers to gain insights into how specific customer segments move through a city — and to identify the best DOOH locations to reach them.

Higher Ad Engagement

Over the past decade, engagement with online display ads has declined steadily, resulting in click-through rates (CTRs) below 1%. This has been driven by a saturation of online ads and has fuelled the rise of ad blockers and the phenomenon of banner blindness.

DOOH gives advertisers and agencies a canvas for creative executions that are both unique and engaging — formats that are immune to ad blockers and cannot be dismissed with a single click.

Real-Life Applications

Outdoor media providers are pushing the boundaries of DOOH application, and JCDecaux is among the most prolific in this area.

Transport for London

Transport for London promoted the city's cycle hire scheme with a contextual DOOH campaign across many screens in the city. The displays offered directions to the nearest docking stations, along with real-time information about the number of bikes and spaces available.

DOOH Screens in Elevators

Elevator interactions can be an awkward experience — a confined space with strangers and nowhere obvious to look. A DOOH screen provides a natural focal point for commuters while giving local businesses a channel to reach consumers in a captive moment.

British Airways at London Heathrow

British Airways used live data feeds on flight arrivals to deliver welcome messages tailored to each baggage belt — in the appropriate language for arriving passengers — and suggested London activities based on the current weather forecast.

Live Content

During the Euro 2016 football tournament, displays mounted on bus shelters carried live content with up-to-date match scores, capitalizing on widespread public interest in the games.

Weather-Triggered Campaigns

Foodora, a food-delivery service, ran a DOOH campaign promoting its pickup option that used weather conditions as a trigger. Depending on the weather at the time of display, a relevant creative was shown — encouraging audiences to pick up food at a nearby restaurant on nice days, or to order delivery when it rained.

The Future of DOOH

The current implementations represent only an early glimpse of what DOOH will be capable of as the technology matures. Operators in the digital out-of-home space will continue to develop more reliable targeting, richer measurement frameworks, and deeper omni-channel capabilities — all driven by ongoing technological innovation.

The key bottlenecks — measurement standardization, supply-demand balance, and real-time creative delivery — are engineering and industry coordination problems, not fundamental barriers. As those are addressed, DOOH stands to become a far more central part of the programmatic advertising ecosystem than it is today.