Digital billboards are the largest drivers of OOH ad spend

The news: US out-of-home (OOH) advertising had a standout quarter, with spending jumping 4.3% YoY to $2.04 billion, per the Out of Home Advertising Association of America (OAAA)—setting a record for Q3.

Key stats:

• Digital billboards are a primary force fueling OOH ad spending, accounting for one-third of revenues in Q3, a YoY increase of 7.3%. Those displays are “our largest driver and will continue to be,” OAAA’s senior vice president of marketing and insights Steve Nicklin told Adweek.
• Spending on transit ads rose 7.3%, the highest gain of any segment. Transit includes ads in airports, taxis, and other transportation. Return-to-office initiatives in major cities have driven an increase in ad spending, and travel demand has remained resilient.
• The political ad spend boom also helped OOH. Political OOH ad spending grew 31.6% compared with the same quarter during the 2020 presidential election—though the coronavirus pandemic likely contributed to less spending in the sector at the time.

We expect US OOH advertising to reach $9.16 billion this year, up 4.8%. Growth will slow slightly to 3% in 2025 due in part to the decrease in political advertising dollars.

Digital OOH ascendant: The ability to cycle through inventory and more accurately target consumers has helped digital billboards capture larger shares of ad spending as the sector recovers following the pandemic.

• The line between digital OOH spending and connected TVs is blurring, as both count on data insights and screen-based content. Small screens in gas stations, on backs of plane seats, and in other venues offer advertisers the opportunity to reach consumers away from home while still allowing some of the targeting and personalization that has made CTVs such a dominant digital channel.
• Travel demand has also helped buoy OOH ad spending. United recently launched a major OOH advertising campaign targeting airports and commercial centers in major US cities, aiming to entice both travelers and office commuters.

Our take: Innovations in video advertising are benefitting OOH spending. While most traditional media ad spend is declining, digital OOH spending is fueling the sector’s overall climb, a sign that these advances are attracting advertisers.

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