Digital advertising is clearly a top priority in marketing today, but that means that some other valuable channels for brands are often overlooked. Out-of-home (OOH) advertising is case in point.
The opportunity to reach audiences using billboards and other signage is something more marketers are utilizing, as evidenced by the 38% jump in OOH ad revenue between July and September last year, according to the Out of Home Advertising Association of America. That amounts to $1.7 billion.
What do these brands know that you may be overlooking?
It’s that successful brands allocate a portion of their budget to expanding their media mix outside the digital realm. A decade of World Advertising Research Center data suggests effective brands allot an average of 13% of their marketing budget to OOH.
So, how much should you spend on OOH ads?
Before planning out your next campaign, here’s how to define your ideal budget:
Build out your budget
Industry studies have come to the same conclusion time and again: When OOH is incorporated into multichannel ad campaigns, it delivers the best ROI among traditional media and lowers costs. This is partly due to OOH’s efficient pricing. Many advertisers don’t realize that OOH actually has the lowest cost per thousand impressions (CPM) of all traditional media.
To take advantage of OOH’s average CPM of $5, advertisers should turn to the data and consider taking the following action when building out their outdoor advertising budgets:
Set your goals
The first step to locking in your OOH budget comes down to campaign goals. Do you want to build brand awareness? Are you trying to get consumers to take immediate action? Is it your goal to drive foot traffic, get website and app conversations, or amplify social media mentions? What outcomes do you want to achieve? With your goals in mind, you can partner with an OOH buying platform to make informed, data-driven decisions on your outdoor marketing spend.
Assess market needs
Next, you’ll want to narrow down your target geography. Do you want to pursue a national campaign? Are you focusing on specific states, regions, cities, or smaller target markets? Or are you looking for a test or exploratory market to gauge how a campaign will fare? The right OOH buying partner can help you get a lay of the land in a particular market.
By further exploring your target markets, you’ll gain insightful data into available units, the highest and lowest unit rate prices, and the average CPM of OOH ad units in a given market. Leverage free planning tools to see what the top 100 advertisers and your competitors are doing in the market and gather information on lookalike markets. With this data, you can stretch your budget and extend your OOH campaign to include high-performing markets you might otherwise have missed.
Consider market penetration
When evaluating a market, it’s important to look closely at its population characteristics and the cost associated with reaching a specific penetration of your target audience. If it is brand awareness you want to build, this level of market penetration will play a crucial role in the budget decision-making process.
For example, if you’re just starting out with OOH, you’re likely looking at an entry-level OOH investment to reach about 10% of a population. If it’s market saturation you want, you should aim to reach about 25% of a market. Market domination might be defined as greater than a 50% market penetration. Free OOH planning tools can help you identify the budget required to reach each of these market penetration levels. They can also help you weigh other important budgeting factors, such as ad location, campaign duration, and spending data from the top advertisers within your same vertical.
Measure your performance
Lastly, consider your measurement strategy when planning out your OOH budget. If your brand wants to achieve a direct response or performance goal, mine your historical campaign performance data in order to project likely conversion rates, determine the number of impressions required to achieve your desired number of conversions, and budget accordingly.
Or, you might have a minimum budget threshold defined to achieve statistically significant results if you are conducting a study. Whatever your measurement strategy is, it will impact your OOH advertising spend.
Today, more than ever, advertisers need the ability to closely manage their ad spend.
Before OOH buying platforms entered the scene, budgeting for outdoor advertising campaigns was like taking a shot in the dark. That’s not the case anymore.
Matthew O’Connor is the CEO and cof-ounder of AdQuick.com, the first platform to allow marketers and agencies to complete the entire process of planning, buying, executing, and measuring out-of-home (OOH) advertising campaigns anywhere in the US and across the globe.
If you like this article, sign up for the SmartBrief on Social Business email newsletter for free.