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How OOH’s Decline in 2020 Continues to Shape 2021 Recovery

Out-of-home (OOH) advertising in 2020 encountered declines that many could have predicted, but how our business rebounds over the next 6-12 months will determine, if any, the long-term Covid-19 effects on the industry.

Interestingly, last year’s OOH decline was reported by Citi that “the market assumed too much, too soon in the short-term” while S&P Global believes OOH’s recovery “will likely remain barbell shaped this year [in 2021]...exceeding 2019 [revenue] by 2022.”

So, there’s good news on the horizon right? In this article, we have compiled the top trends and insights you need to know from industry analysts at PwC, PJ Solomon, public media owners and the Outdoor Advertising Association of America (OAAA).

Key Takeaways

  • By the end of 2021, OOH will experience 10-12% revenue growth but not nearly at the high estimates as predicted by public media owners and analysts
  • As overall OOH share continues to migrate to digital OOH formats, programmatic digital OOH has moved from novelty to sustainable
  • Transit advertising will be hampered until the U.S. is fully vaccinated, expect increased discounting in air & rail formats
  • Major metro spend may remain more depressed than smaller metros and suburban OOH as advertisers hyper-target consumers rather than blanket markets with general coverage
  • As openings occur, advertisers will spend across now battered sectors including entertainment and amusement followed by travel and hospitality
  • Summer advertising spend is critical this year -- if spend increases are not in line with 2019 levels, it becomes increasingly difficult for major suppliers to achieve their growth targets

COVID-19 Impact on OOH Advertising Revenue
The U.S. OOH market declined by $1.3B in total ad revenues in 2020 dropping from $8B in 2019 to $6.7B in 2020, a 16% decline.

Notably, digital OOH spend declined share as a percentage of total OOH ad spending during 2020 (with comparable spend to 2018).
Total OOH Revenue vs. Digitall OOH Revenue
Across the four major operators, 2020 ad spend saw declines of between 11%-41%.
Lamar’s 11% decline is due largely to the company’s limited exposure to transit and airport formats. Further, Lamar inventory draws heavily on southern states which were less restrictive throughout the pandemic.
2020 Public Media Owners-1

Billboards & Transit Media on the Recovery

The overall OOH pullback was hardest on Q2 ad spending. Fears of lockdowns and shuttering of businesses forced advertisers to consider whether anyone would be out of their homes to encounter advertising.

Travel patterns were affected during Q2 and beyond but consumers still traversed markets, staying closer to home initially and then broadening travels even as the pandemic grew leading to OOH spend increases in Q3 and Q4.

What advertisers have not come back to is transit media which was off 50% as of Q4 2020 (airport, subway, bus, commuter rail), malls and theaters.
OFM Revenue Billboards vs. Transit Media

Top Business Sectors Performing vs. Struggling
It is anticipated that the amusement and entertainment sectors will recover first as theaters & attractions re-open followed by travel and hospitality, as a desire for escape fueled by cheap fares lure travelers back.

Retail likely will take additional time to recover as consumers have gotten even more adept at online commerce.

Top Busines Sectors-1

U.S. Advertising Channel Growth Estimates
As consumers emerge from the pandemic, several key OOH trends will fuel its growth in 2021, as 68% of consumers suffer from digital device burnout, 65% of consumers want to get out of their homes as often as possible, and 45% of consumers notice OOH ads more than prior to the pandemic (source: The Harris Poll & OAAA).

And, while OOH declines in 2020 were the highest among traditional media, forecasted growth for 2021 is the highest of all traditional media suggesting that the pull back from local market advertising was much too high.
U.S. Advertising Growth Revenue

Rise of Digital Out-of-Home Standardization

2020 was a significant accelerator for programmatic digital OOH advertising spend across the five major OOH platforms: Vistar, TradeDesk, Adomni, Placed Exchange and VIOOH.

An increased need by advertisers for speed and flexibility across their media spend as well as a desire for guaranteed audiences fueled the growth. As such, there is not an anticipated slowdown in programmatic utilization, with projected revenue spikes doubling over the next two years.
Programmatic DOOH Spend

2020 Accountability
in Advertising Spreads

Social unrest, trust and accountability have led to advertiser boycotts across dozens of brands that either paused or suspended paid advertisements on social media platforms.

This may prove beneficial for OOH which provides brand safe environments for advertisers to reach consumers in 2021 and beyond.
Sample Brands for Accountability

OOH’s Road to Recovery

As of March 22nd, almost one-quarter of the entire U.S. population has received at least one vaccination dose, according to data from the Centers for Disease Control and Prevention. While the road to recovery continues, there is yet a sense of urgency for businesses and brands to welcome consumers back into their line of sight.