2010 Digital Out-of-Home Outlook & Planning Guide

2010 Digital Out-of-Home Outlook & Planning Guide Limited Executive Release August 2009 Digital OOH Media Strategists White Paper

2010 Digital Out-of-Home Outlook & Planning Guide Executive Summary Digital Out-of-Home (DOOH) is one of the fastest growing mediums in North America. Total DOOH spending will hit $4.53 billion in 2013, up from $2.6 billion in 2009, 1 accounting for 44.1% of all OOH spending. Marketers are increasingly finding digital out-of-home an effective and efficient medium with 42% of agency and brand marketers planning to increase their spending in the category this year. 2 However, like most emerging mediums, agencies and planners face challenges in garnering a complete perspective on the landscape and opportunities that exist. initial task. As the medium continues to be adopted into media buys, the question often remains, How much should I be planning for next year and how does that relate to my total media mix? Digital out-of-home currently has approximately 112 significant network operators (many running multiple networks) in the U.S. alone and approximately 45 within Canada who accept third-party advertising. Collectively, there are active media screens in over 70 venue types each with unique audience and media characteristics to understand. The landscape will continue to aggressively grow in capacity and market coverage. More than one-third (38%) of active digital OOH network operators are planning capital investments of between $1M-$10M to expand their venue and screen capacity in the next 12 months. Just under 20% of them plan on expanding the screen count to more than 1,000 each. 3 The complexity to track and manage media partners continues. The 2010 Digital OOH Outlook and Planning Guide is a reference to provide media agencies with a baseline and additional insight to effectively assign budgets during advanced planning stages. This information is intended for intermediate and advanced media agencies utilizing digital OOH to assist in making effective planning decisions for digital out-of-home in place-based and retail environments. To better understand the landscape of the medium is the

Digital out-of-home reaches twothirds (67%) of U.S. residents - Arbitron 2009

At the same time, digital media opportunities continued making headlines throughout the year, pushing new agendas and digital distribution ideas forward sometime to great push back that have caught the attention of consumers and brands alike. A maturation in flexibility, reach, innovation and results has kept pushing Digital forward in a time where Traditional is retooling. While all of this was happening, digital OOH had a strange thing finally happen to it it developed significant scale as a medium enough to all of the sudden be worthy of a second look. While this was occurring early adopters of the medium began to report on successes and failures what works and how to improve providing additional fuel to the interest in the space from early pioneers because many of the results were inspiring. Lastly, digital OOH s ability to hyper-target to exact audience needs became apparent. This meant that not only could brands take advantage of the cost effective price of digital OOH media but they could also eliminate media waste by targeting to exactly where they needed to be thereby saving money even more. Economic Advantage The D in DOOH The economic downturn has had a fascinating effect on the digital OOH medium. While the initial conservative reaction from brands to last September s downturn was to pull back and focus on traditional advertising, avoiding media innovation in late 2008 and early 2009, it also forced many to evaluate new mediums wherein better cost efficiencies and more effective tactics may lie. Early 2009 saw a large surge in exploration of alternative advertising and marketing opportunities across the board. While early 2009 exploration was largely exploration exercises of pricing and audience/effectiveness research, the results of the exercise have raised awareness and, more importantly, understanding of new tools, tactics and media strategy opportunities to use going forward. It has been a time when, for the first time in a long time, we could stop and take pause from the every day and look around to see what else is out there. To conclude - The economic downturn has been good to digital OOH thus far as it has: encouraged deeper looks into new media opportunities like digital OOH; been further associated with digital media as a whole, raising its profile; gained enough scale to be considered as a National medium inside larger opportunities; demonstrated results that encourage ongoing utilization; unique targeting capabilities that provide greater cost-efficiencies As new mediums become needed to supplant existing strategies, digital OOH can support many organizations in new media strategies as we recover from the current economic woes.

Market Scope Out-of-home media has consistently sustained a 3% market share of overall advertising over the last 3 years and accounts for 40% of global out-ofhome spend. 4 The medium, however, is in prime condition for a shift to include digital out-of-home and accelerate existing growth. The accuracy of the recently released 2010 forecasts for advertising spend in digital out-of-home is encouraging, as the past several annual forecasts have been hazy to say the least. A recent survey demonstrated that 69% of marketers and brands plan or sustain to increase their digital out-of-home advertising spends through 2009-2010. 5 With positive direction in the planning intention, budget allocation and expansion of capacity, the conditions are ideal for the medium to sustain the forecasted CAGR of 13.2%. 4 Landscape Digital out-of-home media offers tremendous hyper-targeting opportunities. However, there are exceptional challenges in creating large, scalable campaigns, due to a complex landscape of networks and a complicated matrix of environmental considerations. In addition, DOOH is growing at a rapid pace and new networks are cropping up weekly, making it impossible for marketers to keep track of all the DOOH media available to them and to understand each network s specialty, strengths and quality. Two similar networks can easily look the same on the surface, but deep down, be very different. Understanding the ins and outs of each network is a daily partner conversation, not an as needed transaction when optimizing the true impact of the medium. 6 Organic now includes this platform in every planning discussion for clients and new business pitches. - Conor Brady, Chief Creative Officer, Organic.

How Is Digital Out-of-Home Media Categorized? Digital out-of-home media is made up of LCD screens that have been placed in premium consumer viewing positions inside venues from doctors offices to taxi cabs and pharmacies. The screen is controlled by a software system that plays a closed-loop of content. The content on the screen is intended to provide information and/ or entertainment that is relevant to the viewers inside the environment. As a medium used for advertising, the opportunity exists to have a highly effective, direct communication with consumers. day, understands who is watching the screens, what they are doing inside the environment, and understanding of what frame of mind they are in at the moment and how many times the ad will play. In addition, Digital OOH has all the advantages of digital creativity in a physical environment. There are three main segments of digital out-ofhome media which, include: Place Based Screens of varying sizes (avg. 32-42 ) within environments ranging from transit stations, restaurants / bars, office buildings, doctors offices, etc. These screens, or multiple screens within the environment, are usually located in areas that have the best opportunity to view and/or are in an area that has the highest consumer dwell time. Retail Positioned in key locations inside retail environments from grocery store aisles to convenience store check-outs and pharmacies. Normally, retail screens are found close to consumer products and goods that are available for sale. As consumers make over 75% of their product buying decisions within the retail environment, the opportunity to communicate at the moment of truth is ideal. Outdoor Much the same as traditional outdoor billboards; however, are made of medium- to large-format LED screens. Typically found in urban centers along major highways and interstates, outdoor digital out-of-home media can also be found on the sides of buildings. Times Square in New York City is the perfect example of outdoor applications. The benefits of advertising are also vast. Primarily, an advertiser can be ensured that the ad will be played at specific times throughout a

National Reach & Audience Profile As a medium, Digital out-of-home reaches twothirds (67%) of U.S. residents aged 18 or older each month across the venues measured and delivers a fairly representative cross-section of consumers. Of those who recall seeing digital outof-home displays in the past month, 76% noticed seeing them at multiple venues. Digital video screens in retail locations alone (including grocery stores, large retailer/department stores, drug stores, shopping malls or convenience stores) reach over half (53%) of American adults in an average month. Digital out-of-home displays at gas stations and movie theaters each reach over 1 in 5 U.S. adults per month. Digital out-of-home hospitality venue. E-Cast.

PROFILE OF DIGITAL OOH AUDIENCE BY VENUE CATEGORY MARKET SEGMENT Shopping Mall Grocery Dr. Office / Hospital Retail Drug Store C-Store Restaurant Bar Health Club Waiting for Public Transit Riding Public Transit Elevator Office Building Gas Station Movie Theatre Airport Sex Men 55% 51% 49% 53% 56% 59% 52% 56% 57% 59% 49% 64% 57% 57% 49% 57% Women 45% 49% 51% 47% 44% 41% 48% 44% 43% 41% 51% 36% 43% 43% 51% 43% Age 18-24 21% 12% 18% 17% 20% 18% 19% 12% 18% 24% 25% 21% 18% 15% 21% 15% 25-34 22% 21% 17% 21% 18% 18% 24% 35% 26% 21% 15% 24% 22% 21% 21% 22% 35-44 18% 21% 19% 21% 18% 17% 20% 18% 26% 20% 25% 21% 20% 22% 21% 20% 45-45 15% 20% 18% 17% 16% 23% 18% 18% 15% 23% 20% 25% 19% 20% 17% 22% 55-64 12% 14% 13% 13% 14% 13% 10% 9% 8% 7% 6% 4% 11% 12% 11% 11% 65+ 12% 12% 14% 13% 14% 11% 10% 8% 7% 5% 9% 5% 11% 11% 9% 10% Race / Ethnicity White 61% 72% 65% 66% 59% 58% 61% 67% 58% 49% 53% 63% 61% 62% 61% 67% African American 14% 11% 18% 66% 14% 15% 19% 19% 23% 22% 21% 21% 18% 13% 17% 13% Hispanic or Latino 18% 12% 12% 14% 20% 22% 11% 11% 11% 24% 17% 9% 15% 17% 15% 13% Asian 3% 2% 1% 2% 3% 0% 2% 2% 3% 3% 7% 2% 2% 3% 2% 3% Other 4% 3% 4% 4% 3% 5% 1% 1% 5% 3% 3% 4% 4% 4% 4% 4% Annual Household Income Under $25K 18% 18% 24% 19% 23% 24% 24% 22% 16% 33% 40% 25% 18% 17% 24% 20% $25-$50K 26% 27% 31% 30% 31% 28% 32% 30% 21% 17% 15% 16% 26% 26% 23% 18% $50-$75K 24% 24% 21% 25% 18% 25% 20% 19% 27% 26% 24% 21% 21% 25% 25% 20% $75-$100K 11% 13% 11% 12% 11% 11% 13% 15% 8% 6% 7% 9% 14% 12% 12% 14% Over $100K 19% 18% 14% 14% 17% 12% 12% 16% 28% 17% 14% 30% 21% 20% 16% 28% Sources: Arbitron Out-of-Home Digital Video Display Study 2009

ADCENTRICITY Planning Reference As a strategic partner to media agencies, ADCENTRICITY sustains a transparent working relationship to garner the best possible result against the media strategy. ADCENTRICITY currently has partnerships with more than 90 digital out-of-home networks and 150,000-plus screens across North America. Having a deep understanding of the network data, a sturdy baseline can be illustrated for media planning comparisons. (At the time of publishing, nine new network enrollments with over 15,000 screens were added but not included within these results.) MARKET SEGMENT VENUES SCREENS RATE :15 sec spot CPM AUDIENCE IMPRESSIONS ADS SERVED AVE. COST/ VENUE / WK NATIONAL 20,386 98,028 $2,052,686 $7.86 261,078,518 125,349,677 $22.74 Top 20 DMAs 11,443 52,241 $1,202,091 $7.41 162,212,742 77,876,127 $23.72 Top 10 DMAs 8,661 39,997 $929,824 $7.21 129,011,623 63,803,645 $24.24 1 - New York City 2,789 12,739 $260,301 $10 24,460,210 14,942,808 $21.07 2 - Los Angeles 1,481 4,388 $135,504 $4 28,705,916 10,854,506 $20.78 3 - Chicago 991 8,367 $162742 $12 13,052,475 11,887,073 $37.08 4 - Philadelphia 349 2,426 $55124 $11 4,953,632 5,555,047 $35.67 5 - Dallas/Fort Worth 530 1,325 $69,139 $6 10,984,456 4,935,946 $29.46 6 - San Francisco/Oakland/San Jose 642 2,369 $60,108 $3 15,606,006 4,543,314 $21.14 7 - Boston/Manchester, NH 616 2,213 $35850 $9 3,606,694 2,676,805 $13.14 8 - Atlanta 384 1,300 $32,941 $3 9,127,254 1,804,972 $19.37 9 - Washington, D.C./Hagerstown, MD 307 1,706 $38,141 $6 6,150,076 1,518,245 $28.05 10 - Houston 532 3,023 $75,489 $6 11,624,652 4,572,157 $13.16 11 - Detroit 327 886 $18,448 $7 2,610,780 733,067 $32.04 12 - Phoenix 469 3,412 $62,393 $9 6,672,268 4,246,375 $33.91 13 - Tampa/St. Petersburg/Sarasota 266 3,209 $48,119 $11 4,149,691 1,855,398 $42.95 14 - Seattle/Tacoma 582 863 $20,442 $3 5,227,811 1,208,025 $9.48 15 - Minneapolis/St. Paul 182 267 $13,767 $4 3,440,312 689,309 $32.04 16 - Miami/Ft. Lauderdale 205 3,191 $46,511 $16 2,880,050 2,044,302 $54.05 17 - Cleveland/Akron/Canton 134 218 $4,881 $7 641,437 278,424 $8.69 18 - Denver 261 526 $15,346 $3 4,516,632 478,853 $13.94 19 - Orlando/Daytona Beach/Melbourne 185 1,130 $29,135 $11 2,463,828 740,502 $37.83 20 - Sacramento/Stockton/Modesto 211 683 $17,709 $13 1,338,553 2,310,989 $18.55 *Costs, audiences and ads are based on a :15 second ad spot in a 4 week campaign.

Venue Traffic, Media & Venue Cost Comparison Each campaign s objectives and strategy are unique and call for a specific media mix in Digital OOH. Considerations should be based on audience, relevance, programming, pricing, and targeting and require careful consideration to ensure success. Similar to other new and traditional media channels that have experienced significant growth, this can complicate planning and buying efforts and results. The physical/venue specific nature of digital out-of-home media certainly introduces these challenges. For example, a broad range in cost-per-thousand rates may well exist within a seemingly similar venue type. The published rate of convenience store venues can range from $3-$11/.CPM. However, the audience, screen count, loop lengths, market, location value, programming and other characteristics contribute to the venue s CPM. Planning Approach All of our digital out-of home media plans are rooted firmly in research. We support effective planning and buying on consumer profile data to ensure maximum effectiveness of the targeting needs of each campaign. Campaigns can be delivered run-ofnetwork or targeted to reach any desired audience. Delivery is optimized within these targets based on observed and expected response ensuring you get the results you want. ADCENTRICITY s planning and buying platform allows unlimited combinations of demographic, geographic and venue channel mash-ups. This allows for extremely diverse and complex campaign strategies to be deployed quickly, efficiently and effectively with ADCENTRICITY serving as your single gateway for communicating with consumers on the go. Plan nationally and buy locally or plan locally and buy nationally it s all under your control. One plan, one buy, one bill it s that easy.

Approaching Your Plan Digital out-of-home planning through ADCENTRICITY is not only targeted and impactful, it s flexible, fast and simple. There are three primary ways to begin exploring your plan utilizing the power of the partnership between ADCENTRICITY and the networks with whom it works: Demographic Geographic Category / Channel Given that each campaign has unique and specific requirements, a Dynamic Mix of any of the above offers the greatest flexibility in campaign planning for sophisticated and innovative campaigns. Ultimately, it s important to look beyond the venue categories and focus your initial efforts on planning by audience and not by network this will give you the widest range of opportunities to speak with consumers before whittling down to categories or geographies as needed for each plan. Demographic Planning Planning and buying on basic and advanced consumer profile data to ensure maximum effectiveness to the targeting needs of each campaign, e.g. female, 18-34, $96,000+ household income. Geographic Planning Advanced geo-plotting allows for innumerable ways in which to segment and define the geographic areas of relevance to the needs of a campaign: State, city, DMA, ZIP & postal areas Geographic radii two-mile radius around retail locations Channel planning 15 categories and 70+ subcategories of venue type available, virtually guaranteeing a venue type that fits the needs of your campaign. For example: All pharmacies All bars, universities & sports arenas Dynamic Mix Planning Each campaign and objective re unique can be customized based allowing unlimited permutations of demographic, geographic and venue type mashups. All grocery stores in geographic regions with higher affluence levels All universities and every bar, cafe & club within three miles of the university Males, 18-24, in the top 25 DMAs Apply retail locations, distributors, competitors locations or markets against the plan utilizing the power of ADVenue. ADCENTRICITY s platform allows for extremely diverse and complex campaign strategies to be deployed quickly, efficiently and effectively. More importantly, the leg work has already been done for you and can be delivered and analyzed in a day not weeks. Research / Accountability RESEARCH LITE is an extended service that includes pre-packaged and fully customized research studies to measure digital out-ofhome campaigns in any North American market. With this turn-key solution, only available from ADCENTRICITY, advertisers can take advantage of narrow focus campaign research around the medium and use it to gain deeper insight on the efficacy of the media impact and contribution to campaign ROI / Return on Objectives evaluation. Working directly with a Peoplecount Research Engineer, a customized intercept survey is designed to best meet the objectives. The objectives may include Demographics Advertising / brand recall (aided/unaided) Brand awareness Ad awareness Purchase intent Media acceptance Top of mind Sales lift A-B Market comparison Pre/post campaign study Controlled market testing Dwell time, audience verification Noticeability, and more

Once the objectives are determined, market definition, venue profile selections and critical time lines are compiled against these objectives and professionally executed. Upon completion of the study, an in-depth analysis and dissemination of the collected campaign / consumer data is formatted within two to three weeks for strategic insight into your initiative. Aggregation Aggregation is ideal for targeting and increased efficiency in understanding if Digital OOH will help accomplish your plan goals. The capabilities of specially designed planning, buying and execution platforms purpose built for Digital OOH - provide significant benefits. More importantly, the holistic knowledge of aggregators can bring experience and insight across the entire landscape focused on your media needs as opposed to those of a single venue type. Imagine consolidating three weeks of work to 30 minutes for an initial plan. The aggregation model allows plan and strategy revisions to occur in seconds, decreasing media waste and staff time, reducing creative, distribution and billing requirements and ultimately creating a more efficient end-to-end ecosystem. An aggregator can ensure that you only plan and buy what you need and want, focusing on the maximum audience that will drive results, which also saves advertisers money the more targeted you can get, faster, the more impact you get for less. In assessing a 12-network plan and buy, aggregation increases the efficiencies of the process by over 800%, which increases exponentially each time another network is included. Adding digital out-of-home media to your complete customer management strategy will allow you to hyper-target the exact audience you want, when and where you want to reach them. Digital outof-home creates the ideal customer experience and positions your clients business for continued growth over the long-term. 5 Steps to take when planning a digital out-of-home program. In the development of a digital out-of-home media plan, the following should be considered: 1. 2. 3. 4. 5. How digital out-of-home can impact the overall marketing mix as an integrated dynamic channel. Design contextual and relevant advertising messaging, taking into consideration the environment where the ad will play. Look to other media, such as mobile, that works well in conjunction with the strategy. Set out strategic objectives and accountable measurement tactics to gain the proper insight and impact of each campaign. Do not allow creative development to hinder execution of a well targeted plan. There are basic adaptations and solutions to overcome this barrier should it exist. About ADCENTRICITY: ADCENTRICITY eases the pain and complexity of the buying and planning process of digital out-ofhome media by providing a strategic and holistic solution to media agencies and brands. As digital out-of-home media strategists, ADCENTRICITY provides a high-touch service supported by an advanced media platform and in-depth supporting research. Our capabilities enable complex hypertargeting to deliver advertiser messages only to the venues and screens that meet the target audience profile and campaign objectives, effectively and efficiently. ADCENTRICITY delivers effective advertising campaigns over 90 network partners, 150,000 screens and provides 300 million monthly impressions in locations such as, universities, transit, sports arenas, convenience stores, restaurants / bars, gas stations, office buildings, ATMs, grocery stores and more, ADCENTRICITY drives efficiencies with its One plan. One buy. One bill. approach.

Testimonials: Utilizing ADCENTRICITY, we found digital outof-home to be a very effective vehicle in planning and understanding the entire landscape (of the medium). We found digital out-of-home to be the most efficient media. - Dan Jester, GMMB for the Barak Obama Presidential Campaign We enjoyed working with ADCENTRICITY. The client was impressed with our collective ability to strategically use digital OOH to target their consumers and saw the ads in several unique locations. They have decided, from this point forward, to continue to utilize digital OOH for most of their key products - Chi lp, Account Supervisor, PHD Time and timing is money. For an industry trying to make sense of a complex digital outof-home world at a time when budgets and human resources are limited, the timing for Adcentricity s ADVenue product seems ideal. - Marketing Magazine, April 2009 Ladies and Gentlemen - This Advenue is the REAL DEAL - and not just marketing hype. The application gets high marks from me for its usability but its real power is in the database that holds ALL (130,000 screens in over 200 DMA s) the details of Adcentricity s partner networks. ADVenue integrates the process with some extremely clever conditional logic that automatically filters the out only the most relevant DOOH network partners. - Manolo, former Publicis planner and Editor for DailyDOOH.com References: 1. VSS Communications Industry Forecast 2009-2013 2. Digital Signage Expo Quarterly Business Barometer Q2 2009 3. Digital Signage Expo Quarterly Business Barometer Q2 2009 4. PQ Media, 2008, PWC M&E Outlook 2009-2013 5. Digital Signage Expo Quarterly Business Barometer Q2 2009 6. Arbitron Out-of-Home Digital Video Display Study 2009

Jeff J. Atley VP Marketing & Business Development Founder - ADCENTRICITY Inc. Recent Clients: One of the co-founders of ADCENTRICITY, Atley is an entrepreneurial business development and marketing specialist with a comprehensive background and experience in marketing, media, entertainment, advertising and mobile marketing. Atley also owned and operated Vibe Marketing Group, a private sales & marketing firm in Toronto, Canada developing brands, international business development agreements, integrated marketing programs and co-operative strategies with several Fortune 500 companies. Residing in Toronto, Canada Atley operates from ADCENTRICITY s Canadian office and growing business development and marketing strategies across North America.