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Sostav.ua publishes expert opinion on the OOH market by Dmytro Smolanov, Identity Invest. In the editorial's view, the article contains many controversial points, but we publish the author's opinion without editorial changes. Let's have a debate.

This article is addressed to the thoughtful Ukrainian business community. It is not an ode to the condemnation of outdoor advertising or a judgment on its use. After all, billboards are everything to us — the genetic code of urban landscapes, and the operators of outdoor advertising are the media business gurus. Although these achievements of success come at the expense of the aesthetics of our streets, covered by the "iron forest."

THE UNIQUENESS OF SUCCESS 

The motivational push for this article came from the global forecast Zenith Advertising Expenditure Forecasts March 2018 and the media results of 2017 from our VRK (Ukrainian Advertising Coalition). After analysing nearly 100 countries, Zenith announced that the global share of the Out of Home (OOH) segment, or as we call it, Media Outside the Home, was 6.7% last year. But Ukraine is a country of contrasts! Here, global patterns are being broken: investments in Ukrainian OOH reached an unimaginable 16.7%. This is 2.5 times higher than the global average. 

A real field for research! So, I delved into the analytics, forecasts, and statistics, read a ton of studies, and prepared a clear comparison. 

The triple disparity with global trends makes one ponder the nature of these figures. All foreign case studies on Digital Out of Home collide with the "paper cliffs" of Ukrainian reality. In Ukraine, this segment doesn’t exist. In monetary terms, it is somewhere around the margin of statistical error. Here, 84% are static "billboards."

Why does the print outdoor advertising market have such scale in our country?

Hong Kong, for example, has almost identical OOH metrics. But one must understand that it has a warm tropical climate, a small area (1104 km²), and a massive population density (6480 people/km²). Only Ukraine (603,500 km²) is somewhat far from Hong Kong! We tend to stay indoors during the autumn-winter period since we are far from the subtropics, and our population density is 80 times lower (77 people/km²). Perhaps the cost per contact is negligible? Not quite! Everything is in order here – the cost per contact (CPT) for outdoor advertising is almost the same as for TV. Though, colleagues from the "most accessible entertainment" industry argue that their cost per contact is lower.

Even more thought-provoking is the fact that the media pie figures for television show no such disparity as with OOH (see the chart above). There is only a +32% increase compared to the Zenith figure. And this is consistent – poorer countries tend to watch more TV. According to data from the Industrial Committee of Outdoor Advertising (ICOA), the cost per contact is now even comparable to that of the Internet and radio.

MEDIA for ALL

Reading global studies that reveal the achievements of multi-platform campaigns, we all understand – OOH is very important and a must-have in the modern media mix! There are many case studies and research on how to use this channel correctly, especially when combined with online media. BUT... only 8% of advertising campaigns utilise 4 or 5 media channels, which provide the maximum ROI.

Let me remind you, Media Outside the Home is the most stable communication channel, with fluctuations over the past 28 years remaining within 1%. During this time, Out of Home has undergone significant transformation, moving into the “digital” realm and shedding its label as an anachronistic medium.

For example, the United Kingdom will reach a 50% share of budgets in digital OOH this year. Other developed countries are successfully moving in this direction as well.

MASS-MARKETING

Outdoor advertising is highly effective for many mass-market goods and services. The key phrase "MASS CONSUMPTION" carries a special, almost sacred meaning for some marketers and their loyal consultants, which, it seems to me, is only truly understood by them. And if we take into account the cost of printing (7-15% of the budget), and then consider the target audience of 21+, the investments for some business segments in this format start to stray far from logic and the concept of ROI. 

Before diving into the specific "know-how" of Ukrainian media planning, I suggest we focus on the figures that reflect our reality. We are a developing country, to put it diplomatically. And in statistical terms? Ukraine is the poorest country in Europe with a continually shrinking economically active population.

- 71% of consumer spending in 2018 went towards food, housing, transport, and communications (source 1);

- 47% of the population had no savings, February 2017 (source 2);

- 32% had savings for "less than a month," "for a month," and "for two months," February 2017 (source 3);

- 22% could spend discretionary income on home improvement, April 2018 (source 4);

- 7% of the population planned a vacation abroad, August 2017 (source 5);

- 5% of our citizens flew to EU countries within two years, December 2017 (source 6);

- 1% own two or more cars, March 2016 (source 7).

These are sad figures, but they represent our reality!

MASS PSYCHOSIS 

A marketer is primarily a "master" of statistics, and only then a "creator" of creativity. In the 21st century, we fight for second(s) of the client's attention, as they are bombarded with thousands of messages during their 16 hours of wakefulness. The competition for their gaze is insane. Humanity has immersed itself in two habitats – offline and online. And now, the consumer travels between these worlds, constantly obscuring their tracks, forcing us to search for new solutions, preferably at the intersection of these "universes"! Now, we must think more often, calculate, and ask questions!

How many of my customers are on the street? Could the message be too long for outdoor advertising? Are there other media channels in OOH that are closer to my client? My mathematically inclined logic is quite surprised when I see products/services aimed at the "elite" in mass marketing. Below are a few examples that my brain refuses to understand. Following the principles of business ethics, I will not name any companies or brands:

1. Luxury cars (first sale).

What does a "LUXURY" car mean? With an average salary of 8400 UAH per month nationwide or 13-14 thousand in Kyiv Is this the cost of a car (plus registration) for 1 or 2 million UAH? What if, in 2017, individuals bought just over 51,000 new cars, with the rest being purchased by legal entities? The law states that anyone over 18 can own a vehicle, which equates to roughly 16 million people. This means that only 0.3% represents the annual market capacity for new car purchases across all price segments! If we’re talking about cars priced over $50K, the numbers drop to less than 0.05%. Even being next to sausages, in our cluttered outdoor advertising space, doesn’t seem to bother anyone.
Is there room for advertising a $50-100K SUV in outdoor media? Probably, yes! But in our country? Very debatable! For those interested in a comparative analysis of the investments in the OOH automotive business in the U.S., you can read my specialised article.

2. "Quick" Agro Loans (from 1-15 million UAH).

Of course, we are an agricultural country, and many farmers are in Kyiv or major cities at the beginning of spring. But mass marketing of credit solutions for agricultural producers focused solely on grain and oilseed crops—are you serious!? And investing a million in this communication channel?! I took the trouble to Google it – there are up to a thousand such farms. It's like firing a ballistic missile at a crow! There are websites where, for 3,000-5,000 UAH, you can get access to a complete list of 44,000 agricultural producers, collective farms, and agrarians in one catalogue! There, you can send SMS, emails, or personally call and tell them about the advantages of your banking products. You can even visit ALL of them for just 10% of the budget. But why bother with all that?! Let’s just put up creative billboards; they’ll be seen!

3. Luxury Real Estate ($1800–2700 per m²)

According to the Ministry of Justice data for 2017, notaries in Kyiv registered 31,389 transactions for the purchase and sale of apartments and residential houses, roughly 2,600 transactions per month. The minimum budget for a "one-bedroom" apartment (>50 m²) in a VIP building is $100K. How many luxury apartments are sold per month?

Is it 100 apartments, or 1% of the transactions? The number will be negligible. "The chosen ones" rarely look around and, as a rule, spend 90% of their time being driven, engrossed in their gadgets. VIP developers should think about the traffic they are attracting to their properties and what resources are being spent on it. I liked Yuri Romanenko’s (UIF) response to SMM offers to boost his followers: “I build organic growth, which serves as a lens for my ideas, and you can chase hamsters... for politicians.” A bright billboard with a bold slogan undoubtedly catches attention! But the question is: what audience will your office serve? That’s the real question!

FURTHER, MORE EXPENSIVE

We all know that the "entry ticket" to outdoor advertising has long surpassed a six-figure sum. To effectively cover 20-25 cities (buy the necessary number of GRPs), you need more than just one million. And ahead of us lies another price increase for classic OOH. Two obvious factors contribute to this upcoming media inflation. The main one is the reduction of inventory in the capital. Kyiv operators will need to improve the aesthetic appearance of our streets and align the road infrastructure with EU safety standards. The second factor is the start of the presidential campaign (elections on 31.03.2019). We’re already seeing "faces on billboards," like snowdrops after the snow. This autumn, in Kyiv, the standard 6x3 format will fluctuate between 15,000-25,000 UAH in prime locations along the direction of traffic, while central streets in regional cities will already cost around $200, excluding taxes and printing.

EPILOGUE
So, why does paper-based Out of Home have such volumes in Ukraine?

My main theory is LAZINESS. Yes, it’s all quite trivial and primitive. Most marketers have a herd instinct, buying "representative" figures: everything is clear, everything is fast, everything is simple. The main thing is that it's visible! As for media agencies, there's nothing personal here – it’s just business! What’s interesting is what brings in more money. Why take the time to deeply study the audience and “cut” the budget across different media formats, especially in OOH? There’s no time for that! Where will I earn more with less hassle? Billboards! Here’s the simple math – you take a few million from the client, "squeeze" the operators, buy 200-300 billboards, take photo reports, and voilà... at least 10-15% of the budget is in your pocket. And there’s also printing, where you can make a nice profit. Quick money! And no need to convince anyone, argue, or ask unnecessary questions.

But everyone should remember where this path leads in the future...

“Laziness travels so slowly that poverty soon overtakes it” - a wise quote from the personality that looks at us from the $100 bill.

Be effective at a lower cost!

This article represents the author's personal viewpoint. The editorial opinion may not align with the author's perspective. The editorial team is not responsible for the accuracy or interpretation of the information provided and serves solely as a platform. Additionally, our editorial team is not responsible for any potential reputational or financial losses incurred by third parties as a result of this publication!