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I’ve read plenty of recent articles about targeting in Out-of-Home (OOH) media, and realised that this topic remains largely unexplored. Beyond discussions about 'brand presence by geography' in outdoor advertising or 'video impressions at the right time' on city streets, the conversation has gone no further. But, in fact, targeting is primarily a tool for delivering ads to the right people: identifying a specific target audience and creating campaigns tailored specifically for them. Believe me, such media strategies have long been possible to implement successfully in Ukrainian OOH. It just takes the effort! However, our media reality today is entirely focused on single-format street campaigns. Some colleagues have even developed their own Anglo-Ukrainian glossary of terms, claiming that Out-of-Home refers solely to outdoor advertising. However, globally, Out-of-Home is a much broader concept—it’s Media Beyond the Home, including: Outdoor (Billboards + Street furniture), Transport (Transit) and Indoor (Place-Based).

Why is the topic of media planning in OOH important?

Massive budgets.

Out-of-home (OOH) media accounts for 20% OF ALL ADVERTISING SPEND IN THE COUNTRY, amounting to 3.49 billion UAH out of a total of 17.52 billion. Previously, in an article on Sostav, I tried to understand our "media anomaly". For those unfamiliar, Ukraine's OOH share is 3.5 times higher than the global average in percentage terms. Perhaps abroad, the authorities are stricter about "decorating" landscapes with a sea of metal structures!? Or maybe the media market is more civilised and technologically advanced? Either way, the reality is undeniable: Ukraine is a country of printed outdoor advertising - plenty of forests, an 'analogue' population, and 'cooperative' authorities. It gets even more interesting: in Ukraine, OOH surpasses both Digital media (£2.52 billion) and Radio (£578 million) combined!

Although this is not the full picture...

And what about printing?

Approximately 2.9 billion UAH is spent on billboard advertising. To this, we must add printing costs, which impact the financial efficiency of the entire media channel and the cost per contact. Various estimates suggest that these costs represent 10 to 20% of the placement budget, depending on factors such as the format of the space, the quality of printing and materials, and the number of spare plots required (as they may occasionally tear). For billboard advertising alone, this equates to roughly 470–500 million UAH annually.

This financial "quirk" of outdoor advertising makes it the only media segment involving printing where the costs of printing and paper are excluded from analysis in data from the Ukrainian Advertising Coalition. For example, in print media, all investments in this segment include printing costs. Clients do not pay separately for their print run within each publication—it is all included in the placement fee. 

So, the total investment in static outdoor advertising, including printing costs, amounts to around 3.35 billion UAH, or roughly a fifth of the ad spend pie! The rest is just "pennies": Transport (444 million UAH)  and Indoor (127 million UAH).

- ECO Trends in Media Planning?

- No, we haven't heard of it!

0.5 billion UAH a year spent on printing plots for advertising! That’s just slightly less than the total investment in radio advertising for 2018. Have you ever considered how much that amounts to in kilograms? We’re talking thousands of tonnes of paper, ORACLE film, banner mesh, or fabric, much of it containing plastic. On top of that, all printing uses chemical inks, far from being organic dyes.

So, how is all this disposed of? Does it end up in a landfill? I couldn’t find any information on this topic. And let’s be honest, our eco fines are practically a joke.

There’s a lot of noise in the media these days about irreversible ecological damage, forest preservation, cutting down on plastic, and preventing chemical soil pollution… Yet, in reality, a typical OOH campaign for a national brand that proudly "loves nature" in its press releases results in 2,700 m² of advertising material or 400–500 kg of paper in a landfill (150 billboards x 18 m² each).  There are guys in telecom who purchase >500 billboards or 1,500 kg each month, which adds up to nearly 20 tonnes in a year! One advertiser! One year!

Of course, the text isn’t about this, but we all know the consequences will be for our children to clean up.

Targeting through the lens of demographics, sociology, and purchasing power.

Colleagues, to approach the topic of targeting, we need to carefully analyse the figures related to our population, its structure, income, and spending habits. Ukraine is heavily segmented, and there is a significant societal divide, however uncomfortable that may sound. Here are some basic figures for the "middle class": 41% own a car, 15% have savings, 13% can afford a comfortable holiday abroad, and only 12% have health insurance. A Ukrainian who considers themselves "middle class" because they can "get by" doesn’t match the global standards of what that actually means.

We should realise that Western marketers perceive the reality of their "middle class" differently - its lifestyles, needs, and desires. They shape brand communications based on their own sociological and demographic contexts.

Let’s take a look, without emotion, at some figures about our population:

- 16.3 million economically active individuals in Ukraine (aged 15-70).

- 15.7 million of the working-age population (18+).

- 3.2 million, or 18% of the adult population, have gone abroad for work—every fifth Ukrainian, according to the Ministry of Finance!

This leaves us with around 12.5 million potential customers—a large market, but...

Only 1-4% of Facebook and Instagram users have phones worth over $700.

- 80% of our citizens did not travel abroad this year, and >50% have NEVER left Ukraine.

- 39,492 new cars were sold in the first half of 2019, with private individuals purchasing about 30,000 of them, the rest were corporate sales. Every month, just 5,000 people buy a new car across ALL of Ukraine!

- 3,588 luxury cars (worth >1.57 million UAH) registered in the tax base across Ukraine, subject to the luxury tax of 0.05% of the total vehicle fleet.

And here’s the “final blow”: In the first quarter of 2019, only 500 new apartments were sold in Kyiv (excluding satellite cities)—462 in the business segment and 38 in the premium segment. In the October-December 2018 period, 660 apartments were sold (608 in the business segment and 52 in the premium segment). This means only 133 apartments are sold monthly in Kyiv, a city of 3 million people, with an endless influx of newcomers.

For those who doubt the numbers, here are the Ministry of Justice data for all property transactions (buying and selling) by notaries in Kyiv in 2018 (excluding the region)—35,352 contracts!

This amounts to 2,916 transactions a month across the Kyiv residential real estate market, including houses, secondary market, and new builds! So, each month only 0.1% of Kyiv’s residents engage in real estate transactions. Let me remind you, our housing stock was mostly built during Stalin's time and expanded under Khrushchev, rural areas are dying out, and we also have 1.5 million internally displaced people. New builds in Kyiv should be in high demand! But there’s no money. No mortgages either.

Despite this, every month, Kyiv’s developers invest around 25-27 million UAH in outdoor advertising (excluding printing and taxes). Roughly speaking, that’s 188,000 UAH per apartment sold.

Sometimes we forget how small the sales volume of certain products/services is when it comes to mass-market communications.

Ukraine and the USA. Wealth penetration.

I came across some financial sociology data for Ukraine and decided to compare it with the USA. To start, here are the figures for the number of households: Ukraine – 14.93 million, USA – 127.59 million.

In Ukraine, 4,800 people reported an annual income of over 1 million UAH, which is >83,000 UAH per month. I propose equating this figure to the number of households. I’m sure there are no more than a hundred families where two partners are "raking in millions." Additionally, we live in Ukraine, where people are accustomed to hiding their income. All analysts report that more than 60% of the economy is in the shadow sector. Let’s assume that the "shadow" sector actually accounts for 100%, and there are twice as many millionaires in Ukraine. Let’s call them "ultra-rich Ukrainians," as there are so few of them. We also know that the average salary in Ukraine is eight times smaller. Now, taking into account the "shadow" millionaires: 4,800 * 2 = 9,600 / 14.93 million * 100 = 0.064%. This figure reflects the "penetration of wealth" within our population.

Now, the figures for the USA...

In the US, wealth is considered to include stocks, securities, and direct income, but excludes a person’s primary residence. I’m showing a chart from 2017 to clearly illustrate the structure of income and the annual growth of millionaires, but I’ll use 2018 data (source link at the end) to provide a more representative picture. The number of wealthy individuals in the US is growing. The number of households with a net worth between $1-5 million is 10.23 million / 127.59 million * 100 = 8.02%! I was shocked by the 126-fold difference! But even ultra-wealthy Americans ($5-25 million) are significantly more, and these are highly affluent individuals by US standards. Here’s the calculation: 1.39 million households / 127.59 million * 100 = 1.09%. Even considering potential calculation errors, the difference with Ukraine is 17 times!

Cognitive dissonance.

In the US, the structure of the OOH market is noticeably different from our "monogamous" model, although it really should be the other way around.

As the charts show, even with such a high density of millionaires on the streets, American marketers use indoor advertising three times more frequently. Why? The answer is simple. Indoor or Place-Based advertising provides the opportunity to be closer to the audience’s interests, needs, and "pain points." It opens up a vast array of targeting options: gender, age, interests, income, families with children, car ownership—and these are just the basics. Everything depends on your resourcefulness, creativity, and willingness to share your marketing budget.

The more I study Ukrainian statistics, the more I am astonished by the lack of mathematical logic. A tiny percentage of the middle class, a huge wealth gap, minimal consumer activity in certain business segments... Yet, in the streets of our cities, we see an overwhelming amount of mass-market advertising aimed at millionaires (considering we are the poorest country in Europe).

Ukraine is a country of cognitive dissonance!

A possible solution.

We all know that Out of Home (OOH) is a crucial communication channel in the modern media mix. There are plenty of studies on this topic, but the most important argument is the stability of investments in this segment. It is the only "old school" medium that has remained afloat for almost 30 years, with minimal fluctuations of around just 1%. Plus, the rise of digital media gives a massive boost to this format every year. As we approach media planning season, I’d like to remind you of some of the obvious advantages of Indoor advertising, which can help address the "pain points" of traditional outdoor advertising and make your message more relevant to your target audience—while they’re still away from home.

I’m sure many professionals are already aware of these facts, but the structure of our Out of Home industry reflects a case of collective amnesia within the "media community"...

1. Outdoor reaches all layers of our population. Geographical targeting and message geolocation are, of course, useful and necessary, but they’re not enough for the modern world. The market demands a more personalised message – we need to narrow and adapt the message for a specific audience.

+ Targeting is the key competitive advantage of Indoor. In Ukraine today, you can buy a variety of audiences with national coverage and the right selection (>65%): for example, just people aged 21+; or just men; you can target car owners exclusively; families with children; sports enthusiasts; property owners doing renovations.

2. Half of our population has vision problems, and most of the visual content, text, slogans, and other creative in outdoor advertising stays only on paper, not in the minds of your audience! This is especially true for those travelling by car or public transport.

+ Indoor brings any content within arm's reach (max 3m) and allows the audience to view the details of your media message in "relative peace." In any case, the visual contact with advertising in Indoor is significantly longer than in Outdoor.

3. There are 5-6 months of the year when it’s difficult to focus on anything in front of you, let alone the content in outdoor. It could be snowing, raining with wind, the sun might be in your eyes, and in winter, the short daylight hours make it even harder to perceive ads in the outdoor ads (as not all billboards are illuminated).

+ The all-weather reliability of Indoor is a unique advantage of this format. It is not dependent on the time of year or weather conditions. Your message will be visible, audible, and look exactly as it did when it was approved.

4. In Ukraine, 95% of retail is concentrated in physical stores, and the US isn't far behind (with 20% of retail being online). Even in South Korea, 70% of retail is physical, despite being a leader in e-commerce. We are still very much "analog" people. Investments in online retail are a necessity, but not every product is something people are ready to buy online just yet. Outdoor advertising near retail locations is the best solution, but... there's not enough space for all the ads. It’s becoming harder and more expensive to secure space in cities with a million-plus population, and there’s not always enough time to pop into the store (and you often forget later).

+ Shopping centres are massive "shelves" filled with products, services, and an endless number of brands all in one place. They offer everything: food, household goods, home appliances, electronics, clothing, banks, tourism. Directing foot traffic to the retail store isn’t just a task for trade marketing—it’s especially important in large shopping centres. By reallocating a small portion of your Outdoor budget, you can remind potential buyers, who are just two minutes away from making a purchase, about your store. We are already seeing these trends, and the growth in budgets for this approach continues.

And finally, city authorities will be tidying up their streets, however painful that may sound for Outdoor operators. The "iron forest of billboards" will be cut back, paper (as a media format) will become obsolete, illegal structures will almost disappear, and advertising space will become more expensive. The chain reaction of these changes has already begun. We want to live in Europe, don’t we!?

It's time for us to become Europeans.

Think, calculate, and cherish nature!

Dmytro Smolanov

Identity Invest 

Sources:

1. My article on Sostav ("The Genetic Code of the City", 2018)

https://sostav.ua/publication/geneticheskij-kod-goroda-78389.html

2.  Ukrainian Advertising Coalition 2018

http://vrk.org.ua/news-events/2018/ad-volume2018.html

3. Prime Group (Category report on Outdoor, July 2019: Telecom, Real Estate Kyiv)

https://www.prime-group.com.ua/ru/kategoriynyie-otchetyi

4. Segodnya (The Middle Class: What Is It?)

https://www.segodnya.ua/economics/enews/kto-v-ukraine-sredniy-klass-1148979.html 

5. State Statistics Service of Ukraine 

http://www.ukrstat.gov.ua/

6. Ministry of Finance (Macro Review) 

https://mof.gov.ua/uk/makroogljad

7. Plus One (Facebook and Instagram in Ukraine, September 2019) 

https://www.plusone.com.ua

8. Research & Branding Group (Foreign Travel in the Lives of Ukrainians: Two Years of "Visa-Free")

http://rb.com.ua/blog/zarubezhnye-poezdki-v-zhizni-ukraincev-dva-goda-bezviza/

9. Ukrautoprom (Statistics 2019)

http://ukrautoprom.com.ua/statistika/statistika-2019

10.  Luxury Tax (Elite Cars 2019)

http://autoconsulting.ua/article.php?sid=44593

11.  Number of Apartments Sold in Kyiv

https://delo.ua/business/v-kieve-postroili-rekoranoe-kolichestvo-kvartir-352946/ 

12.  Official Ministry of Justice Statistics on the Work of Public and Private Notaries (Residential Real Estate 2018)

http://domik.ua/novosti/skolko-kvartir-prodali-v-2018-godu-v-ukraine-n258001.html 

13.  Research on Out of Home

http://out-of-home.ua/

14.  Bloomberg, March 2019: The U.S. Now Has More Millionaires Than Sweden Has People

https://www.bloomberg.com/amp/news/articles/2019-03-13/the-u-s-now-has-more-millionaires-than-sweden-has-people