ROI of Outdoor Advertising

A recent study by BrandScience delved deep into outdoor advertising case studies to determine the true ROI of out-of-home advertising.  Globally, the firm determined that outdoor advertising’s average return is $2.80 for each dollar spent, beating out both TV ($2.43) and print ($2.41).

When the study was broken down into individual categories, the numbers proved even higher for marketers in some fields.  For instance, the ROI for advertisers in retail soared to $3.79, and those in the travel industry saw average returns of $3.55 per dollar spent.

A number of factors play into the effectiveness of outdoor advertising, and a careful strategy when selecting a media mix is the only way to guarantee results.  BrandScience found that the highest ROI was achieved when overall campaign spending was relatively low with a high proportion of the funding going toward out-of-home mediums.  This can be explained by outdoor advertising’s strong interaction with other media.  BrandScience states, “When used in combination with other media, out of home not only extends the reach, but also reinforces an advertising message.”

This reinforcement effect can be demonstrated in one form by analyzing message decay rates.  A message decay rate measures the time it takes a customer to forget an advertiser’s message.  When messages seen on TV or the internet are measured with and without the reinforcement of an outdoor advertising campaign, results show that customers remember a message for an average of 2-4 days longer when outdoor is added to the media mix.  Additional studies relating to sales lifts, or the percentage of sales increases that can be attributed to outdoor advertising being combined with another medium, confirm this symbiotic effect.

Another explanation for outdoor advertising’s generous ROI is its low CPM.  Various studies estimate the national average CPM to be in the range of $2.26 – $3.38 for a transit shelter display, compared to $9.50 – $25.00 for various TV forms and well over $50 for direct mail.  Taking advantage of outdoor’s low eyeball rates for the bulk of your campaign and using the more expensive mediums sparingly is a solid strategy.  As described above, outdoor plays a powerful role in reinforcing other mediums.  Leverage this power to lower your overall marketing budget without sacrificing results.

Arbitron performed a study in 2009 to determine how out-of-home media affected audiences.  At the time of the study, 98% of American adults rode in vehicles. Of those, “[s]eventy-one percent of travelers aged 18 or older notice the advertising messages on billboards either sometimes, most of the time or each time they pass one…” Further, “[n]early one-quarter of billboard viewers say they were motivated to visit a particular store that day because of an outdoor ad message and nearly one third visited a retailer they saw on a billboard later that week. Half of viewers reported receiving directional information from a billboard and one-quarter said they immediately visited a business because of an outdoor ad message.”

In summary, outdoor advertising is an integral part of an effective marketing mix.  It not only offers a powerful ROI itself, but it boosts the performance of your other media.  As statistics show, spending a high proportion of your advertising dollars on outdoor mediums results in the highest overall ROI.  This fact can be attributed to outdoor advertising’s ability to reinforce other mediums, increase message retention rates and offer sales lifts, and its low CPM.