China's out-of-home advertising on the up

China's out-of-home advertising market is expected to become the fastest growing segment in traditional media this year with strong spending and digitalization pace, according to a joint report by IPG Mediabrands's out-of-home (OOH) media buying and planning agency Rapport and its investment and media intelligence arm Magna.

Increasing levels of urbanization and rising consumer discretionary income are driving OOH ad spending in the world's second largest ad market. OOH media takes a market share of 6.1 percent of China's overall ad spending.

China media owners’ net advertising revenue is estimated to increase 9.7 percent this year to 513 billion yuan (US$76 billion), following last year's 12.2 percent climb.

Excluding movie cinema ads, the net income of OOH media stood at around 27.4 billion yuan last year.

Globally, other traditional media sectors are struggling to reach consumers, while OOH advertising is leveraging technology to innovate and remain relevant to attract new expenditure — its proportion out of total traditional media sales grew from 7 percent in 2010 to 10 percent in 2018.

Digital OOH dollars represent over 25 percent of total OOH sales, higher than the global average level of 18 percent thanks to the prevalence of digital billboards and location-based inventory in China.

The Chinese digital OOH landscape is expected to record strong growth, with average annual increase at 11 percent in the next five years, contrasted with traditional OOH growth that's set to shrink slightly over the next five years.

This stagnation will be due to a combination of inventory replacement, declining static inventory counts, and lack of brand interest in non-digital inventory.

"Out-of-home ads is the last advertising format that consumers can’t skip or block, and still reaching the young urban active audience, which explains why OOH advertising has grown steadily in the last ten years and will continue to grow in the next five years,” commented Vincent Letang, executive vice president for Global Market Intelligence at MAGNA.

Internet companies and tech giants such as Apple, Amazon, Alibaba and JD in the domestic market are also actively leveraging out-of-home ads to build brand image and to push for consumer spending ahead of sales campaigns.

"The industry has exploited all the benefits of evolving digital technologies, while retaining a unique geographical footprint in a way that no other medium can," added Michael Cooper, Global CEO of Rapport.