Cannibalization (Does Digital Do It?)
One question our customers have when mulling whether to roll-out digital billboards is this: “Will they cannibalize static faces and result in flat sales because ads just move from static to digital?”. The verdict on that question is in, and the answer is a definitive “No”.
Our customers know that an optimally marketed digital billboard should compete with TV, radio and newspaper – not static billboards. The presence of digital in your billboard plant gives you opportunities to reach customers, and advertising budgets, that were spent in those competitive media in the past.
- The bank that runs interest rate specials?
- The hospital that promotes health screenings or guest speakers?
- The retailer with holiday, or weekend, specials?
- The radio station featuring the “now playing” artist and song?
Advertisers, with those specific and timely marketing messages, never consider billboards because the static medium can’t deliver the message. But with the introduction of digital, all those campaigns are a reality. And as a result, your market for advertisers is suddenly much, much larger than it has ever been. Instead of battling it out with other billboard operators for the 5% that an advertiser has budgeted for outdoor, with digital you are in the mix for a piece of their entire ad budget. Instead of being limited to your share of 5%, now you are chasing your share of 100%.
And this isn’t just our opinion. In a recent quarterly earnings call, one of our industry’s leaders discussed this topic. According to their figures, the domestic advertising market grew about 1% in the third quarter. At the same time, revenue from their static faces grew about 1.6% while the digital grew at about 18%. They used that data to illustrate the fact that although they are rolling digital billboards aggressively, the static faces are outpacing the general ad market. They don’t feel that cannibalization is an issue. They understand that they are attracting advertisers that would have slipped away if they didn’t offer digital.
I was reading the Steve Jobs biography this past week, and something he said stuck with me. His opinion was that even though the introduction of the iPhone might have cannibalized sales of iPods, or the iPad might cannibalize sales of laptops – Apple innovated nonetheless. He said, “If you don’t cannibalize yourself, someone else will.” Our customers understand this. Digital billboards are “what’s next” in our industry. The ad budgets are following them. They are the best path to growth. They give you access to huge new markets. If you delay because you are worried about cannibalizing yourself, another billboard operator will.