Software for remote content management, device management and analytics
Home Products Solutions Blog Support Company News Contact
Customer Login  
Digital Signage Insider SignageWire
Latest Articles Full Article List

The Digital Signage Insider
Thoughtful analysis, industry news and best practices for digital signage, M2M and kiosk projects

DOOH Media Buyers and Sellers Prefer Reach-Based Pricing: Survey

Author: Bill Gerba on 2011-11-17 09:26:34

Last week, we began looking at the pricing trends that emerged from our DOOH media pricing survey. While the analysis was only cursory, it highlighted a number of things that folks in our industry have had an incredibly difficult time investigating over the past decade. This week, we have several more insights to share, beginning with some additional detail on everyone's favorite number: the average selling price for DOOH ads.

Mean versus median pricing

In the previous article, we mentioned that the average (mean) sale price for DOOH media is about $12 on a CPM Viewers basis, with most people indicating a price in the $1-$10/CPM range. We noted, though, that there were a few people who entered very high CPM prices ($50 or more), which partly muddied the picture. Consequently, recalculating for the median instead of the mean, we learned that the median CPM Viewers price, which is probably a little more representative of what's being bought/sold in the real world, is more like $6.50.

I wanted to take this a step further and see how the price estimates differed between those who had buy-side experience and those who had sell-side experience, as well as those who had experience with both roles and those who didn't have experience with either of them. However, as you can see from the graph below, the results were quite uniform. In other words, regardless of experience level, most people implicitly "felt" that DOOH ads are worth somewhere in the $1-10 range, again with a median of around $6.50.

Note the big spike up in the $41-$45/CPM range from those with buy-side experience only. At first glance, that might seem to indicate that media buyers/planners are actually prepared to pay a lot more for DOOH than the data otherwise suggests. However, we only had a very small group (less than 10) of these folks actually complete the questionnaire, compared to 175+ total respondents, so their contribution doesn't meaningfully skew the numbers. And since those who had both buy and sell-side experience voted a lot more like everyone else, my only guess is that the handful of media buyers who took the survey and answered this question had some specific high-dollar-value campaigns and placements in mind. I don't want to devalue those answers -- there may well be a different pricing perception at the big media buying/planning agencies -- we just don't have enough data from these people to say that for sure.

Buying on reach versus buying on action

Another thing I found quite surprising was how people would prefer to buy or sell DOOH media. As we talked about last week, buying based on a reach number like CPM Viewers is currently the most popular method, probably because advertisers are used to this metric when purchasing other kinds of media. However, few seemed to be interested in a cost-per-action model that would charge based on how many viewers actually acted upon an ad (presumably by interacting with the sign, taking a coupon, making a purchase or doing some other measurable task):

Not surprisingly, DOOH sellers (who probably consist mainly of network owners) are least enthusiastic about this option, since it means more work and more risk for them -- especially since much of the sales impact comes from content these people will frequently have little control over. Buyers showed a little more interest, but still only 20% of these folks said that pay-per-action would be their preferred buying method. So I think the voice of the industry speaks loud and clear here: buyers and sellers currently rely on CPM Viewers to get DOOH deals done, and that doesn't look like it will change in the immediate future.

How much are better metrics worth?

Everyone likes talking about metrics, and how great it will be when we can scan a shopper's head in real-time as they walk into the store, pull up every last detail about them, and then beam an appropriate message directly into their brain. But how much of that is just lip service? We asked people to indicate how much they would pay for a "qualified" reach measurement like eyes-on, versus the standard CPM Viewers measurement priced out above. The answer turns out to be: "a decent amount," as you can see from the chart below:

In short, screens boasting a qualified reach measurement like eyes-on can command an impressive-sounding 32% price premium. However, this only comes out to about $4 per thousand viewers since the mean cost for qualified CPM Viewers was about $16 (though the median price was also around $16, suggesting there may be more demand for measured spots). Thus, I would say at this point that qualified reach measurement may make your DOOH network more valuable, but depending on your audience size, the cost of implementing the additional metrics may not be worthwhile.

If you're like me, the numbers above raise just about as many questions as they answer. We still have a lot more analysis coming up, including a look at the differences between the various pricing mechanisms surveyed and an examination of per-screen and per-spot pricing trends. For now, though, I'd love to hear your thoughts on the above.

Do these results surprise you? Are they higher, lower, or about even with your own expectations and experiences? Leave a comment and let us know. (If you're viewing this in your email or RSS reader, click through to to comment.)

Comments (6)

rss Subscribe to comments for this article | Trackback

2011-12-02Frank writes:
It doesn't make much sense to pay for advertising only if the product is sold.

The elements of the marketing mix are Product, Price, Promotion and Place. DOOH is only a portion of one of the Ps.

The DOOH business model has its own operational risks. The DOOH can not undertake the market risk of every product or service advertised because the decision of purchase for those products depends on factors beyond the DOOH reach.
2011-12-15Bill Gerba writes:
Hi Frank,

And yet for all that, people are still trying pay-per-action strategies out. Why? Because it can defer some of the advertiser's risk, and it can offer something to potential advertisers that most other media cannot.

IMO we'll never see PPA displace traditional pricing strategies. But I do think they offer something unique to advertisers and network owners willing to give them a try and work through the kinks.
2012-03-04Rich writes:
So... Why not cut your cpm price in half, also charging a modest per-action fee? We are considering this approach.
2012-03-04Bill Gerba writes:
Hi Rich,

That's an interesting idea, though I wonder if the advertisers who want CPM pricing would be willing to accept a CPA, and likewise I wonder if those interested in CPA pricing would even know anything about CPM. I'd love to hear how that model works out for you!
2012-03-28How time of interaction is factored in DOOH media pricing? writes:
...Unfortunately, most of the things that make the DOOH medium unique are not factored into the vast majority of media buyers' pricing decisions (though network owners/operators certainly use them to try and justify their recommended pricing). For virtually all big networks, CPM Viewers is the pricing scheme of choice:
2014-03-19Robin Bechtel writes:
Great article, any updated information here for 2013?

Leave a Comment

Email Address:
(required but won't be shown)

(max 2000 characters)
Are you a human? If so, uncheck this box:

Previous Article: DOOH Ads Sell for Average CPM of $12: Survey
Next Article: DOOH Networks Slow to Adopt Pay-Per-Action Pricing: Survey

Front page of Digital Signage Insider Blog

LEGAL STUFF: The Digital Signage Insider is written by multiple authors. The author of each article is clearly identified at the start of the article. The opinions expressed in each article are solely those of the author, and do not reflect the official opinions of WireSpring Technologies, Inc. All articles are copyright © 2004-2014 by their respective author. All content besides the actual article text, e.g. surrounding branding and informational content, is copyright © 2000-2014 WireSpring Technologies, Inc. All rights reserved. Except as provided in WireSpring's Republishing and Syndication Policy, no articles may be reproduced, in whole or in part, without WireSpring's express written consent.

About this blog
WireSpring provides hardware, software and services for digital signage and kiosk projects. But this blog is a labor of love. Our posts cover everything from case studies to creative briefs, and we post new articles about once a week.

Editorial policy:

Article topics are selected by our writers and editors, with the goal of providing objective and useful information to the entire digital signage industry. This means covering a lot of projects that have nothing to do with WireSpring's products, and we're fine with that. Whenever we mention a project that WireSpring is directly involved in, we'll be sure to provide appropriate disclosure in the text. If you'd like to suggest a topic for a future article, feel free to leave a comment or contact us. We don't take very kindly to PR spam, so please review our past articles before contacting us to verify that what you're planning to send is a good fit for our audience.