‘The Economist November 10th 2018
outdoor advertising
Sign of the times
Innovations from online advertisers
are being adapted to billboards
EDESTRIANS STROLLING down sth Ave-
‘nue in Manhattan's Hell's Kitchen
neighbourhood will be struck by the cast-
limestone facade of the Hearst Magazine
Building. Commissioned by William Ran-
dolph Hearst in 1926, the 40,000-square-
foot (3736-square-metre) art deco building
isadorned with luted columns andstatues
and topped by a 600-foot (a83-metre) glass
and steel skyscraper. Another conspicuous
feature is a vast digital screen transmitting
advertisements from BuzzFeed, EsPN and
Vice. This blend of history and modernity
is emblematic of the outdooradvertising
business itself, which, despite being one of
the world’s oldest forms of marketing is
‘embracing digital technologies.
‘Most forms of conventional adverti
ing—print, radio and broadcast ‘elev!
sion—have been losing ground to online
ads for years; only billboards, dating back
to the 1800s, and rv ads are holding their
‘own (See chart). Such out-of-home (00H)
advertising, as itis known, is expected 10
{grow by 3.4% in 2038, and digital out-of-
home (Doon) advertising, which includes
the Leo screens found in airports and
shopping malls, by 16%, Such ads draw
‘viewers’ attention from phones and cannot
beskipped orblocked, unlike ads online.
Billboard owners are also making hay.
from the location data that are pouring off
people's smartphones. Information about
their owners’ whereabouts and online
browsing gets aggregated and anonymised
by carriers and data vendors and sold to
media owners, They then use these data to
‘work out when different demographic
‘groups—"business travellers’, say—walk
bytheirads. Thatknowledgeis added to in-
sights into traffic, weather and other exter-
nal data to produce highly relevant ads
OOH providers can deliver ads for coffee
-
‘The great cutdoors
United states, avertsingrevenues*
19952015 snmslovege change
4 4 2 0 2
outdoor
Teles
fda
Mopaones
Newspapers
Times Square pre-neon
when itis cold and fizzy drinks when itis,
warm, Billboards can be programmed to
show ads for allergy medication when the
airis full of pollen
Such targeting works particularly well
‘when it is accompanied by “programmat-
fc" advertising methods, a term that de-
scribes the use of data to automate and im-
proveads. In the past yearbillboard owners,
such as Clear Channel and jcDecaux have
launched programmatic platforms which
allow brands and media buyers to select,
purchase and place ads in minutes, rather
than days or weeks. Industry boosters say
outdoor ads will increasingly be bought
like online ones, based on audience and
‘views as well a location,
‘That is possible because billboard own-
ers claim to be able to measure how well
their ads are working, even though no
click-through” rates are involved. Data
firms can tell advertisers how many people
‘walk past individual advertisements at
particular times ofthe day. Advertisers can
estimate how many individuals exposed to
an ad for a Louis Vuitton handbag then go
fon to visit a nearby shop (or website) and
buy the product. Such metrics make out-
doorads more data-driven, automated and
measurable, argues Michael Provenzano,
co-founder of Vistar Media, anad-tech firm
in New York.
‘As the outdoor-ad industry becomes
more data-driven, tech giants are among
those tosee more value nit. Netflixrecent
Iyacquiteda string of billboards along Hol~
Iywood's Sunset Strip, where it will start
advertising its films and 1v shows. Tech
firms, among them Apple and Google, are
heavy buyers of oo# ads, accounting for 25,
ofthe top 100 oo# ad spenders in America
‘The outdoor-ad revolution is not pro-
blem-fee. The collection of mobile-phone
Business 59
data raises privacy concems, And criti-
cisms of the online-ad business for being
‘opaque, and occasionally fraudulent, may
also be lobbed.at the oot business as itbe-
comes bigger and more complex. The in-
dustry is ready to address such concerns,
says Jean-Christophe Conti, chief execu-
Luve of vioost, a media-buying platform,
One of the benefits of following the on=
line-ad trilblazers, he notes, is learning
fromtheirblunders.
Pharmaceuticals
Pill bills
Biosimilar drugs promise to cut
health-care costs in rich countries
Ae yy’s Tux prices, stupid.” That simple as-
sessment of America’s wildly expen-
sive health-care system was made 15 years
ago by Uwe Reinhardt, a health economist
who diedlastyear. Health costs as apropor-
tion of America’s economic output have
soared since, from 14.5% in 2003 to over
17% in 2017, with drug-price inflation abig
culprit. Less than 2% of Americans are
tueated with specialty biotech drugs, but
these account for as much as 35% of total
drug spending.
‘The good news is that cheaper biotech
drugs ate coming. Known as biosimilars,
these complex copycat drugs (which are a
bit like generics) have been allowed in Eu-
rope since 2004 and in America since 2010.
At first, owing to policy roadblocks and
anti-competitive tactics by incumbents,
only a few came to market. But the firms »>