Navigating DOOH Advertising Budget Challenges

Imagine your campaign’s message displayed not just on one billboard but across multiple digital screens on bustling city streets, inside subway stations, and at gas stations—reaching consumers throughout their day. 

This is the promise of digital out-of-home (DOOH) advertising, a channel that is rapidly gaining traction. In the first quarter of 2024 alone, DOOH brought in nearly $2 billion USD in revenue—the highest first-quarter volume in the history of out-of-home (OOH) advertising.

Yet, despite its growth, some advertisers are hesitant to dive in for several reasons: 

• Programmatic DOOH is still relatively new and lacks the familiar data signals and audience insights marketers are accustomed to in other digital formats. 
• The separation between traditional and programmatic buying teams further complicates budget allocation. 

The creative complexity of managing multiple screen sizes and formats can be daunting for those unfamiliar with the ecosystem.

Many advertisers focus only on large, iconic displays like those in Times Square, overlooking smaller, high-traffic screens in places like subways or office buildings that offer tremendous value. For instance, according to recent surveys, 76% of DOOH viewers took action after seeing an ad, such as watching a video (38%), visiting a restaurant (36%), purchasing in-store (30%), word-of-mouth conversations (30%), and visiting a store (29%).

So, how can marketers and agencies unlock constrained budgets to take advantage of this emerging channel? Keep reading to find out. 

Factors Affecting DOOH Advertising Costs

Several key factors influence the cost of DOOH advertising, with the overall price varying based on location, traffic volume, demographics, billboard size, campaign duration, timing, and seasonality. 

Here’s a breakdown of the factors affecting DOOH advertising costs:

Location and Traffic Volume

High-traffic areas, such as city centers, major highways, and transportation hubs (e.g., airports, train stations) command higher prices due to the volume of impressions. 

A billboard in Times Square will naturally be more expensive than a screen in a suburban shopping mall because of the number of people passing by. Advertisers are willing to pay a premium to be seen in these high-visibility areas.

Demographics

Ads placed in areas with more affluent or desirable consumer segments, such as business districts or upscale neighbourhoods, tend to be priced higher because they target more lucrative market segments.

Billboard Size and Type

The size and type of the screen also affect pricing. Larger, high-profile digital billboards can be more expensive than smaller displays in places like subways or convenience stores. 

Spectaculars—massive digital displays that dominate their surroundings—are particularly costly, but deliver high-impact impressions.

Campaign Duration and Timing

The campaign’s length and ad placement timing can also affect costs. Longer campaigns usually result in a lower CPM (cost per thousand impressions) than shorter, more concentrated bursts. However, advertisers looking to place ads during peak times—such as holidays or major events—should expect higher rates due to increased demand.

Seasonality

Like timing, seasonality influences the cost of DOOH campaigns. Advertising during high-demand seasons, such as the lead-up to holidays or major sales events, tends to be more expensive. Seasonality can vary by industry; for example, travel brands may see higher rates during the summer.

Pricing Models for DOOH Advertising

When planning a DOOH campaign, it’s essential to understand the different pricing models available. The three most common models are CPM, flat-rate, and auction-based. 

Here’s an overview of each model with its pros and cons.

CPM

With this model, advertisers pay for every thousand impressions their ad delivers. CPM allows for better transparency and performance measurement since the cost is tied directly to the number of times the ad is shown to potential viewers.

PROS	CONS
Advertisers know precisely how many impressions they are paying for.	While CPM focuses on quantity, relevance and engagement may vary depending on the screen’s location or traffic volume.
CPM campaigns can scale based on budget, allowing for small and large-scale campaigns.	In some cases, impression counts might fluctuate, making it harder to predict final costs upfront.
CPM pricing is adaptable across different screen types and locations, from large billboards to smaller digital screens.

Flat-Rate Pricing

Flat-rate pricing involves a set cost for displaying an ad over a specific period, regardless of the number of impressions. This model is commonly used for campaigns in highly visible, premium locations with guaranteed high-traffic volume.

PROS	CONS
Advertisers know the exact cost upfront, making it easier to stick to a budget.	Advertisers pay the same rate regardless of the number of impressions the ad delivers. If traffic is lower than expected, the ad may not deliver the same value.
Flat-rate pricing is ideal for spectacular locations that guarantee high impressions, offering strong brand visibility.	Premium locations often come with higher price tags, making this model less accessible for brands with smaller budgets.
This model simplifies the buying process for advertisers who want straightforward costs by eliminating the need to calculate impressions.

Auction-Based Pricing

Auction-based pricing allows advertisers to bid for ad placements in real time, similar to how programmatic digital advertising works. Prices are determined by demand, and advertisers compete to win screen time. 

This model is growing in popularity with programmatic DOOH, which offers more ad placement and targeting flexibility.

PROS	CONS
Advertisers can secure lower rates during periods of low competition.	Pricing can be unpredictable, especially during high-demand periods when bids may increase significantly.
Campaigns can be optimized and adjusted on the fly, giving advertisers more control over targeting and budget.	Campaigns with limited budgets may struggle to secure prime ad placements when bidding against larger competitors.
This model allows for precise targeting, ensuring that advertisers only pay for the impressions most relevant to their audience.

Which Model Is Best for Your Campaign?

The best pricing model for a DOOH campaign depends on your goals, budget, and screen type. 

• CPM may be the best choice for advertisers looking for transparency and scalability.
• Advertisers seeking maximum impact in premium locations might prefer flat-rate pricing. 
• Auction-based pricing is ideal for those wanting more flexibility and control in real-time. 

Average DOOH Advertising Rates

Generally, CPMs for DOOH range from $2 to $15, depending on the screen type and campaign scope. Large, iconic screens, such as those in Times Square, can be more expensive, but deliver a large volume of impressions quickly. Smaller screens in high-traffic locations, such as subways or gas stations, may fall on the lower end of the CPM range but still offer strong visibility.

Overall, DOOH pricing is comparable to video CPMs and tends to be slightly higher than traditional display ads (there aren’t as many screens as display placements on millions of websites). This slight premium is justified by the unique value DOOH offers—reaching consumers in physical locations and delivering ads when they are more likely to engage with the real-world environment around them.

Unlike display ads on websites or mobile apps, DOOH creates a distinctive advertising experience. Ads displayed in airports, train stations, or while commuting offer a captive audience immersed in their physical surroundings. This makes DOOH more impactful, as it reaches consumers at key touchpoints throughout the day, justifying its higher costs than purely digital formats.

Consider these factors to navigate DOOH pricing better and strategically allocate your budget to high-impact locations and campaigns that maximize exposure and ROI.

Common Budget Challenges in DOOH Advertising

DOOH advertising comes with several budget-related challenges that advertisers need to navigate. From the perception of high initial costs to difficulties measuring ROI, understanding these obstacles is critical to creating an effective DOOH strategy.

1. Initial High Costs Perception

One of the primary challenges for brands or agencies considering DOOH is the perception of high upfront costs. As mentioned, large, iconic screens in prime locations can be expensive, but there are other options. Educating stakeholders on the range of pricing options and the potential for scaling budgets across different screen types can help mitigate this concern.

2. Difficulty in Measuring ROI

DOOH is typically a top-of-funnel strategy to drive brand awareness rather than immediate conversions. Marketers and advertisers often struggle to link DOOH exposure to concrete performance metrics, as the ability to track individual consumer actions after seeing an ad is limited. While digital channels can provide one-to-one audience targeting and tracking, DOOH’s open, public nature makes such precision difficult. 

Although measurement tools are improving, DOOH remains less addressable than other programmatic channels, complicating attribution and full-funnel strategies.

3. Competing Priorities in Marketing Budget Allocation

Marketing budgets are often stretched across multiple channels, making allocating sufficient funds to DOOH difficult, especially when other digital channels offer more straightforward ROI tracking. 

For advertisers focused on immediate, measurable results, DOOH may be deprioritized in favour of channels with more apparent performance metrics. To overcome this, brands must view DOOH as a critical part of their broader marketing mix, amplifying brand visibility and recognition in ways other channels cannot.

4. Seasonal Budget Fluctuations

DOOH campaigns are often influenced by seasonal demand, with costs rising during peak periods, such as holidays, major events, or retail seasons. This fluctuation can make it challenging for brands to maintain a consistent DOOH presence year-round, as they may face higher rates when consumer attention is at its highest. 

Advertisers must plan and allocate budgets strategically, maximizing their investment during key periods while remaining flexible during off-seasons.

5. Lack of Flexibility in Traditional Buying Models

Traditional DOOH buying models often require fixed long-term commitments and can be inflexible for advertisers working with fluctuating budgets or shorter campaign timelines. This lack of flexibility is a challenge for campaigns that need to adjust their spend quickly or shift strategies mid-campaign. Programmatic DOOH addresses this issue, allowing for more dynamic buying and targeting. 

Strategies to Overcome DOOH Budget Constraints

Marketers and agencies can overcome the perceived financial barriers by educating stakeholders, leveraging programmatic DOOH, and optimizing placements. Here are six strategies to help you unlock this channel’s budget.

1. Educate Stakeholders

It’s essential to demonstrate how modern DOOH, particularly programmatic DOOH, offers flexibility, precise targeting, and scalability. By explaining the benefits of DOOH and how it can complement other marketing efforts, stakeholders will be more inclined to allocate the necessary budget.

2. Maximize ROI Through Targeted Placements

Programmatic DOOH enables advertisers to target specific locations and audience segments with precision, ensuring that ad spend is optimized for maximum impact. Rather than blanketing an entire city, brands can focus on high-traffic, high-relevance areas, such as airports, subways, or business districts.

3. Leverage Programmatic DOOH for More Efficient Spending

Programmatic DOOH offers a significant advantage by allowing advertisers to manage their campaigns more efficiently. Rather than working with multiple providers and dealing with separate reports, programmatic DOOH consolidates all buys into a unified report. This streamlines campaign management and reporting, saving both time and resources. 

Additionally, programmatic allows advertisers to adjust their campaigns in real time, scaling up or down as needed based on performance or budget availability.

4. Explore Hybrid Campaigns (Combining Traditional and Digital OOH)

Hybrid campaigns, combining traditional OOH and DOOH, can be cost-effective. 

Traditional billboards, which often come with lower costs, can be used for broad reach, while digital screens provide dynamic, targeted messaging in key locations. This approach balances cost while ensuring that ads are shown in the most impactful ways, with digital components allowing for more customization and real-time adjustments.

5. Utilize Day-Parting Strategies to Optimize Budget

Day-parting, or running ads during specific times of the day when the target audience is most likely to be exposed, can help optimize a DOOH campaign’s budget. 

For instance, an advertiser targeting commuters can focus their ad spend during morning and evening rush hours. Limiting ad runs to peak times allows you to make more efficient use of your budget while still reaching your audience at the most opportune moments.

6. Negotiate Better Rates With Media Owners

Negotiating directly with media owners can improve rates, especially for brands planning long-term or high-volume campaigns. Media owners may offer discounts or added value for extended contracts or bulk buys, reducing overall costs while securing prime locations. 

Establishing a solid relationship with media owners can also provide more opportunities for flexible buying models or premium placements at competitive rates.

Leverage these strategies to overcome the common budget challenges associated with DOOH and unlock the full potential of this impactful advertising channel.

DOOH Programmatic Benefits and Scalability

Programmatic DOOH offers a scalable solution for advertisers working with constrained budgets. Campaigns can be tailored to run in premium, high-traffic locations like airports or downtown areas, but also extend to more affordable screens in places such as gas stations or retail environments. 

This flexibility allows you to reach a broad audience without overspending. Additionally, programmatic tools enable efficient, real-time campaign adjustments, ensuring that every dollar is spent as effectively as possible.

Ready to explore programmatic advertising and add DOOH to your media mix? Request a demo today to find out how StackAdapt can help.