UK Kinetic Viewpoint 13

A definitive insight into the UK Out of Home industry

Issue 13

viewpoint The high street is dead.

Except it isn’t.

www.kineticww.com

Route launches Out of Home advertising into big data arena

2012 a bumper year for DOOH and a look ahead to 2013

02

introduction welcome to our latest viewpoint newsletter – this edition we look at what is shaping the future of OOH. Published bi-annually, Viewpoint is Kinetic’s perspective on current industry developments, trends and innovations in the UK. We analyse the health of the British high street, the reasons for optimism and the impact that Route, the sectors’ new audience measurement system, will have on the Out of Home industry. Our guest contributor, Neil Morris, Founder and MD of Grand Visual, reflects on the bumper year that was 2012 and what we can expect from the market in 2013; we look at the impact of 4G in the UK and conclude with the recent innovative campaigns that have caught our eye.

The high street has been a staple of British society for centuries and, according to Kinetic’s Panel research, is still a leisure destination for many of us. There is no doubt though that online and mobile are having an impact, and we examine what that impact is and the emerging counter-forces.

The launch of Route brings GPS technology to our measurement landscape and the ability to plan against audiences across various OOH formats and environments. We predict what changes this will bring to the planning process and the industry as a whole. The increasingly important role that technology is playing in the OOH industry and our lives in general is highlighted by the launch of the 4G network – read our synopsis on adoption rates.

New industry metrics, changing behavioural patterns and a faster nationwide mobile network will bring a gamut of changes; 2013 is set to be a defining year for the OOH space.

We hope you enjoy this issue and appreciate your feedback at kineticpeople@kineticww.com.

A definitive insight into the UK Out of Home industry

the high street is dead. except it isn’t.

If you have opened a newspaper, turned on the television or read any news of late, you’d be forgiven for thinking that every high street up and down the country is empty; devoid of shops and people – a deserted urban wasteland where only pound shops and real estate franchises still dwell.

And while it may be true that some high streets and certain retailers have indeed succumbed to the recession, many are in fact thriving and it has been those who have failed to adapt to the changing consumer environment and develop multi-channel distribution models that have disappeared.

Along with the tough economic climate, the blame for the ‘death’ of our high streets has been squarely levelled at online, and not without some reasoning.

Over the last fifteen years, retail sales have been slowly shifting from the high street to online but it still only accounts for 14.3% of all UK retail expenditure.

And it isn’t the same story for every sector; 90% of clothing, footwear and homewares are still bought in bricks and mortar shops and the same can be said for 95% of all health and beauty purchases and 93% of DIY. It won’t shift at the same pace for every sector either.

The truth is that most of us still do the majority of our shopping on one of the country’s many high streets or one of the many malls, and will continue to do so for a long time to come.

Shopping is seen as a leisure activity for many of us; 61% of females and 58% of 18-34 year olds say they enjoy the whole shopping experience, a third of us view it as a ‘day out’ and 73% of people still say they prefer real shops to online.

The shift towards online will continue, but at a much slower pace than you might expect; over the next ten years online retail will only own a third of the UK retail market.

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04 The advent of Click and Collect options mean that while consumers are indeed making some purchases online, a significant portion of them then go on to visit their high street to collect that purchase.

A new retail model is emerging The simple fact is our shopping behaviours are diversifying; offline and online shopping are not mutually exclusive and a new retail model is emerging with many retailers busily fragmenting their distribution strategies to go where the customer is.

And for large retailers such as John Lewis, M&S, Halfords and Tesco, Click and Collect accounts for as much as 70% of their online orders for non-food goods. The advent of Click and Collect options mean that while consumers are indeed making some purchases online, a significant portion of them then go on to visit their high street to collect that purchase. We’ve seen the opposite as well; the rise of showrooming, where consumers browse products in stores and then go on to buy online.

We have seen the rapid rise of Click and Collect services; as of July 2012, over 85% of people in UK towns were within a mile of a Collect+ location – There are now almost 5,000 across the country.

Online penetration by sector 2011: £26.2bn – 12.7% of total retail spending

11.1

10.1

%

%

%

6.0

5.0

4.4 Food & Grocery

%

Health & Beauty

%

DIY

%

Homewares

%

Clothing & Footwear

%

65.2

41.5 32.0

Multi-channel shoppers are the most valuable The convenience of shopping through multiple channels actually encourages people to spend more; customers who buy clothing, homewares and electrical goods for example spend on average £116 per transaction compared to £64 for those who only buy in-store.

Asda are currently trialling Drive Thru collection at certain outlets and they have found that 30% of customers are also going on to visit the retailer’s store after collecting their goods.

Traditional online-only retailers Amazon and eBay are experimenting with multiple distribution channels and have both ventured into physical retail through pop ups, own branded stores and Click and Collect functions, demonstrating the value a real world shopping environment can have on the bottom line.

Electricals

Books

Music & Video

A definitive insight into the UK Out of Home industry

Technology has blurred the lines between online and offline Smartphones mean that consumers are often active in both spaces at the same time; browsing on their phones while in stores. Our recent Kinetic Panel showed that 53% of smartphone owners have used their device to help with a purchase decision whilst in a store.

People want to be able to shop anywhere, any time and on any device or via any channel. Retailers, like Jessops, HMV and Woolworths, have unfortunately failed because they didn’t adapt to the changing retail landscape and embrace the possibilities new technology can bring. Retailers that have embraced technology are enhancing the retail environment, encouraging consumers to interact with their brand, providing a richer experience and ensuring that the pursuit of shopping is an enjoyable one.

M&S are trialling Wi-Fi and QR codes in selected stores, displaying QR codes for items that are not available in-store. Once captured on a

Q: Where do you make the majority of your purchases? % 86

%

%

78

Online %

%

%

High Street %

% 74

71

69

66

65 47 48 34

13

16

25

23

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9

smartphone, the QR codes guide shoppers to the mobile site where they can purchase the item. Superdrug are currently in the process of fitting their stores with Wi-Fi, ensuring customers are always connected.

February saw the high street achieve the best sales for three years and the British Retail Consortium have attributed the growth as coming from across all parts of retailing.

And while the shopping experience is no doubt evolving and not everyone will survive in the new world, the high street continues to play a central role in the vast majority of retailer’s core strategies. There’s plenty of life in our high streets yet.

Watch this space: we are busy undertaking a project in collaboration with CBS Outdoor looking at the current shopping landscape, the on-going relevance of British high streets in consumer’s lives and how it is evolving to keep up with an increasingly demanding consumer audience. There will be much more detail and insight coming your way in the near future.

Music & Video

Books

Electricals

Clothing & Footwear

Homeware

DIY

Health & Beauty

Food & Grocery

Sources: BRC: Retail Monitor Feb 2013, Mintel, Kinetic Panel, Deloitte, Canvas8

www.kineticww.com

06

route launches Out of Home advertising into big data arena Route, a new audience measurement data set, replacing Postar and serving the Out of Home (OOH) advertising community in the UK, has launched bringing GPS technology to our measurement landscape and the ability to plan against audiences across various OOH formats and environments.

Kinetic believes this new data will fundamentally change the way OOH is planned and perceived over time.

It allows us to reflect the changes we’re seeing in the way consumers interact with screens and poster locations whilst on the move and to embrace a new language in how we define our communications planning, as one of the most dynamic and connected areas of media. The increased granular and cross-environment measurement, combined with exciting developments in digital and mobile technology, ensure OOH is well placed to fulfil its potential.

What does the measurement include?

The impact of a new measurement for Out of Home, putting audiences not panels at the heart of what we do, is in itself transformational. The sheer scale of the research – a £19m industry investment, 28,000 people tracked and linked to a comprehensive Traffic Intensity Model, 170 million data records, 19 billion GPS records, all inventory GPS mapped and a deep understanding of the audience in terms of demographic, lifestyle, attitudes – has created a single and unified source of audience measurement across all major OOH environments.

A definitive insight into the UK Out of Home industry

Putting audiences not panels at the heart of what we do, is in itself transformational.

The research is unique in that it combines data from a GPS consumer survey, traffic counts, visibility research and modelled insight into the way we move around interior locations like the Tube, shopping malls and rail stations.

The key themes to emerge from the launch of this data will be primarily how it changes how we look at individuals, geography and location in making important Out of Home media choices, particularly cross environment and when planning regionally. This will provide a measurable understanding of how cross-formats work, a clearer understanding of key issues like effective frequency, a broader use of insights reflecting the changing dynamics of the

OOH audience and improving data inputs into analysis of the effects of campaigns, including econometrics.

It will not be in tweaking and refining schedules at a panel level that this data will have its greatest impact, but in ensuring the strategies we use to reach bespoke audiences across environments and formats deliver the maximum impact and return.

At Kinetic, we believe it also gives us a genuine edge in the marketplace as it enables us to articulate the value we offer in terms of our analytics, insight and planning tools that are already unique to the medium and to use much more granular audience data to talk about effective OOH planning.

Using the audience data As underwriters of the project from inception, Kinetic has full access to the raw data and algorithms provided by the research partner, IPSOS. Kinetic has already fully developed propriety tools to mine and map the raw data and provide analysis by geography, demography, lifestyle, media consumption, day part and day of week, to treat an audience as a collection of individuals rather than a homogenous mass. We believe we are unique in our ability to unlock the full potential of the data from launch.

Kinetic will now be able to demonstrate that the data can make OOH media more valuable. With more accurate and more granular measurement, we can improve the way we track effect, across environments, formats and audiences.

www.kineticww.com

08 It will not be in tweaking and refining schedules at a panel level that this data will have its greatest impact, but in ensuring the strategies we use to reach bespoke audiences across environments and formats deliver the maximum impact and return.

New insights Our unique Mapper and Insight tools allow us to fully mine the original data so we can see what the actual GPS tracked audience realistically sees.

The average adult sees 169 posters a week. Londoners see twice this number, younger audiences also see more than the norm, whilst main shoppers are totally average.

Formats deliver coverage and frequency at different rates and targeting by urban density pushes these curves upwards.

Our challenge is now to ensure we are optimising against target audiences and using cross-environment planning and geography to maximum effect.

The data reiterates that the Out of Home medium delivers relevant audiences at times of day where advertisers can – if they prefer – deliver timely, flexible messaging.

The busiest roadside format locations net over a million impacts (sightings) a week and represent those highly demanded and huge impact large format sites on major London arteries such as the A4/M4. The sites with the highest pedestrian impacts are also in London delivering over 25,000 pedestrians a week. Londoners are most likely to see two 6 sheet panels outside Kings Cross, two 48 sheet large format sites outside Waterloo Station, plus the IMAX, an impactful site in its own right.

The beauty is that now we can select locations and environments according to the right target audience and augment our plans with formats by location that can help deliver appropriate coverage and frequency targets. Outside the top 24 cities in the UK, people see, on average, only 50 posters per week. We need to ensure we factor in these behaviours so that brands can plan retail and other communications strategies accordingly.

Summary In summary, the data will help value and validate what we already know, whilst transforming our knowledge about the incremental and unique reach of new environments and formats.

Improved measurement means greater accountability and a significant impact on econometrics, phasing strategies and effective reach. Greater flexibility over length of posting cycle to fit audience consumption could emerge and a validation of the opportunity to host tactical messaging. There are many more insights to come, but expect the Out of Home industry to redefine the way it approaches planning and to seek to deliver more effective planning which must in turn deliver better ROI for the medium.

Nick Mawditt Global Director of Insight and Marketing

A definitive insight into the UK Out of Home industry

2012 a bumper year for DOOH and a look ahead to 2013

Neil Morris Founder & MD of Grand Visual

Many significant international events converged to make 2012 a standout year for the UK digital Out of Home market. Kicking off with Euro 2012 and the Diamond Jubilee and followed by the Olympics, all eyes were turned towards London and the UK for a summer of street parties, sport and patriotic fervour. Digital Out of Home media was a hot bed of creativity as big name advertisers vied for attention amongst the burgeoning crowds in and around the Capital.

In addition to the vibrant events calendar, 2012 also saw the digital OOH market developing quickly in order to capitalise on the extra footfall pounding the streets during the busy summer.

Last year digital OOH media hit a critical mass made up of quality networks, with dedicated media owner facilitation and improved ad serving platforms such as OpenLoop. All this helped to fulfil the ideas, appetites and ambition to green light campaigns.

The latest figures from the OMC reflect this positive step change, with digital revenue up by 42% year-on-year in 2012, to £181.7m. Digital OOH accounted for 19% of all Outdoor spend during the year – digital’s biggest ever proportional contribution.

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10 BP UGC Home Team Campaign As part of BP’s sponsorship activation, Kinetic planned a dynamic digital Out of Home campaign to celebrate the people ‘off the track’ who were playing their part in helping to make the Games a success. The campaign integrated UGC content from BP’s Facebook page where users could nominate themselves for the chance to win London 2012 tickets. From plumbers to those making tea for weary builders, nominees were selected using OpenLoop and their photos were published across digital OOH formats across the capital.

As the quality of digital media continues to evolve we will see the continued convergence of ambition, budget, facilitation, and creative thinking, and clearer ties between the integration of real world activity with social media support.

Improved technology, broader coverage and the buzz of an event-packed year meant that creative highlights for 2012 were also abundant.

Many advertisers tapped into the national spirit and festival atmosphere by delivering dynamic, real-time, relevant campaigns. Brands also tapped into the online buzz by integrating social media channels to help bring their Outdoor communications to life. Some brands that did this well during the Olympics were Nike, Heineken and BP: Nike #MakeitCount As 2012 was such a massive year for UK sport, Nike wanted to inspire more youth participation by encouraging teens to star in their own #makeitcount ad. By visiting Nike stores at the Westfield shopping centres and Nike Town, Oxford Circus, participants could have their picture taken and post their pledge.

Moments later their signed portraits were broadcast via OpenLoop to screens in shopping centres and on the London Underground. In total, 2,743 teen-created ads were showcased and participants also received their signed photo pledges by email so they could share on Facebook which generated over 250k views and 17k tweets.

Heineken Fan Photos As an official sponsor of the London 2012 Olympic and Paralympic Games, Heineken created an online hub with fan-generated content. Heineken fans were encouraged to upload photos celebrating the Olympics to www. thefanhub.co.uk, where the best pictures were selected each day and delivered via Grand Visual’s OpenLoop dashboard where they were published instantly across digital Outdoor screens throughout London Underground and rail stations.

What’s ahead for 2013?

This year, from a digital inventory perspective, the UK will see some major investment in the quality, scale and sheer impact of digitally enabled environments that offer multi faceted interaction. A good example of this has been the launch of Trinity Leeds in late March – the most digitally advanced shopping destination in the UK. The all-digital environment includes free WiFi, internet-connected tablets and large-format video walls which deliver ‘Wonder Experiences’ based on natural ergonomic movement.

As the quality of digital media continues to evolve we will see the continued convergence of ambition, budget, facilitation, creative thinking and clearer ties between the integration of real world activity with social media support.

Now that digital Outdoor networks are fully responsive, the ability to interact on a more intimate level will continue to be an important growth area. There are a whole host of new and emerging technologies to pick from; we have been playing with gesture, gender and image recognition, colour picking, AR and mobile and we are excited about applying this knowledge to entertaining and innovative campaigns in 2013.

A definitive insight into the UK Out of Home industry

4G launches in the UK 4G means faster, more stable, connection speeds for mobile devices. It’s already available in a number of countries such as Hong Kong where 4G users consume two to five times more data than 3G users.

4G launched across 16 cities in the UK by EE in October 2012.

Though take up has reportedly been sluggish – a likely scenario for any new technology – thanks to EE’s extensive launch campaign and the news coverage of Ofcom’s 4G auction, awareness of 4G technology is at a strong 74% of UK individuals (source: Kinetic UK Panel).

And interestingly for a new technology, this is fairly level across all age groups. Take-up looks set to increase though with 27% of us thinking about getting a 4G contract once it is available across more operators and half of 25-44 year olds citing 4G as a deciding factor in their next phone upgrade.

On the 9th of April EE announced it plans to double the speed of its 4G network in ten of the UK’s largest cities over the summer.

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12

A definitive insight into the UK Out of Home industry

innovation in Out of Home Advertisers in the Out of Home market are continuously exploring and exploiting the innovative ways that OOH media can grab an audience’s attention and deliver a relevant communication. Here is our pick of the most inspiring and effective over the last few months.

Lloyds TSB’s interest turns to interactive OOH campaigns

The Sun blasts commuters with morning headlines

Lynx Apollo – 35ft astronaut lands at Westfield

Towards the end of 2012, Lloyds TSB executed the largest ever Out of Home interactive 6 sheet campaign, with the aim to get people familiar with and talking about the five smart features of a Lloyds TSB personal current account.

The morning news headlines run by The Sun were splashed over digital OOH screens from 7-10am daily across 2800 screens nationally.

As part of the marketing outreach for Lynx Apollo, a 35 foot astronaut was unveiled at Westfield London in what was the largest interactive digital Out of Home special build to run in the UK.

During the interactive game consumers drove around a circuit collecting icons that represented the different smart features you can add to an account.

As well as being the largest campaign of interactive 6 sheets booked, the activity also delivered the first interactive digital 6 sheet in Westfield and was the first interactive 6 sheet campaign by a financial advertiser.

The campaign drove a definitive halo effect for the brand, as 70% of respondents were positive about the experience and around 50% are now more positive towards Lloyds TSB as a direct result of the campaign.

kinetic 24-28 Bloomsbury Way London WC1A 2SL

News International loved the idea of being able to feed that day’s front-page headlines to the public during the morning peak commute hours in an effort to push sales of the paper. Digital Outdoor formed the backbone of the strategy due to its flexibility, short turnaround times and ability to target day-parts.

Due to the versatile nature of the stories, a quick turnaround was needed for the booking, production of artwork, trafficking to media owners and going live. Media owners were only informed of a booking the day before – if there was availability on the screens, the booking would be processed. The campaign was successful at hitting objectives and was rolled out further.

t +44 (0)20 7150 6000 f +44 (0)20 7150 6001 www.kineticww.com

‘Astronaut Me’, was a mobile enabled giant astronaut that floated above the crowds in the Atrium at Westfield London. Shoppers were able to upload their picture by email or text and see their face displayed in the visor of the giant astronaut, taking them one step closer to space!

The campaign was closely integrated with Twitter and Facebook activity and supported by proximity texts.

Participants submitting via email automatically received an in-situ photograph of themselves starring as the astronaut to socially share online with friends and family.