DOOH should be sold the way linear TV used to be with prime time, off-prime and night time

DOOH and retail media are still often sold as if every hour of the day and every day of the week were worth roughly the same. That is an outdated way of pricing a medium where audience levels in reality vary significantly throughout the day. With new technology, it is now possible to analyze how many people actually pass a digital screen hour by hour and in some environments also understand audience demographics such as gender and age category. According to Michael Lemner and Christian Bönnelyche of BizLab, this opens the door to a new and far fairer pricing logic for both DOOH and retail media.

In the linear TV world, advertising prices varied for decades depending on when audiences were actually watching. Prime time cost more than off-prime and night time because more viewers were present. The same logic should increasingly apply to digital screens in physical environments.

Today, large parts of the DOOH market are still sold using models based on estimated reach, frequency and share of voice over longer periods. The problem is that this model smooths out major differences in real traffic throughout the day.

“A digital screen in a store, a shopping mall, a transit environment or along a road does not have the same commercial value at 8:15 am as it does at 12:30 pm, 5:10 pm or 11:40 pm. The flow of people changes dramatically, and often so does the audience,” says Michael Lemner, board member of BizLab.

“TV has always understood that different time slots carry different value. Prime time has been priced higher because more people were actually watching. What is surprising is that DOOH and retail media are still so often sold in a static way, even though audiences in physical environments also vary greatly during the day” says Christian Bönnelyche, CMO of BizLab.

With BizLab’s technology, it is possible to analyze how many people pass a digital screen hour by hour. In relevant environments, it is also possible to create an anonymized demographic picture of the audience, for example based on gender and age category. This makes it possible to value each screen and each time slot far more precisely than today.

“In practice, this could mean that DOOH and retail media begin to be sold using clearer dayparts, such as morning traffic, lunch, afternoon, evening and night time. That makes it possible to charge more when traffic and commercial value are at their peak, while also creating a more transparent proposition for advertisers,” says Christian.

“When you can actually see how many people pass a screen at different times of day, it becomes logical to price the medium accordingly. This could give the market a much more differentiated rate card than today’s models, while also making the offering more relevant for advertisers,” Michael continues.

For retail media, the opportunity is even greater. It is not only about how many people pass by, but also about which target groups are present at different times and how messages can be adapted based on time of day, weather and the actual store environment. This means physical retail can begin to sell more than just screen space. It can begin to sell real audience contacts.

This also implies a shift away from weekly reach, frequency and share of voice as the primary currency.

“If retail and DOOH seriously begin to use data on actual traffic and actual audiences, the market could move from broad estimates to a more modern media currency. It would also become easier to argue for higher value in the hours and placements where audiences are actually strongest” Christian continues.

BizLab believes this is a natural next step for a market that has long talked about digital transformation, but where pricing logic is still largely built on analog thinking.

“The most interesting thing may not only be that certain hours should cost more. The most interesting thing is that the entire market could become more intelligently priced. With the right data, both media owners and advertisers can make better decisions,” concludes Michael Lemner.

For DOOH, retail media and retail itself, this could become an important step from general presence to truly data-driven commercialization of physical reach.