In NYC circa 2019, it seemed like you couldn’t ride a subway, sit in a taxi, or walk down a city street without seeing an outdoor ad for a DTC brand. It started as a trickle back in 2012, with brands like Drugstore.com running ads on the NYC subway. By 2019, OOH had become the defacto media channel for DTC brands, outside of the legacy digital ecosystem. Brand Trains in NYC were the popular choice for DTC and E-commerce brands to proclaim that they’d arrived.
With the impact of Covid in early 2020, the end came swiftly for OOH’s role in DTC branding. As fear gripped the nation, densely populated metros drained of their commuting workers and residents. NYC’s bellwether subway system saw its ridership drop 91% from 5.5 million weekday daily riders on March 5th, to 500k riders on March 31st. Around the same time, city streets, offices, airports, movie theaters, malls…any place where people gathered outside of their homes, became a ghost town. OOH media became untouchable. Most of our clients who had OOH campaigns booked for 2020, including Fiverr, Zola, TodayTix, and Verishop, smartly pulled the plug on their campaigns. We agreed it was the right thing to do and got all of the vendors we dealt with to do the same.
Fast forward one year, taking a deep yet masked breath, and, we are finally starting to see a re-awakening in our country and cities….
In NYC, as in many major cities across the US, we are seeing high vaccination participation rates, restaurants re-opening, theaters being given the greenlight, fans being let back into arenas, live concerts being scheduled…we are all breathing a collective, if tenuous, sigh of relief that things appear to be on the road to at least a modified form of normal.
Simultaneously, in the OOH world, we are paying close attention to a number of improving data points which should help pave the way for OOH to be revisited by DTC brands, including:
Office Worker Occupancy Rate — With 10% worker occupancy currently in Manhattan, numbers are still dreadfully low. But, with announced Q3 office openings for many top tier companies like Google, Salesforce, and Amazon, we are expecting that to change rapidly. Many financial firms are already starting to trickle back in as employees get vaccinated, including Citibank, JP Morgan Chase, and BOA. Most real estate companies are also back.
According to the latest survey from the Partnership for NYC just published (PFNYC worker survey), @50% of office workers are expected to return to their offices by September 2021 in some capacity, including in the Tech and Finance arenas. Further down the road, 22% of employers said they will ultimately require their employees to return to the office full-time, while 66% will implement a hybrid model with some days in the office and some days working from home, and 9% will not require employees to return. Our expectation is that by January 2022, we will see 90%+ of office workers back in cities. It is our belief that numbers of people returning to offices will be strongest amongst millennials. The allure of city life is a powerful draw, and for millennials, the social, career, and cultural aspects are tantamount. We expect this to play out in many cities, from SF to Seattle, from Chicago to Philly.
Public Transportation Usage — Encouraging data recently ( NYC MTA Ridership ), with the largest public transportation system in the country, the NYC MTA, reporting their highest daily weekday subway ridership since the pandemic began, with 1.9mm riders on Friday March 12. That’s still just 34% of pre-Covid ridership, but well off the lows. By September, the MTA is conservatively projecting that Subway ridership will be just north of 50%, but with the office workers returning, we are expecting higher numbers, @65% of Pre-Covid levels. Across the country, in Chicago, Atlanta and Boston, numbers are also ticking up, with similar expectations for ridership.
Streetside Mobile Traffic Data –Through reports from our partnership with a leading location intelligence company, we’re seeing what many people have been seeing for the past 2 months in large market cities. There are more people on the streets…walking, driving, riding… than we have seen in quite a while. Apple Mobility data ( Apple Mobility ) re-affirms this and is showing a rise in routing requests since January for New York county, i.e. Manhattan, for all forms of transportation, including driving, walking, and public transportation. In Chicago, there are more people walking and driving right now than there actually were before the pandemic!
DTC Brand OOH Activity — We are already seeing an uptick in DTC and E-commerce brands committing to OOH for Q3-Q4. On the streets and in the subway, we are seeing brands including Google, Mirror, Seamless, and Pose re-testing the OOH waters, based upon a recent scouting of NYC-posted campaigns.
Vendor Pricing — OOH media is well known for a lack of transparency when it comes to pricing. Often this is due to vendors having to guarantee or rev-share revenue with a variety of local governments and landlords, all who have different sets of expectations for what the media space is worth. Supply and demand plays a significant part as well. The end result is pricing can be all over the map for similar types of media formats, even in the same location. If there is any good news with the current crisis, it is that many vendors we deal with have been forced to come to terms with their pricing, due to the enormous drop in audience reached. While some are doing short term deals, others are more proactive and are figuring out how to tie pricing to audience delivery. That’s good for everyone.
In short, from what we are seeing, we think that we’re close to a point where OOH should begin to become part of the conversation for DTC brands again. We continue to track the latest location and ridership data and trends, and share with our clients so they can make informed decisions about how and when to re-adjust their media mix to include OOH. Some are starting to consider a September restart for their campaigns, albeit on a smaller scale, and with the expectation that pricing will reflect the audience reached. We believe that that will be the case.
If you’d would like to receive these same updates on the state of OOH in the major US cities, let me know at Keith@grafmediagroup.com, and we will add you to the email list.
Keith Kane is President of Graf Media Group (www.grafmediagroup.com), an OOH consultancy and independent outdoor media planning/buying service.