Electric dreams

Electric dreams

Total Property - Issue 5 2017

Digital billboards are lighting up New Zealand’s cities – and adding value to commercial real estate assets.

The advertising world has gone digital - and not just indoors. Outdoor advertising firms are increasing their digital foothold in New Zealand’s cityscapes, sustaining extra revenue streams for owners of commercial property in prime locations.

Although digital outdoor advertising is still in its infancy in New Zealand - the country’s first digital billboards were launched only four years ago - interest is growing from building owners.

The format is known in advertising circles as digital out-of-home or DOOH and it is reshaping the way advertising operates.

Globally, DOOH is the fastest growing format in outdoor media, with accountancy firm PricewaterhouseCoopers predicting that DOOH advertising revenues will overtake traditional spend by 2020.

DOOH is seen as a valuable advertising platform because of its ability to reach consumers. DOOH marketing has also become more affordable, too. The cost of a flat screen television, for instance, is significantly lower than it was even five years ago. As a result, companies can purchase screens in bulk, set up a network of content, and install screens in a variety of unique locations.

Commercial and industrial property owners looking to optimise returns from their property assets will find that digital signage, both big and small, can be a steady and lucrative revenue stream, supplementing tenant rentals.

Strategically located commercial properties can be prime contenders for DOOH.

Digital signage, like that found in Piccadilly Circus or Times Square, can raise the profile of a commercial property and increase its attractiveness to tenants while interactive digital boards located in building foyers or lobbies can boost tenant satisfaction.

In identifying key billboard sites, influencing factors include traffic counts, lines of sight, demand profiles, likely audience profile and exclusivity or volume of other billboards in the area.

Revenue from digital billboards will vary from site to site, but most landlords can expect double the rental for a static billboard. The main value is derived from the annual lease fee and the length of the lease term.

Property Council chief executive Connal Townsend says that although digital billboards are still a relatively new form of technology for New Zealand, “we are starting to see them used more as they offer a profitable, dynamic form of billboard advertising”.

“Commercial building owners are starting to recognise that digital billboards lift the visibility and street impact of their building while also providing a good passive income stream,” he says.

“Tall, vertical buildings with an absence of windows are ideal, as the scale and size provides the perfect blank canvas for the billboard.”

He adds: "Auckland is also becoming a global city and accordingly advertisers and building owners are looking at a range of ways to draw people in and encourage vibrant, dynamic city centres.”

One of the biggest providers in outdoor advertising in Australasia is APN Outdoor. The company has 16 digital billboards in sites across Auckland, Hamilton, Wellington, Queenstown and Christchurch and has plans to grow its DOOH business in New Zealand.

APN Outdoor general manager for New Zealand Mike Watkins says although traditional billboards have a place in the market DOOH has “opened new doors” for the industry, giving clients increased flexibility and relevance.

“Currently our strategy for New Zealand is focused on the main metropolitan centres. We look for iconic locations that have high dwell times combined with significant traffic. They have to be the best opportunities that complement our portfolio,” Mr Watkins says.

He says there is significant interest in large digital signage from owners of commercial property in New Zealand.

“Certain landlords are more aware than others. Seeing the explosion in DOOH should drive an increased awareness,” he says.

“The right DOOH creation can make a building recognisable overnight. Tenants don’t usually want to vacate buildings that are recognisable and iconic.”

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