AI Is Pulling Advertising Back into the Physical World: DOOH Grew 18.5%
Out-of-home advertising in the U.S. set a record — $3.16 billion in a quarter. AI has undermined trust in the internet and made physical space more valuable to brands.
Out-of-home advertising revenue in the U.S. grew 10.7% year over year in the second quarter, reaching a record $3.16 billion, according to the Out of Home Advertising Association of America (OAAA). The digital segment (DOOH) gained 18.5% and accounted for nearly 40% of the category's revenue.
The figures mark an unexpected reversal: after two decades of advertising budgets migrating online, artificial intelligence is beginning to push some of that value back into physical space.
Why Is Out-of-Home Back in Fashion?
At the Advertising Week conference, the topic of out-of-home came up in discussions alongside agents and creators. The reasons lie in a convergence of circumstances that are weakening digital channels.
Key factors:
- Erosion of trust in online content. According to Adobe's 2024 report, 87% of American consumers said generative AI has made it harder to distinguish fact from fiction online.
- Answer engines — ChatGPT, Claude, Gemini — answer questions without sending users to source websites, reducing referral traffic and ad inventory across the open web.
- Agents like Muse and Dots complete tasks on the consumer's behalf, bypassing not only websites but also the ads that subsidize them. Last week Amazon blocked Muse's crawling — the dispute highlighted an existential problem: the agent extracts a site's value without seeing the ads that pay for it.
"As digital and social content becomes easier to produce and harder to authenticate, brands have new reasons to reassess the value of being present in these environments," says Mariano Jeger, former executive creative director of Droga5 who moved to Outfront Media.
What Does DOOH Offer Advertisers?
Digital out-of-home combines targeting and programmatic with the main advantage of a physical format: you can't scroll past a screen. The ad cannot be skipped by definition.
At the same time, the inventory itself is expanding. Retail media logic is extending beyond retail: taxi fleets, airlines, supermarkets, and any company with physical venues and a "captive" audience are turning their spaces into advertising vehicles.
A parallel trend is offline events. For media companies, live events remain one of the few stable sources of growth: Condé Nast, Semafor, and ADWEEK have invested in events businesses that in some cases generate more than half of their revenue.
What Is the Cost for Cities?
The flip side of the boom is urban residents' comfort. In New York, public spaces are giving way to kiosks and screens with nonstop advertising.
"The column I wanted to write but didn't, partly out of fear of the reaction: as a newcomer to New York (I moved here three years ago), I find the presence of advertising in the subway and buses genuinely sad," New York Times journalist Ezra Klein said on an episode of his podcast.
The counterargument is that advertising subsidizes transit. But the MTA gets only about 1% of its operating revenue from it, according to Klein. He raises the question: would riders agree to a modest fare increase in exchange for an ad-free subway?
What's Next?
In every advertising channel, marketers balance reach and frequency. Online, there are frequency caps, and consumers can put down their phone or turn off the TV. With out-of-home advertising, it's different.
The more of the physical world becomes ad inventory, the fewer ways consumers have to opt out of contact. A person can close a tab or delete an app — but they can't close the subway platform.
The question of how much of the physical world consumers are willing to give up to advertising will become sharper as the boom continues. For twenty years, advertising followed the consumer from the physical world to the internet. AI is now helping bring some of that value back the other way.
Original: oaaa.org
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