KILLER COMMUTES, better audience measurement, sweet CPMs, innovative place-based buys and breakthrough digital technology are all factors that will help to spur continued, strong growth in the out-of-home ad market in the coming year, say leading forecasters. In fact, out-of-home, which has fully overcome the flat performance of five years ago, now ranks as the second-best-performing media segment after Internet, according to analysts.

“Technology is allowing for more ads on a billboard. Also, out-of-home advertisers are finding more channels, whether retail, pedestrian, transportation, and there’s more and more acceptance of that,” says George Cole, managing director at Veronis Suhler Stevenson, which forecasts 6.7 percent growth in out-of-home to $7.25 billion next year, compared to 7.9 percent growth to $6.8 billion this year. VSS predicts that out-of-home, which this year accounts for 2 percent of U.S. ad spending, will grow to some 3 percent by 2010.

“Out-of-home as an advertising medium can really reach consumers in a less cluttered environment than within the home, where you’ve got so many other things going on and the consumer is multitasking with television, videogames, the Internet, the telephone,” says Peter Winkler, managing director at PricewaterhouseCoopers, which projects 7.9 percent growth in out-of-home to $7.38 billion in 2007, compared to 8.6 percent growth this year to $6.84 billion.

Even with high-tech digital billboards and the rapid growth of alternative out-of-home media, it is the old-fashioned, static billboard that continues to drive business in the venerable out-of-home category. Billboards will continue to make up the lion’s share of out-of-home business, accounting for a hair shy of 60 percent of total out-of-home dollars by next year, growing 5.3 percent to $4.35 billion, VSS projects.

While still accounting for a relatively small share of overall business, alternative out-of-home—which encompasses digital billboards, out-of-home TV networks, place-based media including “wraps” around entire buildings like transit hubs—continues to show the strongest growth rate, gaining 31.6 percent next year to $509 million and accounting for 7 percent of total spending, up from 5.7 percent in 2006 and just 1 percent five years ago. VSS reports that next year, transit ads will also deliver highly respectable growth, up 6.8 percent to $1.43 billion; street furniture will grow 2.5 percent to $971 million.

Among the biggest investors in out-of-home, local services and amusements, media and advertising, and retail will continue to lead the way, respectively. While local advertisers continue to account for most out-of-home business, VSS reports that the slow-but-sure rollout of digital boards is increasingly capturing the attention of national advertisers because the technology makes it much easier, faster and economical to change a message in the blink of an eye when compared to the static billboard.

Clear Channel, which operates more than 144,000 out-of-home displays in the U.S., has been especially aggressive in digital. Last year it launched a digital outdoor network in the pilot market of Cleveland, where seven high-tech LED billboards reached 1 million drivers a day. This year, the company rolled out two more such programs, in Las Vegas and Albuquerque, N.M., says Paul Meyer, global president of Clear Channel Outdoor. Digital as well as traditional out-of-home continue to be more user friendly, he says. “It’s clearly a much more responsible, nimble medium than ever before.”

Also in the alternative realm, Captivate Network, which operates more than 7,100 TV screens featuring news, information and ads in elevators and supermarket checkouts throughout North America, continues to grab attention. “More dollars are moving out of prime time and into what I call the real world, where people are spending the vast majority of their time,” says Mike DiFranza, president and general manager of Captivate. DiFranza looks for growth in categories including financial services, travel and automotive. Tony Case is a contributing editor to Mediaweek.