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Companies such as Adspace Mall Network and OnSpot Digital Network are leading the trend toward digital conversion of their out-of-home mall inventory. Aug 25, 2008 -By Richard Zitrin

There’s a lot of discussion in media circles about the impact of digital technology, and one sector enjoying a transformation is the once sleepy domain of mall advertising. Companies such as Adspace Mall Network and OnSpot Digital Network are leading the trend toward digital conversion of their out-of-home mall inventory.

Adspace, the largest in-mall digital video advertising network in the country, has built a network of 1,389 screens in 105 shopping centers in the last several years. Plans are to be in more than 200 malls within two years. OnSpot Digital Network, a two-year-old venture of Simon Property Group and agency conglomerate Publicis Groupe, has 1,300 screens in 49 Simon malls.

Eye Corp., which has become one of the leading mall ad companies in the U.S. after only two years in the market, and long-established mall leaders Clear Channel and CBS Outdoor also see digital as a big part of the future. CBS Outdoor has digital in three of 400 malls it has contracts with. Eye Corp. plans to roll out 75 digital sign units in 10 Macerich Malls in time for the holiday season.

“It’s an area in which we’ve put a lot of investment and time. It’s going to make more and more sense as digital evolves to connect from signage into point of sale or into coupons,” says David Gibbs, CEO for Eye North America, which plans to install LCD screens on the same big, black rectangular furniture it has in high-traffic areas in malls.

Mall advertising—both static and digital signage inside the malls—is an estimated $100 million business growing at a double-digit pace, estimates Eric Steinart, senior vp of business development for Adspace. In addition to the third-party vendors selling advertising, the malls themselves are reaping big dollars with sponsorships and mall domination programs, adding another $100 million to the mix. “We’re expanding the mall revenue pie,” Steinart says. “We think a lot of newspaper dollars can come to us because we’re right at point of purchase.”

It’s not unusual to hear those in the business compare the growth of out-of-home digital with the growth of the Internet. “We’re starting to get past the point where the Internet was circa 1995, where we had a new set of technologies introduced to the marketplace,” says Mike Ribero, CEO of Reactrix Systems, a six-year-old interactive OOH media company. “We have technology now that engages a consumer in a way that allows that last impression, that last line of offense, to be as persuasive, if not even more so, than other kinds of media.

” Advertisers and major retailers such as JCPenney, Macy’s, Sephora and Barnes & Noble are increasingly warming up to digital for one simple reason: Consumers seem receptive when they are out and about. A Nielsen study conducted in 2007 for Adspace found that 47 percent of shoppers viewed its smart screens; average commercial recall was 34 percent. On average, shoppers watched one of Adspace’s screens 3.3 times for a total of two minutes, about 10 spots per visit.