Snapshot
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Global snapshot
- Globally, the out-of-home market will grow by 5.6 percent on a compound annual basis from $28.5 billion in 2010 to $37.4 billion in 2015.
- Asia Pacific had the largest out-of-home market in 2010, at $10.7 billion, a total projected to increase 5.7 percent compounded annually to $14.1 billion in 2015.
- Out-of-home advertising will gain a greater share of the overall global advertising market benefiting (1) from increased use of digital billboards, which expand the effective out-of-home inventory because multiple advertisements can be shown on the same display and (2) from improved out-of-home audience measurement.
- Improved audience measurement systems make it easier for advertisers to compare out-of-home with other media, in the process encouraging advertisers to incorporate out-of-home in their overall advertising campaigns and thereby increase their spending in the medium.
- The expansion of captive video networks will also fuel growth because out-of-home can reach people in areas inaccessible to most other media, for example, elevators. Out-of-home growth also reflects increased mobile ad spending as advertisers seek media to reach people away from home and when they are shopping.
Justifying out-of-home through measurement
Media buyers gained accurate and measurable data to plan outdoor campaigns for the first time in 2010 after the launch of the Measurement of Outdoor Visibility and Exposure (MOVE) audience measurement system in February. MOVE was developed over five years by the Outdoor Media Association (OMA) in partnership with Adshel, APN Outdoor, EYE Corp, JCDecaux and oOh!media. The Australian Association of National Advertisers (AANA) and the Media Federation of Australia (MFA) were also instrumental in its development,2 with OMA Chairman and Adshel CEO Steve McCarthy describing the MFA as “an absolute partner in the process.”3
MOVE is a leap forward in audience measurement and is based on ‘likelihood-to-see’ (LTS). This measure is calculated by removing from total pedestrian traffic passers-by who are considered unlikely to have looked at an advertisement. MOVE audience data is updated annually with reference to the size and angle of the ad face, its illumination and the speed of passing traffic. The annual study uses eye-tracking technology and involves pedestrians and passengers in cars and buses wearing lightweight glasses with two-way cameras which capture their eye movements and what they see when passing outdoor advertisements.
The MOVE system currently includes about 63,000 advertising ‘faces’ belonging to OMA members in Sydney, Melbourne, Brisbane, Adelaide and Perth. Further investment is planned, based on media buyer feedback, to improve MOVE’s functionality,4 however wholesale changes are not expected. Advertisers have responded positively to MOVE and the new level of accountability it brings. It has increased the sector’s appeal and attracted buyers who previously didn’t use out-of-home for their campaigns.5
There has been some criticism of MOVE. Critics have pointed out that the impact of each site is not measured and that only local resident passengers are included in the LTS study of airport sites.6 Some of the major players have developed further measurement formulas to supplement MOVE figures, such as the ‘eye fly factor’, which determines likelihood-to-see including non-local passengers.7 As APN Outdoor CEO Richard Herring notes: “If [MOVE is] used only at face value it might lead to the wrong answer … you actually need to take into account other information to make it really useful.”8
While it is difficult to estimate MOVE’s exact contribution to revenue in 2010, growth was consistent across all out-of-home formats. Feedback suggests that media buyers have been using MOVE results to validate their use of out-of-home rather than as a tool to select certain out-of-home formats in preference to others.
Format innovation
The out-of-home sector has a history of showcasing new technologies and 2010 saw the launch of campaigns that encourage interactivity with consumers and use new 3D technology. Innovation is fuelling changes to the audience experience, as EYE Corp’s CEO Mike Tyquin notes: “[It gives us] the ability to take something and present it as an audience experience … you can be in control of their journey and engage them in so many different ways.”9
Digital displays
The growth of digital displays continued in 2010 although the technology is not widespread in Australia and lags behind that of other developed nations. Digital allows bright, moving images to be displayed and increases the number of advertisements that can be shown on a panel. EYE Corp’s digital shopping centre assets include a number of large format and panel advertising faces. APN Outdoor operates digital billboards at Sydney Airport and the iconic Young & Jackson billboard in central Melbourne.
The switch to digital out-of-home formats has been slow because of the cost of billboards and other displays. Planning authorities have also been cautious in issuing approvals, with road safety a particular concern for regulators. OMA’s CEO Charmaine Moldrich attributes the slow take-up of large-format digital to issues with luminescence and environmental concerns as well as cost and cautiousness associated with roadside signage.10 As a result, digital penetration is highest in the transit and retail formats and lowest in street furniture and billboard formats.
Increasing interactivity
A highlight of 2010 was the number of interactive campaigns launched. These retail and street furniture campaigns use technology such as QR codes and Bluetooth to encourage consumers to link to videos and websites from mobile devices. For example, supermarket giant Coles used Adshel bus shelters and Bluetooth to promote the opening of a new store in Dee Why, NSW, allowing passers-by to download discount vouchers for use in-store.11 A campaign for Olay moisturiser used LCD touchscreens and voucher dispensers, located on Adshel street furniture, to encourage customers to answer questions such as skin type, age and problem areas before printing discount vouchers redeemable at Priceline stores.12 Commonwealth Bank used a JCDecaux furniture campaign to let passers-by create their own music by plugging in earphones and interacting with a touchscreen display.13
3D on the streets
3D is emerging in outdoor advertisements as a new way of reaching consumers. In one campaign, Blackmores used TorchMedia 3D production techniques to create the illusion of an aquarium on supermarket floors to promote fish oil supplements.14 In another, Hot Wheels projected a simulated 3D racing track onto the face of Customs House in Sydney.15 Ford has used 3D in a JCDecaux interactive retail campaign in the UK, allowing consumers to visualise a 3D car in their hand as they browsed the differing options available.16
Small digital displays
Cycle schemes
Media owners are expanding their partnerships with city councils and local authorities to provide free or inexpensive bicycles which double as advertising vehicles. One such scheme was launched in Brisbane in 2010 using bicycles provided and maintained by JCDecaux and is ‘almost entirely’ funded by advertising.19However, subscriber numbers and usage in Brisbane have been below forecast with 70 percent of the 800 bikes available in Brisbane unused on average at any one time.20 In Melbourne, the Royal Automobile Club of Victoria (RACV) runs a similar scheme subsidised by the Victorian Government, where users pay an annual subscription fee and additional fees for trips longer than 30 minutes. Australia’s compulsory helmet laws are considered a barrier to such schemes.
Overseas, cycle schemes have been operating in a number of global cities for years with a variety of operating models and varying results. In Auckland, the Nextbike service was withdrawn in November 2010 after three years, with owners saying the business model is unsustainable in its current form, which relies heavily on advertising.21 London’s cycle sharing scheme is sponsored by Barclays with users paying both annual subscription fees and for journeys longer than 30 minutes. Advertising funds cycle schemes in Barcelona and Paris, where operator JCDecaux reported in 2009 that over half of the 15,000 initial cycles had been stolen.22
Such collaboration is likely to continue and will blur boundaries between the mobile and out-of-home sectors. “Outdoor advertising and mobile phones are going to continue to evolve closer together as the consumer can have a rich experience as [they] spend more time away from home,”23 oOh!media’s CEO Brendan Cook predicts. Adshel’s CEO, Steve McCarthy, agrees: “The world is going to work in and around the device in their hands or pockets, that’s the key link.”24
The increased use of mobile devices to access the internet has created an opportunity for out-of-home partnerships involving provision of free wireless internet. In early 2011, Sydney Ferries appointed Blismobile to manage advertising inventory on ferries and provide wireless internet to commuters.25 EYE Corp has partnered with Optus to provide free wireless internet to commuters at Sydney Airport, enabling them to try Optus internet while in a captive environment.26
Regulation
The out-of-home sector is highly regulated and companies are mindful of concerns about content, the aesthetic impact of displays and road safety. Local governments must balance the potential for economic returns from use of government-owned sites against the views of their constituents about aesthetics and safety. In North Sydney, the proposed installation of two 12.5 metre by 3.5 metre illuminated advertising panels provoked comments that the signs would bring the area into “ridicule”; however income from the sites of $250,000 to $300,000 a year proved hard to resist.27 North Sydney Council also approved advertising in its heritage-listed bus shelters during 2010 with The Mosman Daily reporting council “could not afford to knock back the proposal.”28
In December 2010, the Federal Government began an inquiry into the out-of-home industry, with Attorney General Robert McClelland citing an increase in complaints about content.29 One of the inquiry’s tasks is to consider whether to submit out-of-home advertising to classification, like other forms of media.29 The OMA’s submission to the inquiry recommended that the current program of self-regulation continue. It cited the fact that in 2010 the Advertising Standards Board made only eight adverse findings against third-party advertisements (advertisements other than those on an advertiser’s property) while over 30,000 outdoor advertisements were displayed.31
Rather than a threat, OMA’s CEO Charmaine Moldrich sees the inquiry as an opportunity. “Political climates are changing and therefore new people are coming in looking at things from the ground up again and that is an opportunity for us.”32
Suggesting that self-regulation does work, the Eros Foundation, representing Australia’s adult retail and entertainment industries, stated in its submission to the inquiry that media owners discriminate against the adult industries in rejecting advertisements.33
Industry consolidation
Speculation surrounding possible industry consolidation continues both locally and in global markets. Global powerhouses Clear Channel and JCDecaux have hinted at the need to manage their financial positions so they are ready to make a move should an opportunity present itself. Locally, media reports suggest the possibility of transactions involving EYE Corp, APN Outdoor34 and oOh!media. In the first half of 2011 new executive teams at APN News & Media35 and Ten Network Holdings Limited stated they are reviewing the overall strategy of their respective companies. Private equity and other trade buyers are also possible investors in the outdoor space.
Conclusion
With more major players than most media sectors and plenty of smaller innovative companies, further industry consolidation seems likely. While there are many interested parties, buyers and sellers often find it difficult to agree on price. This is because views differ on the returns expected from new digital signage, regulatory issues relating to expansion and growth forecasts. As a result, merger and acquisition activity has been lower than expected in the past three years. This may alter over the Outlook’s forecast period (2011 to 2015) as it becomes clearer whether out-of-home’s stellar 2010 growth is sustainable.
Footnotes
1. www.oma.org.au, accessed 28 January 20112. ‘Moving forward’, Claudine Capel, B&T Weekly, 4 March 2011
3. Steve McCarthy, Adshel, to PwC, 14 April 2011
4. ‘MOVE celebrates its first anniversary’, OMA media release, www.oma.org.au, 23 February 2011
5. ‘Moving forward’, Claudine Capel, B&T Weekly, 4 March 2011
6. ‘Critics say audience measurement system MOVE may sell buyers short’, Lara Sinclair, The Australian, 9 August 2010
7. ‘Insights – the fly factor’, www.eyecorp.com.au, accessed 14 April 2011
8. Richard Herring, APN Outdoor, to PwC, 31 March 2011
9. Mike Tyquin, EYE Corp, to PwC, 31 March 2011
10. Charmaine Moldrich, Outdoor Media Association, to PwC, 8 April 2011
11. ‘Coles launches outdoor Bluetooth promotion’, Celia Johnson, B&T Weekly, 11 August 2010
12. ‘Adshel unveils skincare campaign for Olay’, Adshel press release, www.mumbrella.com.au, 31 January 2011
13. ‘Commonwealth Bank gets into music in interactive outdoor ads’, www.mumbrella.com.au, 24 March 2010
14. ‘TorchMedia’s tonic for Blackmores’, B&T Weekly, 18 November 2010
15. ‘Hot Wheels, Muse Digital’, B&T Weekly, 11 March 2011
16. ‘Ford launches ‘augmented reality’ OOH campaign with JCDecaux’, www.aka.tv, accessed 18 February 2011
17. ‘Inlink reaches 250 sites’, The Age, 18 August 2010
18. ‘California licence plates are the next electronic billboards’, Mark Wilson, www.gizmodo.com.au, 22 June 2010
19. ‘CityCycle Brisbane bike scheme funded by advertising’, Courtney Trenwith, Brisbane Times, 4 October 2010
20. ‘Slow uptake doesn’t faze CityCycle boss’, Daniel Hurst, Brisbane Times, 18 March 2011
21. ‘Wheels come off Nextbikes, Jon C, www.auklandtrains.co.nz, 11 November 2010
22. ‘Thefts puncture Paris bike scheme’, www.news.bbc.co.uk, 10 February 2009
23. Brendon Cook, oOh!media, to PwC, 4 April 2011
24. Steve McCarthy, Adshel, to PwC, 14 April 2011
25. ‘Sydney Ferries appoints Blismobile’, David Blight, AdNews, 11 February 2011
26. ‘EYE launches media first with Optus Wi-Fi campaign’, EYE press release, www.eyecorp.com, 8 February 2011
27. ‘Advertising money makes council think twice’, Boel Eriksson, Mosman & Lower North Shore Daily, 23 September 2010
28. ‘Bus shelters new space for ads’, Boel Eriksson, The Mosman Daily, 13 May 2010
29. ‘Inquiry into the regulation of billboard advertising’, Robert McClelland, www.alp.org.au, 19 December 2010
30. ‘Outdoor ad classification not needed say advertisers’, Simon Canning, The Australian, 7 March 2011
31. ‘Submission to the House of Representatives Standing Committee on Social Policy and Legal Affairs’, Outdoor Media Association, 18 February 2011
32. Charmaine Moldrich, Outdoor Media Association, to PwC, 8 April 2011
33. ‘Sex industry gets a raw deal in public realm’, Clare Kermond, The Sydney Morning Herald, 25 March 2011
34. ‘Pressure mounts for APN Outdoor sale’, Nabila Ahmed & Sarah Thompson, The Australian Financial Review, 20 August 2010
35. ‘Ten Network not eyeing an offload’, Simon Canning, The Australian, 8 March 2011