Outdoor is on the march. With a 9.2% share of display advertising in 2004, according to the Outdoor Advertising Association, the industry has been talking about reaching its long-held target of 10%. After two years of robust growth, outdoor finished 2004 with revenues of £848m - up 7.8% year on year. While forecasts for mid-2005 are flat, it is still expected to outperform TV and radio. With a recovery predicted in the last quarter, outdoor could top £900m this year. But, after coming so far, some believe it could soon hit a plateau.
'The upper limit is probably 11%-12% of display,' says Nigel Mansell, managing director of outdoor specialist Concord. 'If you look at countries where outdoor makes up 14%-15% (of ad budgets), generally there is a less-developed TV market. In the UK, outdoor has to contend with a mature TV sector, digital radio and growth online.'
So, what must outdoor do to break through the 10% barrier, and how much more room for growth is there? 'I don't think outdoor has ever looked so good,' says Catherine Bosworth, client development director at outdoor planning and buying agency Kinetic. 'In 1991, a third of the UK's top 200 advertisers used outdoor. Today that figure is 99%.' As encouraging as this sounds, however, it means growth will now have to be incremental, rather than coming from newcomers to the medium.
Outdoor is encouraging greater use by not only tidying up poor-quality poster sites, but also offering innovations such as backlighting (for better visibility at night), lenticular technology, additional panel sizes, new venues, faster campaign turnaround, digital formats, better research and more flexible packages - particularly among the industry leaders.
Yvonne O' Brien, marketing director at one of the UK's leading outdoor media owners, Clear Channel UK, believes that companies such as hers, Viacom and JCDecaux have brought a new sophistication to the medium, pushing it forward.
Media owners' understanding of what clients want has been typified by the launch of specialist units charged with developing tailored solutions.
Clear Channel has just unveiled Create, a division dedicated to developing cross-format initiatives. 'We have the widest portfolio of the UK media owners, covering shopping malls, student unions, music venues, taxis, six-sheets, 48-sheets and 96-sheets,' says O' Brien. 'Create's remit is to meet clients' briefs in creative and innovative ways.'
Something similar is taking place at JCDecaux, where greater emphasis is being placed on supporting clients' long-term strategic goals. Viacom, meanwhile, has launched Voice, a unit that will provide planning solutions for brands while also forging closer links with agencies.
It is not only the major players that are taking a more creative approach to outdoor. SMG-owned Primesight, which controls about 12,000 six-sheets, is exploring new avenues. 'We recently set up an innovations team to provide clients with integrated opportunities,' says sales director Nigel Clarkson. 'Outdoor's strength is that it can reach audiences in multiple environments. It can deliver a broadcast campaign and then follow consumers right through to the point of sale.'
Clarkson's point is echoed by David Gordon, research and marketing resources director at Aegis-owned Posterscope. 'The fact that out-of-home now covers everything, from beermats to banners, means the medium touches every part of the day and every lifestyle,' he says. 'Broadcast campaigns that build cover and frequency remain the bedrock of the offering, but opportunities to establish direct contact at the consumer's ultimate destination have grown rapidly.'
Greater creativity and expansion on the supply side are being reinforced by shifts in media dynamics. 'TV and radio are experiencing a decline in audience because of digital fragmentation,' says Tim Bleakley, joint managing director of Viacom Outdoor. 'But outdoor audiences are increasing as people spend more time out and about. It's very good value.'
Bleakley believes outdoor is also benefiting from the increased attention clients are placing on the way consumers receive messages. 'Our research shows people using London Underground like ads because they provide a distraction. When you factor in the time that people spend in front of cross-track 48-sheets or looking at Tube cards on the trains, there is a real opportunity, particularly for clients that have to get complex messages across through copy-heavy creative.'
Clear Channel's O'Brien agrees that the medium is benefiting from improved consumer insight on the part of clients. 'Media and entertainment is one of our biggest categories, as clients realise families tend to do different things on their own at home (meaning no single medium can reach them all), then make up for it at the weekend by going out together. It is then that outdoor can target families with group messages.'
One area to watch is digital initiatives. In May, Viacom launched 62 digital escalator panels at Tottenham Court Road Tube station; other posters, meanwhile, encourage interaction via mobile phones. Brands such as Procter & Gamble and O2 have been experimenting with electronic-tagging system Hypertag, which sits inside these panels. Consumers can walk up to a poster, activate the tag via their handset and receive vouchers or ringtones.
This creates a powerful driver that clients can harness by, for example, putting tags in panels outside a newsagent to incentivise people to go in and buy a snack.
Digital, then, has the potential to reinforce outdoor's ability to offer broadcast and precision marketing, but the prevailing view is that it remains a fragmented industry that is unlikely to replace paste and paper in the near future. As Mansell points out: 'Digital revenues grew by 80% last year, but that was from a low base and mainly the result of products such as Maiden's Transvision and JCDecaux's Tesco TV rolling out.'
Bosworth believes digital will be a key weapon in attracting new clients to outdoor, but adds that it will need to provide evidence of its effectiveness.
Other minor concerns about outdoor's future include obstacles to planning consent for the popular giant banner and the rise in aggressive ambient formats, which could alienate consumers and scare off clients.
Perhaps more significant is the potential instability that occurs when contracts come up for tender. In recent months, Adshel fought off JCDecaux to retain control of 5000 six-sheets in London, while Maiden has secured full control of Network Rail Roadside's 3000 billboards. Next up, Viacom will have to fend off competition to keep its lucrative Underground franchise. Another mixed blessing could be consolidation among outdoor buyers, though clients should benefit from the advantages of scale when negotiating with media owners.
The good news is that this growing competition will force media owners to innovate to justify retaining their contracts - and that can only be a good thing for outdoor's growth.
OUTDOOR PLANS FOR A 10% SHARE
- Improve Postar industry research standard.
- Invest in panel quality.
- Expand into new venues, formats and experiential marketing.
- Cross-format, cross-media innovations, backed by evidence of
- Invest in digital media.
- Look to sectors that have yet to shift adspend from TV or radio.
DATA FILE - DISPLAY ADVERTISING SHARE (%)
TV 44.0 43.6
National newspapers 16.3 18.1
Regional newspapers 10.9 10.1
Outdoor 9.3 7.1
Consumer magazines 7.1 6.7
Business & professional magazines 6.6 8.9
Radio 5.9 5.5
Source : Advertising Association/WARC
DATA FILE - OUTDOOR AD REVENUE
Category Jan-Dec 04 Yr/yr
(pounds m) rise
2004 847.8 7.8%
2003 786.4 12.1%
2002 701.5 3.6%
2001 677.4 -2.8%
2000 697.0 16.9%
1999 596.0 5.9%
Source : Advertising Association/WARC
DATA FILE - TOP 20 OUTDOOR CLIENTS
Category Jan-Dec 2004 Yr/yr
Lever Faberge Home Care 21,197,776 22.1
Lever Faberge Personal Care 15,192,465 62.9
O2 UK 14,046,838 83.1
COI Communications 13,775,923 68.9
Masterfoods 13,471,721 4.1
British Sky Broadcasting 12,752,797 67.9
United International Pictures 12,579,370 -5.6
BT 11,997,518 48.5
Ford 11,641,478 -10.0
BBC 10,399,835 -4.6
Nestle 9,744,354 -5.3
Entertainment Films 9,537,573 8.1
Buena Vista International (UK) 9,001,297 4.5
T-Mobile 8,757,016 71.3
Orange 8,253,796 -33.0
Cadbury Trebor Bassett 7,837,148 0.4
Warner Bros Distributors 7,763,207 97.5
Hutchison 3G UK 7,657,746 -29.0
EasyJet 7,100,186 21.5
Procter & Gamble 7,082,136 -24.7
Source: Nielsen Media Research