Outdoor muscles in on ad revenue

Poster companies are having a good time. Last week TDI, the UK’s largest transport advertising company, announced a 28 per cent increase in turnover for the first half of 1996. It was the third poster company to announce such good results.

Last month, Maiden’s first results as a public company showed turnover up 77 per cent, partly thanks to an acquisition. The More Group also announced a big turnover increase – 28 per cent – in the first half of the year.

The poster industry expects to take a six per cent share of the national advertising cake this year for the first time. Mills & Allen is reporting 31 per cent growth in revenues.

The industry points to a number of different reasons for its rude health.

One is the new Postar research system which was launched earlier this year with the intention of making the audiences ascribed to posters so accurate that campaigns could be bought by audience rather than by panel.

In fact, with the exception of three new packages being launched in April by Adshel, none of the contractors have started to sell their posters by audience instead of by number of posters. Postar has so far simply helped to update the quality ratings and audience figures of poster sites. This aids the accountability of the medium in selling it to clients, but the predicted revolution in the industry is a year or more off yet.

More important is the consolidation of ownership in the industry. This has put a bigger chunk of the market under the control of large companies with access to better management and more investment.

This, in turn, has led to product innovations and marketing initiatives that have been used to drive out the commodity aspect of the industry and create premium-priced products.

Most important of all is a cliché that looks like coming true. For years the poster industry’s refrain has been that the fragmentation of TV audiences would leave it as the only broadcast medium. The growing strength of BSkyB, ITV’s periodically wavering audience figures and the advent of Channel 5 next year, are starting to make that wish a reality.

At the moment, outdoor is not replacing TV, but instead is being used in conjunction with it to boost the coverage of a TV campaign or to delay its “decay” in people’s minds.

The change in the use of posters with TV has been quite dramatic. According to research by poster specialist Concord in 1991, 35 per cent of the top 200 TV advertisers used outdoor. In 1995 that figure had risen to 72 per cent.

“We are selling the added benefit of being the glue in the multi-media mix,” says Francis Goodwin, managing director of Maiden Roadside. “We hit the gaps in the upmarket coverage needed for TV.”

As well as planning for the gaps in ITV, outdoor is benefiting from TV starting to be used in a more targeted fashion.

“A very common media mix now is Channel 4, satellite TV and posters,” says Alan Simmons, managing director of Concord. “As agencies are increasingly doing a selective job on TV, they use posters to give their initial launch campaign impetus. If the TV is really niche, advertisers will often use a burst of posters to let the trade know they are advertising.”

The use of posters as an extension to a TV campaign does have its dangers: “We do, to a certain extent, rely on the health of TV,” says Goodwin. “If prices were falling on TV, it would inhibit our ability to raise our rates.”

The strength of the poster market leads some to believe that the major poster contractors have pushed their rates too hard. True inflation in the industry is difficult to judge because of the development of new products every year – most of them illuminated and premium priced. However, even prices for a standard, non-illuminated 48-sheet have risen by nine to ten per cent this year.

Some believe that as a consequence of this bullishness by poster contractors, demand in the fourth quarter of the year is a lot softer than expected.

“They have blown it a bit because of what they were asking for in the fourth quarter,” says Simmons. “They refused to give incentives to advertisers wanting to book early because they believed the gravy train would run until the end of the year.”

In fact, the fourth quarter of the year has for the past four years proved to be the hardest period to sell – the direct opposite of the way it was before the recession in the early Nineties. The two stalwarts of the old fourth quarter – tobacco and spirits – are in decline. Tobacco because of Government regulation, and the spirits sector now it has started moving onto TV instead.

The major contractors apparently have plans afoot to revive the fourth quarter, but seem to have left it too late this year. Hopefully, this is not because they have become too greedy.