On the daily commute from the east side of Manhattan to the west side I have a short jaunt through Grand Central station subway for the shuttle to Times Square. It’s always interesting to see how the walkway to the train gets completely transformed, almost on a weekly basis, by a single advertiser who has agreed to buy every poster spot along the 100-yard pass. The shuttle train’s carriages themselves are also sometimes completely taken over by one advertiser trying to submerge you in their brand for the two-minute ride.
Outdoor advertising like this, which completely owns the space around you, is not uncommon in big US cities particularly in New York where brands compete aggressively to overwhelm all your senses – and ultimately to persuade your recall and buying decisions.
It’s a good time to be in US outdoor advertising, even though the spotlight has been on the tremendous growth of online advertising. Outdoor advertising has continued to outperform the overall advertising industry growth and is second only to the web in terms of growth rates.
Last year US outdoor ad revenue grew by 8% to $6.81bn (£3.33bn) and this year it’s on course for the same sort of performance according to the Outdoor Advertising Association of America (OAAA). The industry has seen around 8% year-on-year growth in each of the first two quarters of 2007.
This may not compare favourably with the 15% to 17% growth rate reported for web ads but compared with the overall advertising pie’s dip in growth of -0.3% in the first quarter, this is a strong performance from a sector that’s more than 100 years old.
Even by more conservative estimates, outdoor advertising will do well in 2007. According to TNS Media Intelligence, outdoor will see 4.6% growth for the year compared with 1.7% growth for the entire US advertising industry for the year.
This sector is also favoured by a wide range of advertisers who have been increasing their use of it over the years as it has diversified from being dominated by billboards to include alternatives such as public transport and street furniture. Even with local advertisers. It is not uncommon in suburban America to have park benches or bus shelters covered with a photo and phone number of local real estate agents.
In 2006 billboards accounted for just 64% of all outdoor advertising, while alternative outdoor took 17%, public transport accounted for 12% and street furniture took 7%. In 1970 billboards accounted for nearly 80% of all outdoor advertising.
Despite outdoor advertising’s many decades of spectacular to steady revenue growth, it has always been one of the more heavily lobbied sectors represented by a strong force on Capitol Hill through the its trade association the OAAA.
There have been debates back and forth about the ethics and standards of billboard advertising over the years. Most recently the arguments against it have been led by organisations such as Commercial Alert, a lobby group founded by Ralph Nader, the environmentalist who has campaigned to be US president.
Billboards are criticised by such lobbyists as an environmental eyesore from which children cannot be protected.
Even in an advertising-friendly city like New York there are strict laws, which prevent advertising in residential areas. Yet in areas where factories and other commercial buildings have more recently given way to luxury apartments and high-ceiling loft residences, outdoor advertising companies are finding loopholes to exploit. Huge billboards have sprung up in neighbourhoods like the trendy Meatpacking district because such neighbourhoods are still officially seen as commercial. This has led residents to complain to their local authorities.
US advertisers have been unnerved by a recent ban on all forms of advertising in Sao Paulo, Brazil, one of the big advertising industry’s major creative centres. If it could happen there, could it happen in a major U.S. city? There are already bans on billboards in some states like Hawaii and Maine but experts say a ban in New York, Los Angeles or Chicago is unlikely.
Any concerns about nationwide restrictions on outdoor advertising wouldn’t just be with the outdoor specialists like Clear Channel Outdoor, Lamar Advertising or Van Wagner. It would also concern their clients – the marketers, who have fuelled the growth in the sector as they try to reach consumers wherever they can. With more media proliferation and various digital distractions billboards are looking like a safer bet. As a recent Clear Channel Outdoor says proudly on its website: “Outdoor advertising is great because you can’t turn it off, throw it away or click on the next page.”
This might be one reason why the cost of buying a traditional billboard advertising space in the US has rocketed more than 100% in the last ten years according to experts.
The US outdoor ad industry isn’t resting on its laurels and trying to take advantage of a range of new technologies to help reinvent the role of the billboard from simply being a purveyor of brand advertising to being more interactive with an immediacy and local relevance once associated only with daily newspapers.
Digital billboards will make the ad space more profitable because they can change their message every few seconds or run different ads at different times of the day.
So far there are only 700 digital billboards out of the 450,000 billboards across the US lobbyists have been trying for the last year to convince Capitol Hill that a digital billboard on a highway will be no more distracting than a traditional static billboard.
This month the industry got a major fillip from the Federal Highway Administration, which ruled that digital billboards aren’t banned by existing federal rules, and that individual states should continue to develop acceptable guidelines for their use.
“This answers an important question: if a static message on a billboard is changed by digital technology, is that billboard ‘flashing’? The government said the answer is ‘no,'” says Ken Klein, executive vice-president of the OAAA.
There had been confusion in some states – nearly 40 states allow digital billboards – as to whether legislators could approve the new billboards if they featured any kind of flashing lights. The guidelines now state that the boards can display an image for four to ten seconds. The OAAA is predicting there will now be a major build-out of digital boards across the country to meet demand from marketers.
The need to try out new technology and techniques outdoors has spread from billboards to street furniture to other unusual areas. One such is ‘car-wrapping’ where a client gets paid to have his or her car repainted and wrapped in the logo and branding of an advertiser. The car owner can get paid anything from $200 (£98) to $800 (£394) a month. The only requirement for some companies is that the car is no more than five years old.
Yinka Adegoke is New York-based business journalist. email@example.com