Calculating shares of outdoor advertising space can be a bit like nailing jelly to the wall. So when it comes to estimating the degree to which the European outdoor market has consolidated in recent years, figures vary.
They may also depend on definitions of market share, “outdoor” and even “Europe”. But JC Decaux claims that the three largest owners have 60% of the market, split among itself, Clear Channel and CBS. Others put their combined share at closer to 75% of available space in Europe.
Clive Punter, chief executive of CBS Outdoor International, is not quibbling over figures. “What is significant is that together, the three of us hold considerably more than 50% of space, so the market is more consolidated than it is unconsolidated,” he say
If some see this concentration as a potential restriction on the market, Punter would beg to differ. He draws a contrast between the consolidated outdoor market and the increasingly fragmented nature of other advertising media such as TV. And he argues that outdoor’s share of total spend in more mature, bigger-spending markets is higher than it is, typically, in less-developed geographies.
“The opportunity in more consolidated markets is about encroaching on, and stealing share from, other media,” Punter says. “Apart from anything else, there’s more professionalism and higher levels of investment in systems and process.” A consolidated market also makes it easier for brands to buy outdoor media and mount a strong campaign, he points out.
All of this may help to explain why outdoor has grown steadily over the last decade in Western Europe, he says, now accounting for about 8% of media spend. This contrasts with the US where, according to JC Decaux, outdoor accounts for less than half this share.
As for digital screens, The Economist global brand communications director Jacqui Kean says: “There’s a lot of talk about it, and it certainly can be interesting, depending on your message and product. We tried it out using the escalator screens in the London Underground.”
She adds: “With digital, you can end up with a pseudo-TV commercial, and in fact, it would probably work well as a way of trailing TV or films.”
Neil Eddlestone is managing director of JC Decaux Worldlink, which helps to manage knowledge and share thinking around the group. “Traditional, straightforward outdoor advertising will continue to contribute the majority of our revenues,” he predicts. “Roadside digital, for instance, will grow in importance, and will be an important revenue stream, but it is unlikely to take the majority.”
Others see this fidelity to traditional techniques as a short-sighted strategy. Mike Anstey, chief executive of digital screen network i-vu, says: “Companies like JC Decaux had the opportunity to put far greater capital expenditure into digital. Instead, they’ve simply chosen to glorify their current business model.” He forecasts that digital screens could come to account for up to a third of all outdoor advertising in the UK.
I-vu represents the more fragmented end of the outdoor and ambient sector. But this part of the market frequently offers greater creativity and, in some cases, higher growth. In i-vu’s case, this is certainly true of projected infrastructure growth. The company has 14,000 contracts for screens in the US and aims to increase this figure tenfold by 2011.
Alongside finding the right partner and engaging with the environment, Anstey highlights the importance of speed in signing up locations. “It’s very much a matter of putting your peg in and staking your claim,” he says.
JC Decaux has not been slow to stake its own claim in the digital outdoor world. It now boasts sites inside Heathrow Terminal 5 and its PrimeTime network of 20 screens on major London routes. Significantly, the message (and presumably the price tag) can be varied to suit different times of day.
CBS Outdoor strikes a similar balance when it comes to investing in, and evaluating, digital screens. Punter (right) contrasts the “digital” approach which allows copy simply to be changed automatically, so reducing costs, with a full high-definition moving image. “We’re only at the start of the lifecycle, and some companies are getting it wrong,” he warns.
But when he talks about outdoor encroaching on the traditional territory of other media, he is not commenting on share and spend alone. Digital screens are moving the outdoor opportunity into new areas. As he puts it: “Digital is starting to cross boundaries, with sites that are GPS- and wi-fi-enabled.”
Brands are already reaping benefits from the crossover between outdoor and mobile media. Kean at The Economist explains that in Australia, a proportion of the six-sheet sites where the magazine is advertising are Bluetooth-enabled. “People’s mobiles are connected with our website, where they can read articles online,” she says. “We might use this in the UK in future.”
Neil Morris is managing director of Grand Visual, a company specialising in digital content for screens in different types of setting. One of the prime benefits of digital in the future will be its interactivity, he predicts: “People can deliver opinions, take part in a poll or influence content.”
Alongside digital, there are plenty of claims being pegged out on other parts of the outdoor sector. JC Decaux’s Eddlestone claims: “What’s driving market growth is the export of more advanced thinking from Western Europe to other parts of Europe, to parts of the US, and to countries such as Japan, Australia and China.”
With its roots in street furniture advertising, JC Decaux still sets great store by this portion of the outdoor market. “In Japan, it was previously illegal to have street furniture advertising,” says Eddlestone. “We have helped to change that, and now JC Decaux has six of the top 20 Japanese cities.”
City by city, media owners are also aligning more of the US with the European outdoor model. What is more, as initiatives such as bike-share schemes take off, new opportunities for street furniture advertising are arising.
In markets such as the newer EU member states, Punter at CBS points to “a scramble to get hold of a share of their assets”. This presumably includes outdoor advertising space. But it is the longer-term impact of this scramble on media such as TV which is of most significance for outdoor, he argues. “They’re at the start of a lifecycle, and as other media fragments, the importance of outdoor will increase.”
Of course, brands are as eager as outdoor advertising companies to tap into the potential of new markets. India is another case in point. Kean at The Economist says: “We have a target to more than double sales there over a two-year period.” While in many US cities, roadside is frowned upon because traffic moves too fast, that is not the case in Mumbai, Delhi and Bangalore, where locals regularly spend two hours sitting in traffic, she says.
In other ways, new advertising territories from Eastern Europe to China are one step ahead of more mature markets, cherry-picking the “best from the West”. Worldwide Partners is a network of 93 independent agencies across 51 countries, with strong representation in countries from Hungary to Slovenia.
Director of EMEA collaborations Lisa Kettman-Kervinen says: “Some of these partners are doing the most radical, interesting work. They’re taking what is some of the most traditional material in Western markets and shaking it all up.”
In fact, where new advertising space is financed by aggressive investors, the UK and Western Europe in general may prove to offer simply too low a return. I-vu’s Anstey says: “Once you know that a system of digital screens works, you want to be going where you know you’ve got mass growth and massive media spending – places like Brazil, Russia, India and China.”
Major as well as minor players in outdoor and ambient media are equally likely to turn their attention to these promising markets.