Last month, Global surprised the advertising industry with the double acquisition of Primesight and Outdoor Plus. Then, late into the afternoon on Friday (12 October), it bought Exterion Media, the out-of-home business that has the contract with Transport for London for the underground and bus network.
The deals give Global close to a 35% share of the UK outdoor advertising sector, making it a serious player in the out-of-home space and a genuine rival to the UK’s largest OOH advertiser JCDecaux. Global – which owns radio stations including Heart, Capital and LBC – already has a 50% share of the commercial radio market, making it hard to expand any further in the radio market.
The outdoor market is also significantly larger than commercial radio, which generated just shy of £680m in ad revenues in 2017, according to the Ad Association and Warc’s expenditure report.
Outdoor looked like a sector ripe for consolidation. The industry generated £1.2bn in ad revenues in 2017 but that was split across six major players. The deals by Global have cut that down to four, leaving JCDecaux, Clear Channel with around 20% of the market and Ocean Outdoor on about 8%.
Outdoor is not the only sector undergoing consolidation. Comcast is buying Sky, while Trinity Mirror merged with Northern & Shell to create Reach. And even if there aren’t acquisitions, media channels are clubbing together whether through The Ozone Project – where The Times, Telegraph and Guardian are joining forces to sell advertising – or ITV, Channel 4 and Sky coming together to talk up UK TV advertising.
Outdoor is also a growing market. Data from the Ad Association and Warc’s quarterly ad spend figures show that outdoor grew by 5.3% year on year in the first quarter of 2018, with 3.2% growth predicted for 2018 as a whole. Radio is also on the rise, with spend up 12.5% in the first three months of the year.
Exposure to outdoor ads is also holding steady. According to the most recent IPA Touchpoints data, people in the UK spend 3.2 hours consuming outdoor media every day, putting it third behind just TV and social networking/messaging in terms of exposure. And a third of adults say they notice outdoor advertising at least once a day.
On top of that, Brits spend 2.4 hours a day with radio/audio.
Offering scale to advertisers
The deals should allow Global to offer advertisers a better aligned strategy across outdoor and radio. Global has already described outdoor as “an extremely complementary fit with our radio business”.
As both mediums embrace programmatic, the opportunities for marketers to reach consumers at scale and with greater efficiency are clear. That is made even more attractive by the likelihood that this will be at a much cheaper price than having separate budgets for radio and outdoor.
Global has already tested linking up outdoor and radio advertising to drive campaign outcomes for brands by targeting specific locations and local offers. Using geo-fencing, it can get data on whether someone has walked past a specific store or outdoor ad and then serve them a relevant audio ad while they are listening to a podcast or the radio.
Testing the technology with O2, Global found that people who were served a geo-targeted O2 ad were 67% more likely to go into a store afterwards than those that didn’t hear the ad.
What next in outdoor advertising?
Global may want to continue its move into the outdoor space, however, any further acquisitions could raise the interest of the Competition and Markets Authority on anti-competitive grounds. But don’t be surprised if the four players in outdoor soon become three if the rest of the OOH sector responds to Global’s moves.
Consolidation, whether with each other or other media owners, seems the obvious route. Clear Channel and Ocean are the next two biggest players so joining forces could make sense, or perhaps they will begin to absorb some of the smaller players.
And then there’s Google, which is reportedly – despite its denial – looking to enter the out-of-home programmatic advertising space in Germany, with plans to later expand to the US and UK. Any interest from a tech giant that has both experience in programmatic and access to a large amount of personal data will undoubtedly pique the interest of advertisers – especially with regard to cross-platform measurement and targeting, and more precise audience profiling.
Compared to some other media, out-of-home is still in its programmatic infancy. In audio, however, Global has innovated with its digital audio platform DAX and will look to do the same in outdoor.
Out-of-home is a thriving medium; however, some have raised concerns that Global’s OOH endeavour, which has a digital-first focus, will speed up the demise of classic billboard advertising.
Indeed, there is a possibility that the OOH sector will follow in the footsteps of print media, which has suffered at the hands of digital. But you only need to look at TV to see that traditional forms of media can survive side-by-side with digital and that it is not an ‘either/or’ scenario for marketers.