Outdoor advertising revenues have dipped for the first time in nearly six years, leading observers to question whether this is a blip or the start of a decline following several years of exceptionally strong figures.
Investment in new, and arguably more exciting, formats such as digital screens and premium billboards has been strong, as have revenues invested in them. But traditional formats such as six-sheets are being overshadowed by more glamorous alternatives, which as yet have relatively small inventories.
Figures from the Outdoor Advertising Agency show revenue has fallen by 6.7% in the outdoor sector, leaving outdoor ad spend down £15.9m to £221.5m in comparison with last year (MW last week). OAA chief executive Alan James calls the results “disappointing”, but points out that digital outdoor screen revenue was up by 74% in the first quarter of this year.
One industry insider says the industry has been “off loading” six-sheets in bulk, which has had a direct effect on the market. Digital currently accounts for below 5% of the outdoor sector, although this percentage is expected to increase substantially over the next few years.
Nick Mawditt, Kinetic group marketing director, says the figures are “not overly surprising”. However, he adds: “There has been a consistently bullish picture of outdoor over the past few years.”
‘A medium of choice’
Jeremy Male, JC Decaux UK and Northern Europe chief executive, says the results show the need to promote outdoor to agencies as “a medium of choice”. “But you have to see [these figures] in the context of the performance of outdoor,” he cautions. “If you look at the past year, we were up around 8% in the first quarter and 9% in the second.”
Moreover, he says digital inventory could be the “icing on the cake”, with digital revenues potentially doubling to 10% within three years. Digital screens are, according to Male, “new money” with investment in digital formats continuing to increase.
Meanwhile, many outdoor contractors are jumping on flagging press circulations when selling to potential new clients.
Digital in demand
Clear Channel Outdoor marketing director Pip Hainsworth says the outdoor contractor has seen a “strong” demand for digital products such as its roadside LEDs, and agrees that digital will attract new advertisers and money.
Hainsworth says there has also been a conscious effort to “highlight the benefits” of six-sheets. As a result, the company has sold out of six-sheet sites for the entire month of June.
She says that certain categories, such as entertainment, have been hit more than others in the sector. She adds: “This year big film releases like Sex and the City and Indiana Jones will bring in the money.”
Outdoor ad spend may be down, but the industry insists it is not out, and remains bullish about the year ahead. Traditional formats may be cannibalised to some extent by more glamorous digital formats, which show strong growth albeit from a small base. At a time when the media industry is warning about shrinking budgets, the outdoor giants now need to pull together to convince the largest spenders that the latest figures are a blip in the otherwise steady rise of the medium.