How big should poster contractors be allowed to grow? The agreement between the Institute of Practitioners in Advertising and the Incorporated Society of British Advertisers to an ownership limit of up to 25 per cent of the total outdoor market has encouraged the Office of Fair Trading to relax the rules. This should enable contractors to buy more plant and invest heavily in the future of the medium.
The IPA and ISBA agreement was rapidly followed by Maiden Outdoor’s bid for British Transport Advertising (still subject to approval by the OFT). Although the deal will give Maiden 21 per cent of the combined market, the new company will hold 36 per cent of the 48-sheet market (including NSS). What are the implications for advertisers and Maiden’s competitors?
The consensus has been one of good feeling towards Maiden. It has the opportunity to invest in BTA’s plant, upgrading it, building new sites and seeking opportunities for advertisers. Since its management buyout in 1987, BTA has been unable to keep pace with the investment ploughed into the medium by companies such as Mills & Allen, Maiden, More O’Ferrall and JC Decaux.
The impact of greater investment has to be beneficial to advertisers, but consolidation of ownership does raise questions about any misuse of strength which might arise.
In the past, contractors have not been able to make such acquisitions. In 1990, Mills & Allen was forced by the Monopolies & Mergers Commission to sell its Dolphin plant to regional contractors – at great expense to the company. This time, M&A is not raising objections to the BTA takeover.
Other “mini monopolies” have existed and operated efficiently in recent years, with no contractor abusing its position in the market.
More O’Ferrall Adshel invented six-sheet sites in the UK, and hence cannot be penalised for having an 82 per cent share of the medium. Additionally, LTA/TDI has dominated the London Underground and, increasingly, the transport area is supporting fewer players as larger operators absorb more of the regional bus concessions.
This appears to be setting the trend for the future, as smaller contractors disappear and their business is taken over by big players.
Acquisitions will have a beneficial effect on the market. They create stronger poster contractors, which have the means to invest and increase their ability to compete in a wider media context. This development should be a watershed for the outdoor medium, enabling it eventually to boost its share of the overall advertising market