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The future of out-of-home advertising is rosy, and digital
ROADSIDE billboards, posters on buses and subway escalators, ads in airport terminals—a type of publicity known as out-of-home advertising—used to be the dull end of the industry. No more. The falling price and improving quality of flat-screen displays mean that static posters printed on paper are being replaced by snazzy digital mercials with moving pictures, sound and sometimes interactive features. As some advertising media, especially newspapers, see their audiences fade, streets, airports and other public spaces are being crowded with more potential viewers than ever, as people continue moving to cities and travel more. MagnaGlobal, a media researcher, predicts that worldwide spending on out-of-home advertising will expand by 8.3% in 2011 to about $26.4 billion, faster growth than that seen for other non-inter forms of advertising. Spending on digital billboards and posters is expected to double in the next five years, to $5.2 billion. William Eccleshare, who runs the international operations of Clear Channel, an American firm which is one of the largest out-of-home ad panies, thinks that in some countries more than 90% of its business will be digital by the decade’s end. His arch-rival, Jean-Charles Decaux, the boss of France’s JCDecaux, agrees that there will be a significant switch to digital, but mainly inside airports, railway stations, shopping malls and other controlled environments. Ads in bus shelters and other outdoor spots at risk of vandalism will take a lot longer to move away from paper, Mr Decaux thinks. Digital displays already account for about one-quarter of his pany’s sales in transport hubs, but for less than 5% in street furniture and billboards.
The pace of the switch to digital is but the least of several areas of disagreement between the two men. JCDecaux boasted in February that it had overtaken Clear Channel to bee the world’s largest out-of-home ad pany, with revenues of €2.4 billion ($3.2 billion) last year. “It is rare that a European media pany is bigger than an American one,” says Mr Decaux. Because his group is less indebted than the others, Mr Decaux says it could consider buying the American operations of CBS Outdoor, the world number three, or indeed those of Clear Channel itself, if the opportunity arose.
Mr Eccleshare dismisses such provocative talk, noting that Mr Decaux has repeatedly talked of big acquisitions in America—where it is a weak number four in the market—without anything happening. He acknowledges that there will be consolidation in the highly fragmented industry, though he expects it to take place within, rather than across, national borders. For instance, China has 60,000 out-of-home advertising firms, many of them microbusinesses with one or two signs, and is clearly ripe for rationalisation.
Clear Channel is so optimistic about digital posters because it believes they offer enormous potential for making advertisements more effective. Advertisers can tailor their pitch to the time of day: McDonald’s can advertise its sausage and egg McMuffin at breakfast time, change to its regular Big Mac fare at lunch and follow that with ads for apple pie and ice cream during teatime. They can also react to events as they happen: when Spain won the football World Cup last year, digital billboards in Madrid, sponsored by Nike, showed the result within seconds.
