MEDIA: FORUM - Is the outdoor sector really undergoing a decline?/Last week Maiden blamed a downturn in the outdoor advertising market for its own disappointing half-year results. Some people didn’t really buy that. Is the outdoor market that frag

Not for the first time in recent months, there is a strong suspicion that the Maiden Group has been consulting its edition of the Bumper Book of British Excuses. This substantial volume is popular with great sporting and industrial institutions, particularly in the field of transport - leaves on the line, the wrong sort of snow, etc - but there’s surely a well-thumbed copy on all the desks that matter at Maiden.

Not for the first time in recent months, there is a strong

suspicion that the Maiden Group has been consulting its edition of the

Bumper Book of British Excuses. This substantial volume is popular with

great sporting and industrial institutions, particularly in the field of

transport - leaves on the line, the wrong sort of snow, etc - but

there’s surely a well-thumbed copy on all the desks that matter at

Maiden.



That at least was the view from some quarters of the industry last week

when they read Maiden’s interim results for the six months to 30

June.



The period had, according to a company statement, provided a ’difficult

trading environment’ resulting in an 8 per cent year-on-year decrease in

turnover - and although it still managed to scrape a slim operating

profit, the damage manifested itself in an overall pre-tax loss of

almost pounds 1 million when other balance sheet factors were taken into

account. But, and here’s big excuse number one, there was nothing it

could do about it because the whole outdoor advertising sector had been

depressed.



How so? The outdoor industry likes to think of itself as relatively

recession proof - along with all media sectors it does well in periods

of growth, but when times are tough, outdoor is often the last budget to

get cut because the medium is regarded as being of good line of last

defence value. And, of course, we haven’t exactly had a recession.

Maiden’s line was that the industry at large had been hit by a far more

subtle phenomenon - indecision.



Advertisers couldn’t make their minds up as to whether we were heading

for boom or bust, so they cut their outdoor budgets.



But no other medium has suffered noticeably and the outdoor industry’s

own figures, from the Outdoor Advertising Association, indicate that

revenue for the first six months was more or less flat year on year. The

obvious conclusion is that the 48-sheet sector - Maiden’s core market -

faced a particularly difficult time.



Perhaps - but even Ron Zeghibe, the chief executive of the Maiden Group,

is ambiguous on this point, preferring to focus attention on price per

panel figures. He states: ’If you look at all the publicly available

figures, from independent sources, the price per panel in 48-sheets

decreased by exactly the same amount in 6-sheets - 15 per cent. That

would point to a broad-based drop in demand across the medium. It is a

cyclical issue economically and nothing to do with one product line

versus another one.



There has been a whole lot of uncertainty out there which has led to

advertisers holding on to discretionary budgets. The good news though is

that the second half looks a lot better.’



The City appeared to find Zeghibe’s statement eminently plausible and

took a somewhat lenient view of Maiden’s performance, knocking only 4

per cent off the share price last Thursday, the day the results were

released.



But some in the industry are irritated that Maiden appears to be

shifting some of the blame for a poor set of figures. Roger Parry, the

chief executive of Clear Channel International, which operates in 26

countries, says that the UK was one of the network’s better-performing

markets. He asserts: ’Our UK business for the first six months of this

year was up 11 per cent and we remained very profitable. Admittedly,

growth rates were slightly lower than they have been but the plain fact

of the matter is that Maiden lost share. What I think we are seeing is a

movement of money from 48-sheets to 6- and 96-sheets, from

non-illuminated formats to illuminated, from poor quality to greater

quality.’



He adds: ’There are some of us in the industry who are a little fed up

with the fact that when Maiden has a poor performance it blames the

market as a whole.’



Maiden sources counter some of Parry’s assertions by pointing out that

Clear Channel’s UK operation doesn’t file publicly available accounts

any more. The implication is that Clear Channel (and other contractors

in the 6-sheet market, for that matter) is being disingenuous. But

buyers say that Parry’s figures bear out their experience of the

marketplace - which also indicate that the transport advertising

company, TDI, had a superb first quarter, up by more than 15 per

cent.



What’s the true state of affairs? Does the 48-sheet market in general,

and Maiden in particular, face a long-term decline in share? And should

we give any credence whatsoever to Zeghibe’s ’uncertainty’ factor? Steve

Wilson, the managing director of Blade, says he has some sympathy with

the Maiden point of view. He comments: ’Maiden did very well in the

times of plenty so they are coming from a high base of profitability and

outdoor has been struggling to grow revenue when other media haven’t. I

don’t know why - one of the theories is that advertisers are taking

money from the outdoor budget to experiment on the internet. All the

same, I don’t think there’s any doubt there has been a continuing shift

in market share towards 6-sheets.’



Wilson, in common with other observers, points out that rates may well

have been as soft in the 6-sheet market as they’ve been in 48s but

that’s largely due to the fact that, because of new-build programmes by

Clear Channel and JCDecaux, there has been a huge increase in

supply.



Some analysts believe that Maiden’s 48-sheet rival, Mills & Allen, came

within a whisker of outperforming Maiden in 48-sheets over the first

half - which, if true, could be astounding given that M&A was a company

adrift for two years until JCDecaux bought it earlier this year.



Annie Rickard, the chief executive of Posterscope, agrees there’s little

doubt that some sectors of the outdoor market are performing a lot

better than others. She states: ’You could argue, I suppose, that the

uncertainty over the future of M&A adversely affected the whole 48-sheet

market. But if you look at the consistently strong performers like TDI,

you have to say that its performance is down to sales and marketing. The

48-sheet sector is still a big chunk of the market, but they are not

selling as well as they could be. If Maiden had performed better in that

area I suspect it would have led to a better result.’



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Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).