Media Forum: Do poster buying giants work?

Does the consolidation of outdoor buying benefit advertisers?

The poster medium is clearly the place to be these days. While other traditional media face declining audiences and other long-term structural problems, out-of-home is blooming. Last month, the Outdoor Advertising Association revealed that the medium was on target to achieve one of its long-term goals of taking a more than 10 per cent share of the display advertising market for the first time in living memory.

There's even more potential for growth too. The fundamental driver for all of this is the fact that we now spend more time out and about, and less time lazing at home. Despite the rise of digital mobile media, outdoor is the pre-eminent medium for people on the move. And that effect has been enhanced by consolidation on the media- owner side - creating a small group of global media owners that are very focused and highly professional.

That consolidation has in turn been replicated on the buying side - last week saw another small but significant step in that direction when PHD pulled out of Outdoor Connection (control of which had been acquired by WPP) and shifted its £30 million billings into the Aegis-owned Posterscope.

Since the merger of Poster Publicity and Portland earlier this year to form Kinetic, the buying market has been dominated by the big two - the WPP-owned Kinetic and the Aegis-owned Posterscope. Which is all very well for the holding companies but perhaps not such unreservedly good news for media owners. Or, come to that, advertisers, who are increasingly deprived of choice when it comes to outdoor specialists.

That's not a huge concern, Jeremy Found, the head of media at COI, responds. COI is one of the few advertisers to insist on making direct appointments in outdoor, rather than being swayed by media agency alignments.

He states: "The fact outdoor specialists are now able to invest more in understanding the medium is a clear benefit of consolidation. It's true there is also the question of choice but I'm sure we will continue to see new companies emerging. There will always be companies able to offer different services for advertisers with specific requirements. It's all down to what a particular advertiser wants and needs."

David Tallis, the global commercial director of Kinetic, says that it's all a question of balance. He comments: "Consolidation on the purely buying side is, to a degree, mirroring what has been happening on the media owner side. It's an equilibrium thing. Strength on the selling side is balanced by strength on the buying side where the three main buying points control 90 per cent of the market. That can only be to the benefit of clients and agencies. If the two sides (were mismatched) it would be to the detriment of trading. Meanwhile, on the planning side, there are still seven or eight front doors for clients. There is still plenty of choice."

Interpublic's Magna is the third buying point Tallis is referring to.

But it's miles behind the big two - and is surely feeling marginalised.

Roy Jeans, the chief executive of Magna Outdoor, doesn't think so - in fact, it's Magna that keeps this market fluid, he argues: "If you look at the economics of any market, two points is bad news. A healthy market needs three or possibly four or five. Happily, the outdoor market has three major buying points."

But he cautions: "The distinctive thing about the outdoor market is that, though there are specialist companies and the market is worth around £1 billion, there are relatively few outdoor-only pitches. Most business is aligned with other holding company relationships. But if outdoor continues to grow its share of the advertising cake, that situation may change and advertisers may feel they don't have enough choice."

David Pugh, the managing director of Maiden Outdoor, agrees that the obvious concern regarding recent events would be an increasing pressure on price. But he states: "You suspect it might be the classic situation where they know the price of everything and the value of nothing. It hasn't been the case - though it's true that a degree of pressure has been there and robust discussions are not unknown. But, as the specialists have grown, they have become more professional and better resourced. In some respects, that has paralleled what has been happening on the media-owner side, which has been developing increasingly sophisticated new products in essential locations. The important point is that the market is continuing to evolve."

- Got a view? E-mail us at campaign@haynet.com

YES - Jeremy Found, head of media, COI

"Negotiating clout is important but one of the most important factors is that out-of-home has become a great deal more complex in recent years. So it has to be a good thing agencies are able to invest in a better understanding of the medium."

YES - David Tallis, global commercial director, Kinetic

"Consolidation on both sides has been a contributory factor to the growth of the outdoor medium. Instead of many disparate interests on the media-owner side, there's a more co-ordinated vision on both sides of the industry."

YES - Roy Jeans, chief executive, Magna Outdoor

"One of the benefits is the fact that you can have consistent brand values and deliver the same quality of service in each and every market. Consolidation has helped to push outdoor up the agenda both in Europe and the US."

YES - David Pugh, managing director, Maiden Outdoor

"Well-resourced specialists add to levels of confidence in outdoor. Ten years ago, there were many advertisers who didn't really know what outdoor was about. Now they can be confident the specialists will spend their money wisely."

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