When we ran an analysis piece on the outdoor market back in October 2009, we had the temerity to suggest that all was not quite as rosy as was being painted.
The industry was talking up the market by pointing out that available inventory across the last quarter was disappearing rapidly, leading many to the conclusion that a recovery was underway. We reported a contrarian view that lack of availability was a reflection not of an increase in demand but the consequence of a restriction in supply. Not only that - it reflected attempts by contractors to maintain an informal, de facto, industry-wide attitude towards yield.
Ironically, perhaps, it soon became apparent that some elements of the outdoor media owner market were beyond even the help of supply management.
Both Titan and CBS Outdoor had been subject to speculation for many weeks. For instance, Clive Punter, the CBS Outdoor international chief executive, had stepped down in August; and he'd been followed out of the door in September by its UK managing director of sales and marketing, Tim Bleakley.
Last week, the company revealed its profits during the last quarter had gone into freefall, down 97 per cent worldwide (the UK figures aren't broken out: but they're not likely to make for comfortable reading). In January 2010, a new start was signalled when Mike Moran was hired as its UK managing director.
The story over at Titan is more unsettling. Its revenues had also collapsed - and in January, having gone into administration, its railside business was bought by JCDecaux. Revenues have, many in the market say, been stabilising - and the first quarter of 2010 should be flat or better. But there's still a feeling of uncertainty.
This hasn't been helped by the fact that one of the UK's main buying points (outdoor buying in the UK is dominated by the Aegis-owned Posterscope and the WPP-owned Kinetic, who between them control more than 80 per cent of the market) is still in the midst of a major management transition phase. Last week saw the departure of Paul Shearring, Kinetic's UK chief executive, with James Copley, the chief operating officer, taking on his responsibilities.
1. Kinetic launched in May 2005, following regulatory approval of WPP's takeover of Poster Publicity Limited in a deal that had been announced in July 2004. PPL was effectively merged with WPP's existing (but underperforming) international outdoor planning specialist network, Portland Outdoor. PPL executives retained 50 per cent of the nominal equity in the new venture and secured most of the senior management roles on five-year earn-out contracts. PPL's group chief executive, Eric Newnham, became the Kinetic group chief executive; PPL's European managing director, Mike Segrue, became group client director; Paul Shearring took the position of UK chief executive; while Steve Ridley headed up the US operation.
2. June 2010 had been fixed as the target date for WPP to complete its acquisition of full control and set sail with a full complement of new managers on board. In July 2009, it parted company with Segrue, who left without another job to go to. Earlier in the month, Kinetic had appointed Simon Crisp (formerly the boss of the digital sandwich board company Adwalker) to the post of chief executive EMEA, replacing David Payne, who'd become the US chief executive in April 2009.
3. Last week, there was an undercurrent of speculation in the market that Shearring's departure had been arrived at sooner than planned. WPP sources refute this absolutely - and others in the market say that the announcement was hardly a surprise, given the ongoing nature of his earn-out talks. Now the focus moves to Newnham. If he does eventually decide to move on, his will not be easy shoes to fill.
4. There was also speculation that WPP has been pushing forward the acquisition of full Kinetic control in order that it might be more unambiguously integrated into a Group M reporting structure. Again, WPP sources say that this doesn't really add up.
Kinetic is, they say, very clearly a Group M family agency but has too much valuable third-party business (not least Starcom's outdoor buying) to risk moving Kinetic too close to the reporting structures linking Group M to its Mediaedge:cia, Mindshare and MediaCom planning and buying agencies.
WHAT IT MEANS FOR ...
- The major contractors say that the revenue prospects are looking optimistic again - and they continue to believe that the Kinetic-Posterscope buying duopoly works in the best interests of the medium as a whole. So they clearly hope that the senior management transition at Kinetic is ably handled - and despite last week's speculation in some quarters, they're pretty confident that it is.
- For many years, there have been calls for greater transparency and clarity in the outdoor market. A market dominated by two buyers and three sellers is clearly open to allegations of abuse, some say - and there are dissident voices on both sides of the outdoor fence who maintain that abuses do indeed take place.
- There were those who believed that the WPP chief executive, Sir Martin Sorrell, would, when the Kinetic founders moved on, seek to modernise the group's approach to outdoor - and, indeed, end its not entirely splendid isolation as a medium.
- After all, if agencies can bust a gut to integrate the fiendish complexities of digital into their mainstream offerings, then the rocket science world of posters shouldn't be too challenging either. But there seem to be indications that this is not (if it ever has been) on the agenda.
- Forget succession management and the strategic complexities facing outdoor as a standalone specialism - just count the money. Kinetic is about to reap its own share of the spectacular stream of account wins recently by Group M agencies - including COI.