Media Forum: Do poster bids boost creativity?

Are big outdoor contract tenders a stimulus for innovation, Alasdair Reid asks.

The outdoor media market has been through an unprecedented period of pitch activity during the past year. It all kicked off in the early summer of 2004, with a pitch for Network Rail's railside and station advertising. Maiden took that one, winning a ten-year contract worth just under £450 million. Maiden also took the £350 million (across ten years) Network Rail roadside pitch in May this year and, in the same month, Clear Channel scooped the £350 million Transport for London bus-shelter business (again, a ten-year contract).

This ten-year habit is clearly catching, because the latest review to be announced - the BAA concession for its seven UK airports (currently held by JCDecaux) - will also be for a decade. It will be worth more than £500 million over that period. Viacom Outdoor is also defending its London Underground contract, set to run for ten years.

A pattern is emerging here. Previously, the big national contracts came along somewhat more irregularly and at better-spaced intervals - now we seem to be locking into a ten-year cycle that will bring about outdoor media's version of the alignment of the planets on a more predictable basis. Things, in other words, will now be relatively quiet until 2014 - which will be a relief to many.

Such a period of tranquillity could create complacency at media owners. So perhaps all this pitch activity is a bad thing for the medium. In addition, you can imagine it must be hard for outdoor media owners to keep their eyes on the ball while all this activity is going on. And you can also imagine some companies suffering from outbreaks of short-term thinking and making ill-advised bid offers in the desperate heat of the moment. The whole business is, after all, conducted by the inventory owners such as RailTrack and Transport for London on the basis that they expect increased yields from their properties.

However, the flip-side of the coin is that it might help drive innovation - much in the same way that military conflict can accelerate technological advances. This is, after all, a struggle for survival. It may just be that advertisers are the net winners in all of this.

Jeremy Male, the UK and Northern Europe chief executive of JCDecaux, argues that the longer contracts now being offered will ensure that this is indeed the case. He states: "Greater certainty of tenure is hugely positive for the industry because it allows the media owner to invest more in the assets. The good thing about a pitch is that it leads to a frank evaluation by the owner of the assets and also by the media contractor as to the best way to enhance the value of the media asset and increase the benefit to the consumer of that asset."

Alan James, the chief executive of the Outdoor Advertising Association, agrees - not only are contracts longer these days but, whatever the contract length, it's always useful for planning purposes to know the end date. This compares favourably with the rather more hazardous pitch-based life of the ad agency. "While an end-date contract is not unheard of when it comes to advertising and media agencies, it is certainly not the norm. All too often, we read of a new marketing director putting his business out to pitch within days of being appointed," he says.

Nigel Mansell, the chief executive of Concord, points out that the winning media owner in a pitch will almost certainly have promised a bigger return on the new contract - and innovation is the only real way to deliver that return.

He explains: "The media owner will have to rebuild locations and better present a portfolio that will command a higher selling price. It will also have to take a fresh look at how it is sold. Innovation is therefore often key to a successful pitch - advertisers will rarely pay more for the same. In fact, much of this forced innovation is what is driving the growth of the medium."

And Tim Bleakley, the joint managing director of Viacom Outdoor, agrees that, if you approach even the biggest of pitches in a disciplined fashion, disruption can be kept to a minimum. He concludes: "If you organise yourselves in the right way and run your business efficiently, there's no reason why companies involved in the pitch process should take their eye off the ball. And I genuinely believe that this has been the case with Viacom during the London Underground pitch, where we've had an independent team of people working solely on the bid while the main core of the organisation has focused solely on the customer."

YES - Jeremy Male, chief executive, JCDecaux

"A ten-year contract allows more scope for investment during that period. The great thing about a pitch is that it makes each company look really hard at how it can enhance value. It forces the pace of change. It gives extra focus."

YES - Alan James, chief executive, OAA

"Contract pitches create an immense amount of work. But the one thing that differentiates these from the majority of pitches is that they are pre-planned. This helps companies make sure they don't take their eyes off the day-to-day business ball."

YES - Nigel Mansell, chief executive, Concord

"The companies involved will have a whole team who do nothing but the pitch process and you have to remember that, these days, for the global media owners, this is a truly international business."

YES - Tim Bleakley, joint managing director, Viacom Outdoor

"Generally speaking, pitches are a good thing. The only exception to that rule is where companies overbid with no plan or investment to back up that bid. Companies who do that are usually just bidding for survival."