OUTDOOR EMPIRES: The outdoor sector is in a state of dynamic change as the key players in crease their global clout. Alasdair Reid reports

The outdoor business is now in the most dynamic phase in its history and when the dust settles it will have evolved from advertising’s country cousin into a truly global medium. About time, some might say. But that would underestimate its sophistication or suggest other media have already been there, done that.

The outdoor business is now in the most dynamic phase in its

history and when the dust settles it will have evolved from

advertising’s country cousin into a truly global medium. About time,

some might say. But that would underestimate its sophistication or

suggest other media have already been there, done that.

They haven’t. Take Rupert Murdoch out of the equation and you could

argue that there are no truly global empires in either press or TV. And

Murdoch can’t offer a tabloid newspaper in every European market or a

single dominant TV station outside the US. In outdoor there are now

several companies looking to own significant market shares of the medium

in all the world’s major ad markets.

When regulators and media buyers in this country look with alarm at the

growing concentration in UK outdoor ownership, they are being

disingenuous or are missing the bigger picture. The imminent sale of

Mills & Allen and the recent deals involving Trainer and Primesight are

symptomatic of a worldwide upheaval in the industry’s structure.

The US market has been, and will continue to be, the engine for change

in this. In 1995, there were 3,900 outdoor companies in the US. Now

there are less than 1,500. In 1995, the largest company had a 4 per cent

market share. Now three companies - Outdoor Systems, Clear Channel and

TDI - own more than 40 per cent of the country’s plant and around 35 per

cent of total outdoor revenues. That’s a staggering consolidation and

the companies involved have spent more than dollars 7 billion in making

it happen.

It came about because outdoor was ripe for an application of all the

usual ’big is beautiful’ arguments. The market was too fragmented; the

smaller companies were often poorly managed with large overheads and

less than professional sales forces. The smaller, privately owned

companies didn’t have access to the investment capital needed to upgrade

their plant, systems and sales expertise. Publicly quoted companies like

Clear Channel have access to relatively cheap finance, and Wall Street

was happy to sanction aggressive acquisitions policies. The big

companies now have the clout, presence and expertise to hold

increasingly meaningful conversations with major advertisers.

They’ve also started to look further afield - and wherever they look,

they see an industry in much the same state as the US a decade ago. In

1994, TDI established a foothold on this side of the Atlantic when it

took over LTA. It followed that up the next year, acquiring Metro CIE in

Ireland. In January, it expanded into continental Europe when it snapped

up Alrecon, which accounts for 30 per cent of the Dutch outdoor


Clear Channel’s international division, CCI, is also on the move,

putting itself in pole position globally with the pounds 575 million

acquisition, in June 1998, of More Group. More Group was already one of

the world’s biggest players, with operations in France, Ireland, Belgium

plus the Nordic and Asia-Pacific regions as well as the UK. Since then,

CCI has extended its reach with a dollars 22 million deal to take 50 per

cent of the Chinese contractor, White Horse. Both CCI and TDI are

clearly hungry for more, and Europe is a prime hunting ground.

Not that Europe is a backwater. Although markets may be relatively

fragmented at a national level, there are two international players: JC

Decaux and Avenir. But Avenir, which owns Mills & Allen as well as Sky

Sites and AP Systemes and is present in 16 countries worldwide, was put

up for sale by its parent company, Havas, last November.

Manoeuvring has only just begun (first bids were submitted on 19 March)

but the betting is that it will be swallowed up by existing major

players or will form the basis for yet another emerging superpower. Some

observers believe that within two years there will be six global media

owners in the outdoor business. In effect, it will have become the first

truly multinational sell.

Roger Parry, the chief executive of CCI, agrees that we are only at the

beginning of the revolution. He says: ’Within individual markets there

are obvious economies of scale. It’s a fixed cost medium so the more

sites you own, the lower your overheads. In small markets it will come

down to two dominant companies, in bigger ones, it might be four, and in

the US we’ll see four big companies and ten smaller ones. Smaller

companies will continue to be bought.’

Aside from any continuing interest in the fate of Avenir, CCI’s biggest

priorities now are Spain and Germany. Parry, however, believes analysts

oversimplify the rationale behind the international expansion of media

owners. They are not advertising agencies, which have to create

international networks because clients demand them. And they are not

doing it because there are large cross-border operational economies of

scale to be had - you still need a sales force in each country. The big

players want to get bigger but CCI’s primary motivation is to be the

best in each local market.

Some would say that the US companies are doing it because they’ve just

woken up to the fact that it can be done. Outdoor is the least regulated

advertising medium - and because posters carry no editorial content,

governments tend not to worry about foreign ownership.

However, networks bring benefits and there are cross-border synergies,

especially in the street furniture, bus shelter and transport


If you want evidence of that, look no further than your nearest


Street furniture contracts are usually put out to tender by big

metropolitan authorities. They usually look around the world to see what

other cities have and they tend to demand the best. If you can’t offer

lavatories as part of the package, you’re at a disadvantage.

Until recently, CCI’s Adshel division didn’t have a loo. It does now,

but the product cost dollars 10 million to develop. If you can’t spread

that cost across ten countries, it’s a hugely risky investment. Only

companies of the size of CCI or its main rival, JC Decaux, can afford

that sort of development overhead.

This factor will become increasingly relevant as the street furniture

business attempts to evolve beyond ink on paper to electronic static

visual display technologies. The big companies say their size helps to

ensure that best possible practices in sales and marketing are uniformly

applied across their growing networks.

But according to Parry, what this very definitely isn’t about is

cross-border deals for advertisers. He’s particularly adamant when he

gets onto this topic. He says: ’I’m amazed people still get confused

about this.

The simple fact is there is not much cross-referral of business (from

one market to another). Clients who want to discuss cross-border deals

tend to want huge discounts. That is not in our interest. We tell them

to go and buy locally. People tend to forget that agencies that have

networks of media buying companies use those networks to buy locally. We

are not planning at any point in the future to sign cross-border


Jeremy Male, chief executive of TDI in the UK, tends to echo much of

that, but he’s slightly less adamant. ’Transport is our core expertise

and with any business we become involved in, we can add value by

bringing our sales and marketing expertise to bear. But I’d agree that

it is largely a market-by-market proposition. Our Irish business doesn’t

get any spin-off from our contact here with London agencies. There are

different buying systems and the brand strategies may be entirely

different. We are, however, seeing formats starting to coincide and that

may eventually have an impact.’

So if cross-border deals are not an immediate prospect, what’s in this

for advertisers? The big media owners argue that advertisers will

obviously benefit from better standards, uniformly applied. The medium

is to be upgraded spectacularly and will be more widely available as a

true campaign environment.

Outdoor has three evolutionary stages. In the least sophisticated

markets, the medium is commonly used in signage mode - billboards saying

little more than ’Eat at Joe’s cafe.’ The next step is long-term

branding, with selected sites carrying the same image - such as the

Marlboro cowboy - for month after month, or even year after year. Many

markets, even in Europe, still operate in this way. But the most

effective use of the medium is closer to TV, where advertisers can run

brand advertising in bursts, dovetailing with sophisticated

communication strategies. It’s more efficient because research has shown

that the optimum time for a poster to be up is ten days. After that it

begins to blend into the background. But it’s also a lot harder to


Only media owners with the right resources and skills can make it


Agencies and poster specialists obviously welcome a growing

accessibility of outdoor as a campaign medium. They appreciate the

marketing, research and coordination back-up they are likely to see on

an international basis.

They even take on board media owner insistence that cross-border deals

have not yet been in demand because advertisers don’t plan on an

international basis - campaign aims and planning strategies differ from

market to market even on a well-co-ordinated international brand. And

they appreciate that each market prefers different outdoor formats and


But some are less than convinced by Parry’s rhetoric. Buyers have also

been expanding internationally and, in the short to medium term, their

strategy is roughly parallel with that of the media owners. They seek to

guarantee consistent levels of buying expertise on a market-by-market

basis. Dennis Sullivan, the chairman of Portland International, which is

now present in ten countries as well as the UK, argues that the story is

unlikely to end there. He comments: ’I’d agree that there is still a lot

of fragmentation in the way that multinational advertisers look after

their business. But that will change. We’re seeing it change already. We

must be able to react to needs.’

Concord is another specialist that has been growing internationally.

It has a subsidiary, Outerspace, which buys roadside in Europe and

airport advertising worldwide; and it is also part of a network of

affiliates, Outdoor Network One. Concord’s chairman, Alan Simmons,

points out that media owners may be opening Pandora’s box. ’The faster

the media owners consolidate, the faster it makes advertisers think

about what it could possibly mean for them,’ he says.

Mike Segrue, the deputy managing director of another international

specialist, Poster Publicity International, points out that we’re

already seeing cross-border convergence in poster formats, particularly

in bus shelters. But media owners shouldn’t attempt to hide behind that

or any other issue.

He says: ’The business is all about audience delivery and contractors

are starting to realise this. There will be increasing opportunities to

go to a contractor and say to them that they have a certain percentage

of the sheetage we want to use. We will negotiate it all locally but

we’ll want to overlay some sort of centralised negotiation too. It’s

happening in other media. Why not in outdoor? Some media owners will try

to resist it but it’s almost inevitable. Big advertisers are already

embracing this.’

For media owners, should it be a case of never say never? Spencer

Berwin, a director of JC Decaux, is almost willing to concede that

point. He adds: ’We have good relationships with multinational

advertisers and global strategies are being implemented locally. But

international consistency and convergence in formats could make a

difference. Everything is customer driven. If they really want to do it,

that’s the way it will go.’


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