While the winds of structural change have buffeted the media industry for most of this century, the outdoor sector has largely escaped unscathed. Yet, after six years of continuous revenue growth for the outdoor advertising industry, last year the recession brought the party to an end.
In 2008, revenues tumbled 3.8 per cent across the sector, according to the Outdoor Advertising Association. Outdoor media owners might draw some comfort from the fact that the sector still out-performed the market - increasing its share of the advertising pie to 9.9 per cent for the 2008 calendar year. But, unfortunately, the pie itself is smaller and recovery is uncertain. Last month, it emerged that the major outdoor contractors are cutting inventory and looking to offload sites in response to a collapse in revenue. And while the Olympics in 2012 is expected to deliver a boom, the sector cannot afford to wait that long.
Outdoor media owners now find themselves in a cut-throat battle for recession budgets, against each other and against other media. Outdoor still offers a bold broadcast platform for brand-building but media owners are also bidding for the more tactical advertising favoured by many brands in times of recession. Outdoor has become increasingly flexible in terms of the timing of campaigns and copy changes, while media owners have invested heavily in improved accountability and measurement.
Traditionally, advertisers were offered a two-week cycle and campaigns would go live a few days either side of the official start date. The natural destination for advertisers wanting to run short-term tactical campaigns, to promote bank holiday weekend sales, for example, was not outdoor but newspapers, TV and radio. This perception still remains but it no longer reflects the reality of what outdoor can do.
Digital screens have now hit critical mass. Digital outdoor ad revenue in the UK hit £16.9 million in the first quarter of this year, up 29.4 per cent from the same period last year. There is a wide range of formats, from digital roadside billboards to digital escalator panels on the London Underground, but they all have one thing in common - the medium is inherently flexible. The fact that you can change the copy easily and remotely means ads can run at any time of the day or any day of the week.
That's the theory. In practice, it's about supply and demand. Media owners want to avoid ending up with unsold slots so they tend to favour advertisers who are willing to make a commitment for a full two weeks - with the flexibility being used to tailor the copy to the time of the day or day of the week. For example, Gordon's Gin advertises on Titan Outdoor's Transvision network in mainline rail stations, but only on Fridays.
However, Titan Outdoor's national sales director, Jed Weston, says advertisers could embrace the flexible opportunities of digital outdoor more, pointing out that there were three tactical April Fool's Day ads in the Metro newspaper and none on Transvision.
Now that demand has slackened, advertisers are finding some great bargains. James Copley, the managing director of the poster specialist agency Kinetic, says: "You always could do flexible things in out-of-home media but owners weren't particularly keen to do it and whenever they did it, they made it quite expensive.
"At the moment, advertisers are wanting truly bespoke solutions and their communications objectives don't always fit into a predesigned two-week block." Kinetic has just set up the Daily Post, an online calendar that marks events such as Mother's Day and short-term outdoor availability to allow for tactical campaigns lasting days rather than weeks.
Papa John's is one advertiser taking advantage of the increased flexibility. The company's media agency, the7-stars, has booked tactical advertising on the digital screens on the Tube network, running one-off ads for the pizza chain at 5pm-7pm on Friday nights. "We go in tactically to deliver extra sales and we go in late and trade late to take advantage of the market, so it's short-term outdoor buying," Will Phipps, the head of planning at the7-stars, explains. "The reality of the current climate is that people don't want to buy 10,000 poster panels," he adds.
The LCD screens in entrance halls at Tube stations ran with high-quality food shots, while the cross-track projection screens ran with a punchier offer, message and phone number prompt to take advantage of the long dwell time.
Cross-track projection is the newest digital format but has so far not set the world alight. Tim Bleakley, the managing director at CBS Outdoor, insists that he is satisfied with its growth. "Cross-track projection is not doing as well as the other two (digital escalator panels and LCD screens)," he admits. "We've got some advertisers testing it and some like it, while some are not sure, but, by the end of the year, it will have some traction. It seems to be growing in the same way as digital escalator panels and LCDs - people didn't always love them."
It's not just digital - traditional posters are becoming more flexible as well. Improvements in print technology have reduced the time from delivery of the copy in electronic format to the finished poster down to one day. Meanwhile, outdoor operators have overhauled their own processes to deliver operational efficiencies and ensure a fast turnaround on posting. For example, CBS Outdoor has upgraded its bus advertising to a single sheet that can be installed or removed quickly. The contractor is more limited about what it can do on the London Underground, particularly with cross-track posters, due to safety concerns.
JCDecaux has invested in its own print facilities and offers rapid turnaround, especially if it's planned in advance. Spencer Berwin, the managing director of sales at JCDecaux, says Tesco is a case in point. The billboards cannot advertise products that are not in store and Tesco's week for new stock begins on a Wednesday. The supermarket delivers its copy to JCDecaux on a Monday, it's printed on a Tuesday and posted on a Wednesday.
"We love digital here at Decaux but it's important to remember what else there is out there that isn't digital," Berwin says. "We're looking at how we can increase the flexibility of our non-digital offers, which until recently was quite a challenge."
In another example, Orange Mobile ran a six-sheet campaign in April booked by Kinetic. There was a digital element to the activity but the bulk of the advertising ran on traditional printed six-sheets with JCDecaux and Clear Channel. Yet the copy still changed twice a week - every Monday to Wednesday the copy was for Orange Wednesdays and every Thursday to Sunday it changed to Nokia.
Measurement and accountability
The sheer diversity of outdoor formats and opportunities to tailor campaigns raises the issue of accountability. And the recession has pushed ROI to the top of the agenda in the boardroom battles.
The first part of accountability is proof of posting. Media owners have been upgrading systems to verify that ads go up where and when they are meant to. Rob Atkinson, the Clear Channel UK managing director, says this has been a focus: "We've spent a lot of money to make sure that, for us, on every single site, whatever shape, size and location, we know the ad got posted at the right time and it came down at the right time."
JCDecaux offers a real-time online system called JCDecaux Live. The poster contractors carry a GPS device that updates the website so advertisers can view digital images of their ads in situ as soon as they are posted.
Meanwhile, the industry is investing heavily in a new version of measurement system, Postar, and has committed to maintain funding for several years. The old measurement system is geared up for measuring audiences of roadside ads, with some extra functionality such as measurement of the Underground tacked on. The Postar chief executive, James Whitmore, says the new system, which will launch in the first quarter of next year, will treat all formats equally.
"We're starting again and we're going to create a completely comprehensive measurement currency for roadside, rail, the Underground, buses, taxis, retail operators," he says. The study group, 10,000 people in the first year, then dropping to 5,000, will carry a GPS device.
Whitmore says this means it will pick up on all the journeys that people forget to tell interviewers about and suggests it could provide a 20 per cent boost to the total outdoor audience. As it is now, the figures will be boiled down to a net audience, based on likelihood to see, or what the Americans call "eyes on", using data from eyeball-tracking studies.
The final piece of the puzzle is proving that outdoor advertising actually works and trying to distinguish between the effectiveness of the different products. Individual media owners and poster specialists have funded their own research but the industry has also pulled together through the OAA and events such as the Third Space conference earlier this year.
Music to delegates' ears was the econometrics presentation from Sally Dickerson at the Omnicom-owned Brand Science. Among the key points were the findings that outdoor offers better ROI than television or print and has become more efficient over the past three years while other media have declined in ROI efficiency. Adding outdoor to a campaign also amplifies the effect of television advertising for FMCG brands.
All the big outdoor owners are constantly investing in research and marketing to prove the effectiveness of their medium. Recent examples are a study from Titan Outdoor and a marketing campaign by CBS Outdoor.
Titan commissioned research on the effect of the surroundings on ad effectiveness. The marketing director, Steve Cox, says the findings vindicate the higher prices it charges for the same format in an indoor out-of-home environment over street posters.
Meanwhile, CBS Outdoor used its own medium to show the effectiveness of cross-track ads with its "time to consider" campaign. The unbranded ads, which used images of fox-hunting and intensive farming to spark debate and prove the effectiveness of the medium, ran on cross-track billboards and cross-track projections screens.
There's no doubt that the outdoor industry is making concerted efforts to pull together and raise its game as times get tougher.
But, in reality, it'll be the ability of its major players to renegotiate contracts in their favour that will make the biggest difference to its fortunes.