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FEArURE

V

Out-of-home advortising is on tho

brink of ohango, Tho sootor is

oonso l ida tmg ond now teohnology

m o a n s it s a lso tak ing on a w holo

now look. Horo,Lucy Clark

invostigatos what tho futuro

holds for outdoor

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S I T

ABOVE: OOH IN ACTION. SYDNEY OPERA HOUSE'S BIG MOMENTS

CAMPAIGN, YELLOW PAGES' YELLOVATOR GAME. AND A

SHOPPING MALL'S DIGITAL BILLBOARD

's the dawn ofanew era for out-of-home advertising. With the sector

slimming down due to several conso lidating moves over the past year,

coupled with technological advances and a positive growth outlook than

to a growing audience, things could well look a lot diffe ren t in the month

and years ahead.

Out-of-home is alreadyon a roll.Theforecast compound annual growth rate for

out-of-home to 2015 is 4.8%, according to PwC.

"Out of home advertising is one of the oldest media form ats but it wasastand-

in2011,"PwC's annual Outlook re port states. "It grew by 3.7%, atagreater rate th

all other advertising channels bar internet advertising."

The sector is inaspace of its own,asAPNOutdoor's chief execu tive and

chairman of the Outdoor Media Association Richard Herring comments: "With the

fragmentation of media that's happening all around, out-of-home is almost in

a

bubble. Our audience is growing - the re are more ped estrians in the stree ts and

more carsonthe roads. Add to tha t the fact that we are progressinginour forms o

delivering out-of-home and there are some really positive insights goingforward."

Steve

O Connor,

chief executive at

JCDecaux,

adds:

We

posted 3% growth for

first half of theyear, which was strong relative to the rest of the market. And most

people are havingareasonable third quarter of the year.

"Outdoor is inagood place."

Consolidation has beenahot topic for out-of-home, with private equity making

big moves

on

the scene.

In Decem ber2011 ,Ooh M edia was bought out by Champ Private E quity. This wa

swiftly followed in early 201 2 byAPNNews and Media dives ting

50 %

of its intere

in APN Outdoor to Quadrant Private E quity. And now,

a

deal between Champ Priva

Equity and Ten Network Holdings is about to be

signed,

w ith Champ purchasing Te

Eye Corp for S145 million .

PwCforecasts yet more consolidation in the future: "Withamore fragmented

market and w ith many small innovators ca rving out new niches, furth er industry

consolidation is likely, particularly in light of Private Equity's involvement in the

sector in 2011 and 2012."

in the same report, PwC anticipates strong grow th for outdoor digital screens in

the coming months,leadingto better targeted messages and allowing out-of-home

to move into new locations.

Here, we takeacloser look at the potential impact of consolidation onthe

industry, and then we explore the possibilities for the future of out-of-home.

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Consolidating the future

W

hen it comes to the cons olidation of

the out-of-home sector, everyone

has a diffe ren t opinion. But good, bad

or indiffe ren t, the one thing they all agree on is

that the industry is in a stron g place.

While some outdoor advertising companies

see consolidation as a means to sim plifying a

complicated offer for advertisers, others see it

as a big step in the righ t direc tion for an industry

that is growing - and an industry that investors

are keen to grab a slice of.

Concerns over poten tial price hikes for

advertisers, due to less competition in the sector,

are expressed by some but disputed by others.

Another suggestion is that big changes

will be afoo t several years down the line when

today's new investors look to cash in their ou t-

of-home purchases.

Richard Herring, APN Outdoor chief executive

and chairman of the Outdoor Media Association,

sees the recent buyouts as good news. He says:

It's been an aim of the major outdoor players to

consolidate the business more. I'm not surprised

by it. It'sagood thing and it improves the industry

asawhole. Having fewer players provides the

ability to have better and more investment in

the industry and makes it easier for clients to

deal

with.

It's

a

very complex buying and selling

arrangement with outdoor, so less parts to deal

with is easier for c lients, and it should mean they

have be tter assets at their disposal.

But Mindshare trad ing dire ctor Phil Church is

not so positive, viewing consolidation asastep

towards less competit ion.

About the imminent sale of Eye Corp to

Champ Private Equity, the new owners of

OohlMedia, Church

says:

Up until this point

they have been competing and have been able

to give two viewp oints on reaching people in

the shop ping malt. If this goes throug h, then jus t

having one major player in that place will make

it very difficult for media buyers because there

will be a lack of com petition.

Poying the price

There is speculation that industry consolidation,

and the res ulting chop in competition could lead

to price hikes.

Church commen ts: It's inevitable they are

oin

to look at

pricing.

They are

oin

to have to

claw back some ofthe money they have paid for it.

But, ultimately, the market will dictate the price.

But Adshel's marketing director Nicole

Mclnnes disputes Church's viewpoint.

Consolidation shouldn't affect pricing, as at this

point it does not re sult in an increased number

of panels nor an increase in demand, these being

the two main facto rs that drive pricing, she

explains. What is more likely to moveout of

home pricing is its continued growth within

the media market. As our sector continues to

take share from fragmenting tradit ional media,

prices should follow th at increased demand

accordingly.

And JCDecaux's O'Connor agrees: All we

need is two players in one part of the market

for prices not to rise. SoIdon't think we will see

prices rise. It's still a competitive marketplace.

Charmaine Mo ldrich, chief executive of the

Outdoor Media Association, does not expect

consolidation to impact the industry from an

advert iser's point-of-view.

From my point o f view, it really doesn't

affect the industry or the industry association,

explains Moldrich. It's a commercial decision

that's been made by the companies and where

they get their funding from . One possible

interp retatio n is that the industry is in a space

of its own, it 's probably the only traditio nal

media that's grow ing as rapidly as it is and

people want to buy into it.

In terms o f the way the industry operates

and how it operates, it 's s till being run by the

same people. My board is still made up of the

same people from the same companies.

I don't think adv ertisers w ill see anything

differ ent. R egardless of who funds the

industry, the way the industry ope rates is

gett ing be tter and better.

A

global player

O'Connor says the changes will simply bring

Australia's out-of-home industry In line with

the indus try on an internationa l level.

Before the recent consolidations, there

were probably too many players, he

says.

Bu t

now there probably aren't. It was over-supplied

in some form ats before. The shape it's in now,

assuming the Eye takeover goes throu gh, will

be the same as other cou ntries, with three big

players in the mark et and a couple of smaller

players. That's the s ituation in places like the

UK and France.

The JCDecaux boss does, however, predict

big changes ayear or two down the line.

P rivate equity does not normally hold assets

fo ra long time, he speculates. Their aim is to

build business and seil it, so the shape of the

industry tod ay, which has been very stable for

a long period o f

time,

will be differe nt inafe w

years't ime.

Eye has been owned by Ten for over a

decade, APN have been as they are for over a

decade - it has not changed much atall, they

have grown quite substan tially. But change

shakes it up a bit, O'Connor says.

R EG A R D LE SS O E W H O

F U N D S T H E IN D U S T R Y ,

T HE W A Y T H E IN D U S T R Y

O P E R A T E S IS G E T T IN G

BETTER A N D BETTER,

C H A R M A I N E M O L D R IC H O M A

S PT M R

14 20 T 2

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