Outdoor Ads, Once Local, Go Global ON ADVERTISING

By Eric Pfanner

Outdoor advertising, the business of planting posters on everything from billboards to bus stops to public toilets, might seem like the most local of marketing media. But like so much else these days, it is going global.

No, the ads haven’t suddenly sprouted wings, though Ryanair, the Irish no-frills airline, recently announced plans to sell space on the fuselages of its planes, and even lowly buses are being embellished with video ads using digital displays.

What is really turning outdoor advertising into an international business is the increasing wanderlust of consumers. In a more mobile society, even if most of the billboards don’t move, their audiences do, and that means marketers can reach ever more of them with this kind of advertising.

So while ad spending on other “old media” stagnates, outdoor advertising is enjoying steady growth of around 8 percent a year, with much higher rates in some developing markets.

The companies that operate billboards are also looking to expand internationally, turning themselves into global rather than regional players and fueling a consolidation of the outdoor business, which used to be highly fragmented.

China, where consumer spending is booming and billboards are seen as an alternative to state-run television, is the target of much of this activity. But even in more mature advertising markets like Europe and the United States, leading global players are competing aggressively for lucrative, consolidated contracts from transit systems and municipal governments.

JC Decaux, the Paris-based billboard operator, has made three major acquisitions in China this year, most recently agreeing to buy a 73 percent stake in Media Partners International Holdings, a Hong Kong-based outdoor advertising company, for 715 million Hong Kong dollars, or $92 million

The agreement will give Decaux control of a variety of transit advertising contracts in Hong Kong, Beijing, Shanghai, Guangzhou, Chongqing, Nanjing and Chengdu, said Jean-Francois Decaux, co-chief executive of the company. It will help lessen the company’s reliance on the slower-growing European market, which still accounts for 85 percent of sales, he added.

“If you want to be a global advertising partner, this is not a market you can ignore,” Decaux said about the move into China.

Even in Europe, however, there are opportunities. Decaux was recently placed on a short list of two bidders for what may be the largest single transport advertising contract in the world: operating more than 30,000 billboards in London Underground stations and more than 80,000 advertising sites in the subway trains themselves, a deal with an estimated value of l1.2 billion, or $2.1 billion, over 10 years.

Decaux’s rival for the London deal is Viacom Outdoor, a unit of the American media conglomerate Viacom that currently holds the contract.

Viacom Outdoor is mounting a vigorous defense of its business, rolling out new features like video displays on London buses, as well as a digital ad in an Underground station.

These formats are intended to make outdoor advertising more competitive with other media, said Andrew Oldham, joint managing director of Viacom Outdoor in Britain. Video makes billboards more like television, and digital ads can also be updated daily or even more frequently, something that generally has been practical only with newspaper, radio or online ads. A decision on the London contract is expected early next year.

While Decaux, Viacom and Clear Channel Communications, through its Adshel division, are the three leading players in the business, they are facing new competition lured by the lucrative contracts.

Cemusa, a unit of the Spanish company Fomento de Construcciones & Contratas, was the surprise winner of a recent competition to provide New York City with so-called street furniture public toilets, bus shelters, newsstands and the like in exchange for the right to sell the advertising that will adorn it. The deal is worth more than $1 billion over 20 years.

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Eric Pfanner can be reached at adcol@iht.com.