Mall Ad Networks See 3Q Boost

Sales and traffic in retail stores have been lethargic as a humid summer day during the third quarter. That, along with the limp economy, might sound like a bad sign for out-of-home networks in malls, especially since the back-to-school period is second only to the fourth-quarter holiday season in terms of advertiser demand. But some networks are showing healthy—sometimes even double-digit—revenue growth. If the momentum continues into the fourth quarter, total 2009 revenue for mall networks could wind up 50 percent ahead of last year.

Adspace reported a 50 percent hike in mall ad revenue in July and August with a spike of 85 percent in September, according to Bill Ketcham, the company’s evp and CMO. Likewise, SeeSaw vp of marketing and networks Rocky Gunderson said its mall business grew 50 percent in the third quarter. Both executives expect full-year ’09 revenue will rise about 50 percent compared to last year, a tough call since most buys are being placed close to the scheduled ad run.

Jean-Luc Decaux, co-CEO at JCDecaux North America, was less specific about third-quarter revenue growth. “Performance in the third quarter is better than the first half of the year,” he said. He noted a shift in campaigns for back-to-school to the earlier part of August.
“Advertisers are trying to get in front of consumers earlier than before.”

Some categories upped spending in September. When contacted in August, Michelle Schiano, vp of marketing for Eye Corp., observed that fashion was on the rise, but accessories weren’t following. By early September, accessories had also picked up. And healthcare, DVDs and TV were also stronger.

Decaux ticked off the relative growth of the top five ad categories in malls for his company: The top sector, media and entertainment, is “strong and resilient”; No. 2, apparel, is down around 15 percent, although spenders include Skechers, American Eagle and True Religion; No. 3, cosmetics and beauty, is up somewhat, with buys from Clarins, Shiseido and L’Occitane; No. 4, telecommunications, is up thanks to brands like U.S. Cellular and Verizon; and No. 5, food and beverage, is “more or less flat.”

Execs see clear reasons for their companies’ big growth in otherwise hard times for media. Ketchum cited attractive demos: teens, young adults and women. Probably more important are attractive CPMs—around $5, which are low compared with TV.

Those better rates have caused many advertisers to shift budgets out of newspaper circulars into mall signage, said Gunderson. “There’s more research in the marketplace from companies like Arbitron, which shows people are aware of the screens,” he said. “And because the ads are contextually relevant, they take action.”

Jeremy Lockhorn, director of emerging media at Razorfish, added, “We work with retail brands that own and operate stores, as well as labels in department stores. And both are natural fits for digital signage in malls.”