Lamar to Slow Digital Rollout

Soft advertising and a difficult economy forced outdoor company Lamar Advertising to temporarily suspend its digital rollout in 2009. Compared to the 400 billboards the company converted to digital this year, next year that number will fall to 100. By the end of 2008, Lamar will have as many as 1,070 digital boards.

Along with slowing its digital rollout, Lamar also announced several other cost saving measures during its third quarter earnings call Thursday (Nov. 6), including reducing headcount.

In third quarter, Lamar’s net revenue declined by 5.5 percent to $312.5 million. Through the first nine months of the year, Lamar net revenue is up 1.6 percent. For fourth quarter, the company is expecting a revenue decline of 9 percent, due to weakness in auto, real estate, and media.

Despite the temporary digital suspension, digital contributed plus 2 percent same-store growth, while its static business was down 8 percent.

“We remain bullish on the business case, but we also have to be very cognizant of the environment we’re operating in,” said Sean Reilly, chief operating officer and president for Lamar. “We could not, number one, add a tremendous amount of additional capacity, given what we see in the world of ad demand, and ad spend. The prudent thing for us to do is focus laser-like on selling the units we have in the air, rather than adding, potentially 50 to 60 percent more capacity.”

The company is also proposing to drop its rate to move its inventory, at least on a short-term basis, a tactic it used following 9/11, and sell inventory contracts for shorter durations.

“After 9/11, that third and fourth quarter time period was a difficult one, and we sold short and preemptable where we needed to move space and when demand came back, we were able to get rate back to where it needed to be,” Reilly said.