On The Move

More advertisers are starting to view outdoor as a real alternative to other media and as a way to provide continuity of advertising messages between flights in magazines and schedules on TV and radio. And while other media are struggling with technological advances that threaten traditional business models by luring away audiences, outdoor is finding that new digital technologies are expanding the business, providing more flexible and more targeted choices for advertisers.

“Not all media can say technology is a friend,” says Nancy Fletcher, president and CEO of the Outdoor Advertising Association of America. “I don’t think there is a technology that can hurt outdoor, short of people teleporting.” This year, Fletcher expects the outdoor industry to best the 5 percent forecast the OAAA made earlier this year and keep up the momentum into 2005.

Other forecasters are even more bullish. “Outdoor is less prone to be lost in the sea of other options,” says Peter Winkler, managing director of PricewaterhouseCoopers, who is forecasting outdoor to end the year up 6.3 percent to $5.9 billion. For 2005, Winkler is predicting similar growth of 6.8 percent to $6.3 billion.

Among the advertisers expected to step up outdoor expenditures are packaged goods advertisers, such as Procter & Gamble, which has placed campaigns for Tide and Oil of Olay. “Clients will be spending more in 2005, especially those advertisers in the fashion and food categories,” says Jack Sullivan, senior vp of out of home media for Starcom.

Outdoor media companies, it seems, are making all the right moves to evolve the outdoor industry from a static mass media vehicle to one that allows advertisers the ability to target by daypart, location or geography. For example, earlier this year, Clear Channel, the largest outdoor company, made a commitment to embrace some of the new digital technologies. The company, which generates about $2.2 billion in outdoor advertising annually, plans to convert many of its static signs in malls, airports and other interior spaces to full-motion digital electronic signs that allow advertisers to remotely change copy almost instantly.

Captivate Network, purchased by Gannett in April, is building a network of TV screens in elevators in the nation’s top markets, targeting business executives and offering advertisers larger audiences than the Wall Street Journal or BusinessWeek.

Outdoor is also presenting advertisers with more inventory in more venues, allowing advertisers to target consumers consistent with their lifestyles. According to Sanford C. Bernstein & Co., narrowly targeted media will grow at a much more rapid pace than mass media, increasing 13.5 percent a year from 2003 to 2010, compared to 3.5 percent growth of mass media. Most of the growth in the outdoor category reaches beyond billboards, to malls and airports, transit and street furniture.

“This segment came out of nowhere in the last few years and is now 40 percent of the outdoor universe,” says Fletcher. Other companies, such as New York-based Zoom Media, are putting together networks of in-venue advertising in targeted locations such as bars, fitness clubs and movie theaters.

Cinema advertising is growing in leaps and bounds, and is forecast to grow 12 percent this year and next, according to Zenith Media.

The new outdoor media are changing how advertisers consider the formerly stationary medium. For buyers, it’s an entirely new proposition for the advertiser, and that’s the downside. “It’s slowly going more digital, and we have to get a little smarter in how we use a digital versus a static ad,” says Starcom’s Sullivan. The upside is that there is more advertiser interest in outdoor. “What client hasn’t been saying they aren’t tired of TV?” he adds. “Outdoor isn’t a magic bullet, but it offers a lot of interesting alternatives to advertisers.”

Another factor in outdoor’s healthy growth pace is consolidation of the alternative outdoor media companies, giving these newcomers new credibility among advertisers.

“A lot of new media fails,” says Mike DiFranza, president and general manager of Captivate. “In order for it to be effective, it has to reach critical mass quickly. You won’t generate advertising fast until you can deliver that.” With backing from Gannett, Captivate is aggressively moving to have its network of elevator advertising in 17 of the nation’s top 20 markets by the end of 2005.

Outdoor’s ability to make its case also stands to improve with the prospect of ratings. Nielsen Outdoor, owned by Mediaweek parent VNU, plans to provide outdoor ratings in the top 10 markets by the end of 2005. There are also new automated planning and buying systems in the works. The OAAA is also working with the American Association of Advertising Agencies to establish standards for the seamless electronic transfer of data. All of these advances should make outdoor a more accountable medium that’s easier to buy.

“The ability to measure the viewing of a particular billboard, along with enhancements in the technology, will enable better targeting and rotation of ads,” says Winkler. “It will give the medium more flexibility for advertisers.”

Fletcher adds: “A number of initiatives and occurrences are coming together. It’s not out of line to see outdoor grow in double digits over the next decade.”

Katy Bachman writes about radio and research for Mediaweek.