Out-of-home likely to see more consolidation, say panelists at The Drum Future of Marketing event

Alice Pickthall, Sophie Pemberton and Louise Stubbings

This summer, it was reported that Google was set to enter the outdoor market in Germany. In October the tech giant took action, announcing a partnership with outdoor media owner Asiaray in Hong Kong. And closer home, Global recently made their surprise move into the sector when it aquired two outdoor advertisers - Primesight and Outdoor Plus.

The Drum speaks to Sophie Pemberton, strategy director at Talon Outdoor; Louise Stubbings, creative director at Clear Channel and Alice Pickthall, research analyst at Enders Analysis on what their take on the Global move is and what this says for the traditional medium like out of home (OOH) and TV.

Louise Stubbings, creative director at Clear Channel

OOH has been radically transforming in recent years with the digitisation of its advertising estate. The rise of the digital OOH offering allows advertisers to be more targeted, flexible, creative and adaptive with their messaging. So far this has enabled OOH to maintain its share in what has been an incredibly competitive media market. With digital OOH now hitting true national scale in the UK, the stage is set for OOH to grow and gain share.

The recent consolidation in the market, most notably from Global Radio with the planned merger of Primesight, Outdoor+ and Exterion, demonstrates how the industry is being valued by investors. It shows the confidence the media market has in the ability, and likelihood, of OOH continuing to grow, and accelerating that growth through further investment.

The move creates a more consolidated OOH landscape with three big players, giving increased opportunity for standardisation and OOH market collaboration. The industry has been focusing on increasing the ability to deliver a frictionless, automated trade with the aim of making OOH easier to plan, buy and distribute. Given Global’s efforts on programmatic with DAX in radio, it seems reasonable that they would look to do the same with their Outdoor business.

The recent conversations surrounding online digital clutter only serve to increase optimism for OOH. What we’re seeing is a consolidation of media owners, investment in the advertising estate creating fewer, better sites and investment in technology bringing flexibility to the sales model. In effect, OOH is decluttering, improving quality and increasing flexibility.

So, how does this leave us feeling about OOH right now? It feels great to be in a part of the advertising industry that’s getting attention for all the right reasons, and we’re excited about helping to create the future of media, out of home.

Sophie Pemberton, strategy director at Talon Outdoor

The entry of the Global Media Group into OOH to supplement their already strong position as an advertising business is a very welcome one. The move shows a great deal of confidence in the Out of Home sector and offers huge potential to build a strong portfolio under the Global Outdoor name. The move is also good for advertisers as Global can bring experience from radio and its national/local infrastructure and will continue to invest in upgraded inventory and systems.

It is important to consider that Global’s first priority will be to consolidate its three newly acquired OOH businesses and address the technical debt inside those businesses. We need to keep in mind there is a huge amount of investment needed in the foundations i.e. standardisation and systemisation of inventory management and trading protocols and that alongside tackling these current issues, the industry is attempting build programmatic capabilities but right now it’s important that we walk before we can run.

The ever-increasing scale and quality of OOH inventory in the UK is evidently appealing to digital advertisers but making our industry conform to existing online advertising structures isn't that simple and may not be a long term solution, there is a long way to go before programmatic OOH becomes become a genuinely appealing option for advertisers.

Supporting and promoting an open market will enable us to grow OOH, collaborate more closely with other channels and create genuine value for our clients. At Talon we have taken a lead in this space by proactively testing the technical capabilities of programmatic OOH alongside developing new data-driven targeting and campaign measurement techniques which we believe will deliver real results for advertisers.

Alice Pickthall, research analyst at Enders Analysis

Indeed, Google's entrance does not come as a surprise. Google is the largest advertising technology provider in the world, and hungry to expand to brand media: first in TV and now in OOH. Google has been a large advertiser for years, especially on digital panels. Their ultimate aim will be to integrate Google Marketing Platform (DoubleClick) into OOH inventory, but at present, the infrastructure surrounding DOOH is not in place to enable that kind of automation.

But, Google will need to be careful how it handles data from different parts of the business. For example, although they have rich location data, they will need to be careful not to be seen crossing too much data from different hands in breach of regulation.

Global's move makes sense for several reasons. Firstly, they had to expand somehow, and with their saturation in the radio industry, they needed to search elsewhere. OOH is ripe for consolidation, it enables them to gain further scale in a medium that has not been disrupted by mobile (and gives them something to show investors), and so far has continually grown outside the wider ad industry.

Although both Radio and OOH are often bought as part of the same campaign, as supplements, the sales are very different, so the synergies are not yet totally clear. In reality, any benefits of a shared platform would be marginal at least initially.

The Global move is a game changer - out of nowhere a dominant player has emerged. But, Global's acquisitions are not all digital. For example, a large proportion of Primesight's revenues are tied up in paper, and large parts of the TfL contract operated by Exterion cannot be converted to digital. So for Global to digitise is going to require a large upfront investment in the infrastructure and will take a long period of time. It looks like Global will be going for a long-term play in the sector.

In terms of the wider consolidation debate: I think it likely we will see more in OOH, and probably end up with 3 core players with the lion's share of revenues, and a long tail. With some of the media owners unable to acquire anything further due to competition constraints, cross-channel acquisitions are likely to occur.

The strength of OOH and TV is that they do not suffer the same problems as other formats. They offer advertisers access to large-scale audiences in quality, trusted environments with good viewability. There is a finite amount of inventory, especially for digital panels, which means there is less physical clutter. Whilst TV has many of the same benefits, the prices of inventory are rising as eyeballs shift away from linear TV presenting an opportunity for OOH. Online, it is harder for advertisers to know about and control how cluttered (and what quality) the media context is.

Stubbings, Pemberton and Pickthall are all speakers at The Drum’s Future of Marketing, featuring on the Out of Home and Experiential Marketing panel. The event will take place on 22 November at The Crystal London.

Sponsors of the event are: Identity, MMT Digital, WLT, Inition, Turtl, IAB UK, Toaster and Atrefact

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