This first appeared in the AdNews February 2019 magazine. Support AdNews by subscribing here.
Hot on the heels of a year defined by mega–mergers and industry consolidation, two new Australia out–of– home (OOH) market leaders have emerged and are raring to go – with Ooh!Media and JCDecaux now taking a commanding position of influence throughout the industry.
However, with investment in the sector expected to rise, they are not alone, with players such as QMS, Scentre Group, VMO, Goa and MCN still in the mix, finding their own niches in the market.
All eyes are now on the two new dominant forces in OOH to lead the industry in digital out–of–home (DOOH), best practice, transparency and measurement, with major holding groups’ media buyers making no bones about expectations when it comes to industry standardisation and trading methods.
According to JCDecaux CEO Steve O’Connor, now that the majority of the teams have been restructured and organised into the JCDecaux business model, the move is to take the company to new heights and stamp out its place in a smaller market.
O’Connor said 2019 is the year to push for further growth, not just as a business, but as an overall industry too.
JCDecaux CEO Steve O’Connor
“Out of home isn’t going to shrink, not by any stretch of the imagination. If anything we’ve taken the view that consolidation would help the sector grow for a range of reasons,” he said.
“Our capacity to invest is heightened and we will be investing in an accelerated digital roll–out of more products, as well as digitising more assets. We’re also looking at an automated trading platform to introduce in the new year as well.”
According to reports from PwC, the OOH industry currently stands at an annual growth rate of 6.7%, but has the ability to reach 8% total advertising market share by the end of 2019, while others in the industry have put it closer to 10%.
The Outdoor Media Association (OMA) has been a leader in this space, originally developing its own automated hub for buying and selling OOH advertising across all formats, nationally.
O’Connor believes that while the amount of competition has lessened, the competitive nature of the industry has been heightened, with JCDecaux and Ooh!Media now vying for clients that will inevitably have bigger expectations.
“Both ourselves and Ooh!Media have a broader portfolio of products to sell, which will come with more comprehensive briefs and marketing problems. In that regard, the competition will be around who is best suited to find the right advertising solutions,” he explained.
“Being able to provide multi–tiered and multi–format responses will ultimately lead the market to question how much we can offer and to what extent, creating a whole new set of challenges.”
Bundling and rates were always going to be a point of contention once the dust settled, with agencies eager to realise the cost and capacity each of the new businesses were able to offer.
O’Connor is adamant that massive hikes or changes to rates won’t be a factor, as it wasn’t a defining reason behind JCDecaux’s decision to acquire APN Outdoor.
“Bundling typically means discounting or rate erosion. We didn’t buy APN to do this, for us it will be about broadening our offering, not radically changing rates,” he said.
“We’ve got to make sure we continue to hold on to the virtues that both companies have and marry these to each individual format and environment, and we will continue to do that.”
Ooh!Media CEO Brendon Cook, agreed adding that it would be “immature” to suggest consolidation would lead to a hike in rates or an unnecessary stance on bundling.
Ooh!Media CEO Brendon Cook
He said the only reason consolidation in the industry would work is if it’s focused less on the cost and more about how the two businesses can drive further growth within the sector.
“Growth won’t come if your pricing is inappropriate and doesn’t match the performance of the medium and we know agencies are adept at pricing and bundling themselves so I don’t think that really is the issue,” Cook said.
“Now, not only can we handle the basics when it comes to client briefs, but we have revenue that we can put toward creating even greater value for clients, in a way that we can provide data or the way that we can do a different style of campaign.”
Not shying away from the topic of measurement, Cook said the four major players becoming two, was the “backbone” in driving greater development in that space.
He revealed the OMA and the rest of the industry remained “keen on marching forward” and improving audience measurement, but emphasised that agencies needed to understand the cost that comes with those improvements.
In looking at future goals of where audience measurement can go as more and more data becomes available, Cook said it was a very expensive scenario, unlike television, “which has OzTam and gains revenue from agencies and clients”.
“We get no funding support from the buying industry so the buying industry has to bear with us because we’ve got a lot to spend on a lot of things and we can only do it as fast as we can go,” Cook said.
Buyer expectations
One of the larger implications of the two mergers is what impact it will have on the publisher and agency relationship. Conversations have already begun between the two, however, early questions linger around how briefs and campaigns will be executed in the new landscape.
A major consideration from agencies has been around the breadth of work that can now be taken to these two new entities, which have both dramatically increased their offerings as a result of their respective deals.
While frequent questions will be asked of both JCDecaux and Ooh!Media, Bryan Magee, the CEO of Posterscope, which books more than over 30,000 OOH campaigns globally every year, said agencies shouldn’t expect “seismic changes” to their capabilities.
Magee believes 2019 will be about stabilisation and development of both companies’ teams and assets.
“It won’t be a seismic change, at least certainly not the first half of next year while they try and get their respective houses in order because you can’t underestimate the size of the tasks that are ahead of them,” Magee said.
“The world of OOH won’t drastically shift in early 2019 and while people talk about the deals being ‘complete’, I beg to differ.
“This is just the beginning of a mammoth amount of work, work that we as agencies won’t feel the immediate impacts of for some time.”
Despite this, Magee hopes one of the important results of the two mergers is a renewed focus on measurement, verification and the standardisation of data.
With less competitors in the market, he said, finding mutual ground and coming to a shared agreement on what the acceptable standards are should be simpler.
“No one can say definitively if this will be something both companies will look to do, but we hope with less players will come quicker decisions on what is one of the defining topics in OOH,” Magee explained.
“All we can do is hope they both see that as an opportunity and put the foot down and accelerate towards a mutual solution. I’m not saying that coming up with a digital measurement solution is easy. All we’re saying from the buyer side is we don’t want to wait another two years for it.”
GroupM chief investment officer, Nicola Lewis, said it would certainly be one of the key talking points for 2019, adding that the industry would need to drive serious change around digital measurement.
Nicola Lewis
“Measurement is an interesting one and I hope what we find is that out of home providers will start to want to trade their assets through an audience,” Lewis said.
“In order to do that, we’re going to have to review the way that out of home is measured. That’s going to be something for the OMA and for Move to tackle and I would imagine, first and foremost with Ooh!Media and JCDecaux.
“This year, we’re going to need to see quite rapid advancements in out of home measurement and I absolutely think that JCDecaux and Ooh will be at the forefront of that, especially considering the amount of digitisation that occurred in 2019.”
Publicis Media Exchange managing director, Sarah Keith, agreed adding that the mergers mean buyers now really expect to see an acceleration of investment and improvement on systems that tie in with data and measurement.
Keith said the consolidation of the two major players will also bring a level of standardisation of current rate systems. But, she said this wouldn’t include a sudden shift to bundling deals, as both companies should be aware that bundles are only necessary when there is room for an up–size to a campaign.
“I’m hoping discount positions will play a lesser role in proposal evaluation and we anticipate a significant improvement on the speed of delivery,” Keith said.
“Similarly, I don’t necessarily see anything negative happening in terms of bundling things that we don’t want to buy because these businesses are all a lot smarter than that.
“They haven’t put these companies together to reduce their operation by any means.”
The OOH industry is not just made up of JCDecaux and Ooh!Media. AdNews spoke to some of the leaders from other key OOH players to find out their key thoughts on the industry for the year ahead.
Val Morgan Group CEO Dan Hill:
The merger of the ‘big four’ is unlikely to side–step the ever–increasing demand for competition, flexibility and innovation across the industry. With agencies under pressure to deliver the best possible result for their clients, it’s now more important than ever to understand their needs in order to provide targeted, efficient solutions with pace and accuracy. Each OOH format can play a unique role in the media mix and 2018 saw strong demand across the board for all these channels.
Dan Hill
QMS CEO Barclay Nettlefold:
What it’s done is really identify the market position for QMS. We are and we profess to be the highest digital revenue out–of–home media business in Australia. We’re hitting 80% digital media revenue. So, our whole brief and focus is around that digital area and it’s all about the relevance to digital. What we’re seeing now in the market place is outdoors becoming just a part of the digital buy when you’ve got a product that’s so relevant to the digital media. That’s what we’ve been trying to achieve.
Barclay Nettlefold
Scentre Group head of sales Jonathan Case:
The disruption is hopefully over. Sales teams can start to be reliable and understand what it is they do and, from a brand and advertiser perspective, they can start getting some certainty in what it is the landscape looks like and who the major players are. With fewer players in the market, it would be great if we could start to be more collaborative. There has been a push from the industry for some time to be more collaborative as an out–of–home category, so hopefully stabilisation in 2019 leads to that.
MCN head of Sky News Group Ben Allman:
While it’s been on the OOH agenda for some time now, there will be greater focus on the different types of data available and how advertisers are able to use that data to make more informed planning and buying decisions. This better understanding of audiences means OOH will operate less and less in isolation and more as part of a broader, multi–screen solution.
Furthermore, we’ll start to see content playing a bigger role as publishers begin to use DOOH as a communications platform, not just an advertising platform.
Ben Allman
Verification and measurement: How do you expect measurement and verification to improve in 2019 and what impact will the major mergers have?
Veridooh founder Mo Moubayed:
The continued digitisation of OOH has led to major consolidation and a huge expectation of growth. With greater marketing power comes greater verification responsibility. Advertisers at a minimum will demand a verification service that collects data independently and covers 100% of their DOOH campaign. Right now, OOH has an opportunity to learn from the mistakes of online advertising and to drive growth by building greater trust through transparency.
Seedooh director of partnerships Joe Copley
2018 produced the great delivery debate: What did we book? What was delivered? In 2019, platforms can provide this independently verified, standardised data set for all clients, all formats, all campaigns in almost real time, at a nominal cost. This connected data enables the broader ‘measurement’ discussion to progress at scale: Who saw my ads? How did they react? What could we improve? Recent sell–side consolidation will speed this progression.
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