Outdoor sector eyes £1bn mark as digital role grows

LONDON - Outdoor ad spend fell in Q4 2007 for the first time since 2002, but the sector posted strong growth across 2007 and is tipped to hit the £1bn mark this year.

Revenues slipped by 0.9% in the fourth quarter of 2007 to £254.5m, according to Outdoor Advertising Association figures, ending a run of growth that spanned 21 consecutive quarters.

Across the year, however, outdoor revenues were up by 4.6% to £975.7m, marking six consecutive years of growth. This surpasses the 4% annual growth in 2006, when OAA revenues reached £932.5m.

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Alan James, chief executive of the OAA, said the dip in revenues in the final months of 2007 mirrored a general advertising slowdown at that time.

He said: “Things are a bit tighter all round, but we are confident that outdoor will continue to grow as advertisers recognise its many benefits and the high level of innovation in the sector.”

James forecast that outdoor ad revenues will hit £1bn this year, fuelled by growing digital revenues. Spend on digital outdoor formats was 42% higher in 2007 compared with 2006, and 56% higher in Q4 2007 compared with the same period a year earlier.

Outdoor is also growing in terms of overall market share, which currently stands at 6.1%, according to the latest advertising forecast from WPP’s GroupM. James predicts that outdoor will comfortably hit a 10% share of display by 2009, possibly even by the end of this year.

The outdoor sector received a welcome boost last year from the ongoing feud between BSkyB and Virgin Media, both of which featured in the OAA top 10 advertisers by volume, spending £19m and £16m respectively in 2007.

Virgin in particular upped its outdoor spend sharply, by 450% year on year across the 12 months, and by 708% in the final quarter. BSkyB, the top spender, increased its spend by 14% in 2007.

Entertainment and media remained the number one outdoor ad category, accounting for £171.7m of ad spend, closely followed by telecoms at £102.4m. Food was the fastest-growing category, up by 55% to £56.5m, with Müller Dairy posting the highest increase in outdoor spend of any advertiser – 1,214%.

David McEvoy, marketing director of JCDecaux, said: “It’s rather ironic that a lot of media owners are using us to reach the consumers outdoors they can’t reach indoors. Likewise with the big FMCG companies, who seem to be switching out of TV.”

According to McEvoy, £1 out of every £5 spent on outdoor advertising is by entertainment and media companies.

Media Week 26-Feb-08