There’s no doubt that 2019 has been an exciting year for the out-of-home (OOH) market in the UK, with large-scale acquisitions, the rise of digital media and exponential growth dominating the headlines.
In fact, the market’s total revenues grew by 9.4% year-on-year during the second quarter, rising from £284 million to £310 million. At the same time, digital OOH saw a cumulative growth rate of 17.2% in Q2, following increases of 11% and 16% during the previous two quarters.
In this post, we’ll explore these trends in further detail, whilst asking what other developments dominated the OOH space during 2019. We’ll also take a sneak peek at what 2020 may have in store at a local and national level.
The Sudden Rise of Global Media – And a Swathe of Acquisitions
We start with the single biggest and most eye-catching development of 2019, which saw the sudden emergence of UK media firm Global as a key player in the OOH marketplace.
The media giant, which was founded back in 2007 and spent years building one of the largest commercial radio operations in Europe, launched its Outdoor Division last year and completed a series of ambitious acquisitions to seize a dominant market share.
With a strong focus on digital OOH, the brand announced the acquisitions of both Primesight and Outdoor Plus in the autumn of 2018, with these deals having since been completed as part of a lucrative double deal.
In total, these acquisitions may well have cost Global in excess of £200 million, whilst the newly formed outdoor division will run parallel to the commercial radio venture.
But what prompted such a sudden and decisive move in the OOH space? Well, the most obvious trigger can be observed in the sustained and consistent growth of the OOH medium, which helped to create record global advertising revenues last year.
More specifically, revenues grew by an impressive 7.2% in 2018 to reach a cumulative total of $552 billion (£421.2 billion) across 70 of the world’s leading economies, and this trend shows no sign of abating any time soon.
At the same time, OOH was revealed to be the only traditional media category to showcase growth, as the revenues produced by this medium increased by 4.6% to $34 billion (£25.9 billion).
In contrast, similar channels such as linear TV, print and radio saw their revenues decline by -.1.5 during the same period, and this will have undoubtedly caught the attention of the team at Global.
The growth of traditional and traditional ads in premium locations and ‘placed-based’
local settings was central to this growth, and these factors combined to highlight the potential of OOH to expand even further in the near and long-term.
Global also noticed the similarities between OOH and radio advertising, with both of these mediums offering affordable marketing opportunities and playing a pivotal role in driving assisted conversions.
These interactions are measured as part of the overall customer journey, with each one awarded a value that enables marketers to understand the true impact of integrated, multi-channel campaigns.
There’s no doubt that Primesight and Outdoor Plus also represented strategic targets for Global, with the former boasting an OOH ad estate of ad display channels and billboards covering more than 35,000 UK sites (an estimated 95% of the population).
As for Outdoor Plus, they also owned a diverse selection of premium digitals ad sites across the length and breadth of the UK, with its strong presence in central London including locations such as the Euston Underpass and Hammersmith Towers particularly alluring the national advertisers.
In total, these two firms also shared a combined annual turnover of around £91.8 million in the last financial year, so Global have been able to quickly incorporate lucrative and diverse OOH operations into their newly-formed division.
Incredibly, these intuitive acquisitions saw Global Outdoor claim a whopping 35% share of the OOH marketplace in one fell swoop, immediately putting them on a par with the previously dominant JCDecaux brand.
These acquisitions also represented the first of several moves that Global have made in this medium, as the brand continues to change the landscape of OOH advertising in the UK and disrupt the market leaders.
The Acquisition of Exterion Media – What Does This Tell us About the Future of OOH?
Just weeks after the acquisitions of Primesight and Outdoor Plus, Global also moved to procure the established Exterion Media brand.
This undoubtedly represented another strategic addition to Outdoor Global’s bow, with Exertion having held a lucrative, £1.1 billion Transport for London (TfL) advertising contract for the London Underground and rail networks.
Additionally, the firm is also responsible for the OOH inventory across three other large-scale Metro systems in the UK; namely Liverpool, Glasgow and Newcastle.
Ultimately, Global is looking to focus its core OOH operations on roadside, bus side and train advertising across selected UK networks, whilst creating transport-focused assets that both augment its newly-acquired collection of billboard sites and taps into some of the most relevant outdoor advertising trends.
Even on a fundamental level, train and bus shelter ads provide the ideal medium through which to target shoppers and commuters, with research suggesting that they reach up to 92% of the population every week.
Beyond this, these non-intrusive adverts are also able to target consumers at a time when they’re most likely to engage with brands, as they meld seamlessly into the background and provide a distraction from the mundanity of the daily commute.
The latter point is particularly important, with prominent brands such as Burger King increasingly looking to experiment with digital and traditional OOH in order to create personalised ads that specific customers and key times.
Digital bus shelter ads provide the ideal medium for this time of targeted and dynamic content, which aims to provide higher levels of engagement and direct customers to take further action (such as completing a purchase at a local store or placing an order online using their smartphone).
By also snapping up key roadside locations as part of their acquisition strategy, Global is also recognising the effectiveness of OOH as a medium for building brand awareness.
Make no mistake; large-scale 48 and 96-sheet roadside billboards are capable of targeting a large number of customers, particularly when you consider that 36% of the UK population continues to commute to and from work by car.
In busy and high-traffic locations, drivers can also serve as something of a captive audience, creating a scenario where clearly visible roadside ads are capable of driving higher levels of awareness and brand recognition.
Global’s transport-led strategy is definitely telling, as it highlights both the core advantages of OOH and the growing desire of brands to drive personalised and targeted ads in strategic locations.
This arguably sits at the heart of OOH market growth as a whole in 2019, as companies continue to develop increasingly integrated campaigns that optimise the effectiveness of concepts such as top funnel marketing.
Digital vs. Paper Billboards – The Ongoing Battle
There’s no doubt that digital sites featured heavily in Global’s recent acquisitions, whilst the statistics show that this channel continues to drive substantial growth in the OOH marketplace.
We already touched on the fact that the global OOH space grew by 4.6% in 2018, for example, whilst the sector will have expanded by a further 1.2% by the end of this year.
However, digital OOH is expected to grow at a compound annual growth rate (CAGR) of 10% between now and 2021, whilst the digital ad spend reached 37% over the course of the last 12 months.
Whilst digital OOH maybe growing at a faster rate than the traditional medium, however, it would be wrong to suggest that ad channels such as paper billboards are experiencing a lack of demand.
Similarly, we shouldn’t underestimate the value proposition provided by paper billboards, particularly in a strained economic climate where many traditional ad mediums are in decline.
Interestingly, the continued success of paper and traditional billboards is being underpinned by local economies throughout the UK.
At Airoutdoor, we’ve certainly noticed impressive growth in local markets throughout 2019, and this is being driven by small and independent firms who are looking to target customers in specific geographical regions.
This resulted in impressive growth of 40% for Airoutdoor in 2018/19, with this inspired predominantly by demand from local advertisers across the length and breadth of the UK.
But why should SMEs and local businesses prioritise paper ads over digital alternatives? Well, one of the key factors is price, as traditional OOH channels such as paper billboards can be sourced for considerably less than digital ads over the course of a typical booking.
For example, a typical two-week booking for a 48-sheet digital billboard will cost a business around £2,000 on average.
Conversely, 48-sheet ads from locally-focused suppliers like Airoutdoor will cost just £495 for the same period, including those all-important design, production and maintenance costs (which account for £175 in total).
The actual ad space itself will cost just £320 for a two-week booking, and this translates into huge cash savings for local businesses that are often extremely budget conscious and forced to deal with minimal resources.
Paper billboards arguably offer superior value to marketers too, and this is another key consideration at a time when economists are discussing the portents of a global recession unfolding in 2020.
After all, paper billboards feature a single advertiser during the course of a booking, affording the optimal level of exposure for brands and the highest possible return on their marketing spend.
In contrast, digital billboards typically force marketers to spare precious ad space, as they usually feature up to six messages per minute on a single billboard.
This rotation means that brands are only exposed for up to 10 seconds at a time, forcing them to compete with alternative messaging and creating a scenario where they may struggle to drive awareness or achieve their core marketing objectives.
These factors are key for small and independent firms, and they at least partially explain why paper billboards and OOH channels are continuing to drive local economies nationwide.
When we also consider the fact that SMEs accounted for an estimated 99.9% of all private sector firms at the beginning of 2019, it’s easy to see why traditional OOH mediums have such clear and sustainable growth potential even in the digital age.
Marketers Have Continued to Spend More on OOH in 2019
Earlier in the piece, we discussed how OOH was the only traditional ad medium to showcase growth over the course of the last 18 months.
As a result of this, 2019 has seen marketers increase their OOH ad spend considerably, with this trend expected to continue for a sustained period of time.
In fact, analysts have predicted that OOH could double its share of the UK marketing spend by 2025, with this distributed across both digital and traditional channels at national and local level.
Of course, it’s important to note that ad spending in increasing across the board in the UK, with the total marketing investment increasing by 4.2% to £6 billion during Q1 2019.
However, the growth of the OOH ad spend is undoubtedly significant, whilst it’s also likely to be sustained over an extended period of time.
But what’s behind this trend? Clearly, the aforementioned acquisitions played a key role in creating a buzz around the OOH marketplace and highlighting its level of demand throughout 2019, whilst also contributing heavily to double-digit revenue growth throughout the first three quarters of 2019 (in the immediate aftermath of the purchases).
Similarly, the behaviour of Millennials is also influencing marketers, with this consumer demographic having fully matured over the course of the last 12 months.
During this time, Millennials have grown to outnumber Baby Boomers, whilst the youngest members of this demographic also entered into adulthood and come of age as consumers.
Make no mistake; OOH is fast becoming the preferred media channel for Millennials, many of whom are regularly bombarded with untargeted ads and messages online.
The saturation of the Internet with digital advertising has certainly created a sense of cynicism towards this type of marketing, and this is borne out by the fact that an estimated 43% of younger Millennials have used an ad-blocker during the last 12 months.
In this respect, OOH ads provide a stark and refreshing contrast, thanks to their non-intrusive nature and the fact that strategic placement can target them at times when they’re most likely to engage with commercial messaging.
Clearly, marketers are beginning to respond to these traits and trends, encouraging them to spend more on OOH advertising and leverage its diverse channels to target Millennials more effectively and in real-time
Is it All Good News for the OOH Market?
Of course, it wasn’t all good news for OOH brands in 2019, as the year also saw the established supplier 8 Outdoor enter into administration. This followed the termination of its license with landlord Insite, which covered an estimated 70 roadside screens in total.
Interestingly, Global Outdoor failed to snap up any of these assets, whilst there was no official reason given for the company’s slide into administration.
However, this development arguably has more to do with the loss of the Insite license than any general trends within the OOH marketplace, as this single contract reportedly accounted for more than two-thirds of 8 Outdoor’s total portfolio.
So, whilst it has been reported that Insite terminated their contract with 8 Outdoor after a failure to keep up with the agreed repayments, this was not the decisive factor in the ultimate decline of the business.
Still, it does send a timely message to OOH suppliers, even in an age where the market is growing incrementally and benefiting from increased local demand.
More specifically, it’s important for companies to create diverse networks that can offer value to a myriad of clients at both local and national levels. After all, this translates into a larger customer base and more sustainable revenue streams, whilst minimising the financial impact in instances where one or more client walks away from your service.
The Last Word – A Largely Positive and Action-Packed Year for the OOH Space
The decline of 8 Outdoor has certainly served a timely reminder to the OOH market leaders, who must heed this message in order to avoid complacency as they approach the beginning of 2020.
Beyond this, the last year has been a seminal and largely positive one for the OOH marketplace, with the large-scale acquisitions by Global helping to capitalise on the rising levels of demand that existed in 2018 and contributing to significant increases in outdoor ad spending during the last 12 months.
This, combined with gradually shifting consumer demographics and the role that small businesses have played in driving OOH at a local level, have propelled the OOH industry forward and helped to establish it as one of the fastest-growing marketing mediums around.
The fact that these trends are expected to continue for the foreseeable future is also excellent news, as it enables the market’s key players to invest in the type of long-term growth strategies that support jobs and increased revenues.