Legend has it that many, many years ago the original designs for the first bus shelters in London were “lifted” during an overnight raid of an actual unit in a town in Northern France. It’s a great story if it’s true. In the intervening years, Clear Channel or its predecessor More O’Ferrall used the Adshel brand to bring us no shortage of iconic campaigns, from encouraging Londoners to “Go to work on an Egg”, through to the classic Persil’s designs, and to Sheila, the “first Australian perfume” which was a test to prove the effectiveness of out-of-home. Back illuminated posters or Superlites followed and overnight a medium that had been overly reliant on FMCG brands was suddenly transformed and started to attract the attention of high-end luxury goods advertisers, blockbuster cinema releases, financials and even motor cars.
So what does this mean? Well in their own words, Clear Channel were “gutted”. However they have rightly won plaudits for the way in which they’ve handled the loss – taking a refreshingly honest and brave stance, evidenced by their double-page advert in Campaign magazine re-affirming their commitment to an unwavering OOH vision.
On the flip side, JCDecaux who have won the contract will see this as great victory – and so they should. A journey that began almost 25 years ago with a street furniture contract for a handful of sites in Kingston Upon Thames now re-affirms them as the largest out-of-home media provider in the UK.
Rapport estimates that the win will increase JCDecaux market share to 34% in the UK. However, there are a lot of unknowns – with potential knock-on effects for advertisers.
Price will inevitably be a hot topic when JCDecaux take over the contract from January 2016. No doubt they will need to try and increase price but will buyers allow that? Will some advertisers move away from 6 sheets altogether if prices increase? After all, the product and audience isn’t changing in the short-term – although clearly we expect to see more digitisation. However, all is set to be revealed on the 7th October with a JCDecaux event that promises much – the “launch of a new medium” no less.
JCDecaux certainly have a reputation for investing with best-in-class design and technology so we fully expect products that excite – and ones that will grow share which is ultimately the absolute goal for out-of-home in the UK. But should we also expect a shift or change in the way that out-of-home is traded?
Route was a significant development for OOH, allowing us to optimise delivery against an almost infinite number of target audiences. Here at Rapport, we’ve evidenced the effectiveness of using Route data to drive cost efficiency for our clients. But significantly we’ve used Route to enhance campaign performance metrics – such as recall, awareness, consideration and recommendation. In essence, we’ve been buying audience for a couple of years now – albeit without specific audience CPT’s set by media owners. However this is currently a very manual and labour-intensive process – and one that technology will ultimately change for the better very soon.
Software being developed currently by various parties is looking to take Route data a stage further. Linking optimised audience delivery to live availability would be a major advancement for the industry. It’s certainly not a step too far to imagine buy-side API’s accessing live media owner availability in the not too distant future. OOH is moving ever closer to audience trading and automated buys – which ultimately should see further growth for the sector as it becomes easier to buy, opening the channel up to new advertisers.
JCDecaux’s win has certainly positioned them to take advantage of this long-term growth – although the cost of the TfL bus shelter contract means that making any money from it in the short-term may be challenging. Their ownership model is a distinct advantage though in this situation, allowing them to play a long-term game.
That said, there’s also always the danger of over-paying. We only have to look back to 2011 for an example of this, when CBS Outdoor threatened to terminate the current TfL tube contract, primarily because their tender had been based on a forecast of strong economic growth – that ultimately didn’t materialise.
Which leads us to the fact that the London Underground advertising tender – one of the biggest of its kind in the world – is again up for grabs in 2016. We estimate that this is worth a massive 14% in OOH market share. Should JCDecaux add this to their TfL bus shelter contract, it would take them to almost 50% market share – dwarfing their nearest competitors.
The likes of Primesight and Ocean Group have shown that there is room for other players to thrive in an OOH sector that continues to grow – but Exterion Media and Clear Channel will be hoping they’re not having to play this same role by the end of next year.