‘We don’t use data as a panacea for growth’ says APN Outdoor’s Richard Herring

Data can be an effective sales and marketing tool for advertisers, but is not the “panacea for growth”, APN Outdoor’s outgoing chief executive, Richard Herring, has said.

He has also disputed the suggestion rival Ooh Media is leading the way in the out-of-home market by investing in data and analytics.

Outgoing CEO Richard Herring: Data is a tool

Speaking to investors following the out-of-home company’s half-yearly financial results, Herring said innovation was “core” to future growth but data was a tool and would not be the key to growth going forward.

“Innovation is at the core of our future growth. Rather than a perceived threat, innovation is infiltrated into the fabric of the business,” Herring said.

“It is already providing improvements to product, including internal systems, and our marketing and sales armoury.”

However, Herring added: “Unlike others in the industry, we don’t use data as the panacea for growth.

“Rather, it is an important growing element that adds sales and marketing tools for advertisers.”

The latest results reported a total revenue climb, up 8% to $162.3m, and EBITDA (earnings before interest, tax, depreciation and amortisation) also increased to $37.2m (+7%).

Net profit after tax fell 19.3% to $15.76m.

Herring said screen conversions and optimisation, and pursuing developments in marketing products, would continue to drive growth.

He later disputed a question which suggested Ooh Media was ahead of APN Outdoor in investing in data and analytics.

“Not at all. My point is there are many many levers, and to isolate to data, which is actually a whole lot of information – the analytics are the most important bit of that – would be incorrect.

“These are sales and marketing tools, and the sales and marketing tools are used to provide either better information for advertisers to make better decisions, and to choose from different formats,” he explained.

“We are very much at the forefront of that, it’s obviously a moving field. The availability of new data points and technology is moving at a pace, and we are certainly endeavouring to keep up with that movement, and where appropriate, use that innovation is some sales and marketing tools.”

A differentiating point in Ooh Media’s financial results, compared to APN Outdoor’s, were the costs associated with the failed merger – which was terminated following the Australian Competition and Consumer Commission’s (ACCC) concerns about the lack of competition in the out-of-home market.

While it cost Ooh Media $2m, APN lost more, reporting total proposed merger costs of $3.38m.

Wayne Castle, chief financial officer and upcoming interim CEO, said the company could not compare the costs, as they didn’t have a breakdown of the details.

“What we do know is that majority of our merger costs relate to advisory costs, as you would expect, and we knew that going into the proposed merger that the advisory costs would be expensive and they were,” he said.

Despite the loss of revenue across, rail, transit and airports, Herring said he was optimistic about 2H17.

APN Outdoor locked in its Adelaide Metro contract earlier this month, but rail saw a decline

While the billboard category grew 20% year on year to $84.6m, other categories fell, with rail down 10% to $11.6m, transit down 2% to $47.1m and airports slipping 1% to $19m.

“Transit revenue has underperformed at the start of 2017,” Herring said.

“Initiatives included product and price changes, as well as the transit factor, which was a major research project… were all introduced to improve our transit performance.

“A third of our revenue comes from transit, a format that currently does not have a digital solution,” he explained.

“Although much of our earnings growth is from digital investment, it is just as important to optimise classic revenues, and on a reducing asset base due to digital conversions, the first-half decline in classic revenues of only 1%, is a credit to our sales and marketing teams.

“These initiatives gained traction, and second quarter revenues, as well as our forward bookings into the second half, are now above the same time last year.”

Herring said the late inclusion of XTrack TV in Perth would help results in the rail category.

XTrack TV became a national product earlier this year

On the topic of airlines, he added:  “Following an outstanding year in 2016, airport revenues were under pressure, but like billboards we also took share, and are implementing a number of new initiatives to improve this format’s performance.”

Earlier this month, APN Outdoor announced it had renewed its Sydney buses contract, on “improved financial terms”.

Herring explained they had negotiated reduced rent, noting the improved terms were a response to the way they saw future revenues performing.

“A real feature of our business is our ability to understand the contracts that we renew, and understand the commercial terms that we are willing to put up to run that contract,” he said.

“We are very happy to lose contracts if those terms aren’t suitable to the business, and that’s exactly the way we should be looking at this business.”

Also this month, APN Outdoor lost the Canberra Airport contract, after more than 20 years.

Herring said while it ended on good terms, the company would not accept contracts if the returns did not warrant the “focused investment required”.

“We are not sentimental about it, we are commercial about it,” he said.

APN Outdoor had worked with Canberra Airport for more than 20 years

The company also announced the earlier extension of its Perth Public Transport Authority contract for an additional term.

He said the extension was a “wonderful credit to the business” and said the contracts for Yarra Trams in Victoria, which was currently being processed for renewal, would be confirmed in September.

Following the announcement this morning, APN Outdoor climbed 22 cents on the Australian Securities Exchange (ASX), reporting a market capitalisation of $753.10m.


Get the latest media and marketing industry news (and views) direct to your inbox.

Sign up to the free Mumbrella newsletter now.



Sign up to our free daily update to get the latest in media and marketing.