Features
OOh’s Cathy O’Connor says flat results already in ‘rear-vision mirror’ as company looks to future
As advertisers tighten their once-lavish television and radio spend during a down economy, the out-of-home market is booming, now attracting 15% of all agency spend – a record likely to continue to be broken, as the format comes of digital age.
Unfortunately, this wasn’t reflected in oOh! media’s first-half results revealed on Monday, which saw revenue slip 3%, and a 11% drop in net profits – both of which took a hit due to the loss of the Vicinity shopping centres contract, which saw oOh! market share in the sector take a hit.
Cathy O’Connor, CEO of oOh! media, spoke to Mumbrella after the results were released to the market. As she explains, all eyes are on the company’s bright future.
Obviously revenues down, profits are down, which is mainly to do with losing the Vicinity contract. What good news do you see in this first half?
Well, the outlook is certainly positive and that’s really probably more important than what has happened through the rear-vision mirror.
I appreciate it was a flatter quarter, in revenue terms, than the market grew – but we’ve moved through that now and are returning to growth in a very strong way into August, and robust pacing from September onwards. So that’s positive.
We’ve continued to run a really efficient business and I think the significance of that is that we have been renewing large contracts in the recent 12 to 18 months – and many of those involve a step up in rent. So, the ability to do that in a disciplined way is very important for long term growth and value in the business. That’s been an absolute tick.
Also, just the number of fantastic brand new digital assets that we have brought into our network: The Metro Rail line in the Sydney CBD, which launched today. And we’ve won the Metro Tunnel in Melbourne, which is another premium rail asset, which will come online in 2026. The Woollahra win was a big one for us last year – we’re about halfway through the build of those digital assets. And that’s the first time the eastern suburbs has had street furniture of that nature.
Cathy O’Connor at the Sydney Metro launch, Monday
OOh! is also expecting another $38 million in new contracts.
These are Metro Sydney and Melbourne contracts, which will come into the network in the near future. We expect to have some announcements imminently about those. So, we’re feeling very upbeat about the growing strength of our network, and importantly, as we saw with Vicinity coming out, networks matter in terms of revenue share and revenue growth. So I couldn’t be happier with what we have to build the business with, moving ahead.
Also programmatic, a great story. We were slow to the programmatic space. We expected our revenue to double this year – it’s closer to triple. That’s been the fantastic new leadership team we’ve brought in and a programmatic team that’s been set up underneath them. So we’re feeling very upbeat about that as well.
And then on top of that, the actual out of home industry itself is booming. It scored 15% of agency spend for the first half of 2024
That’s right. That’s been a very compelling trend and that’s really about the structural shift out of other forms of broadcast into out-of-home. Obviously, we have growing audiences. We don’t have the fragmentation risk of other ways to consume us in platforms that TV and radio has.
So that’s also fueling a lot of optimism in the sector, a lot of investment into new assets. And oOh! media as the largest player, will be the beneficiary of all of that.
What’s been the biggest change you’ve seen both within oOh! media and just the broader industry since you started at oOh!?
I would say that, when I joined, out-of-home was down the consideration set of most major advertisers, and I’ve really seen a shift in the market where we are at the beginning of those conversations. And generally being seen as an equal in a media mix conversation with larger advertisers.
Equally, I’ve seen the sector really start to come into its own at the bottom of the funnel. So dynamic, creative, lots of new small-format digital assets in particular. And data-led targeting is really causing a lot of advertisers to realise we aren’t just a medium of brand fame. We can also be really efficient in a tactical way and deployed at very short notice, either programmatically, or through direct buys, in a way where creative and data can change in real time.
It’s been a broadening of the prominence of out-of-home in marketing conversations. And I think our share and growth, relative to other media, is the pretty compelling evidence of that shift.
CEO Cathy O’Connor and CFO Chris Roberts.
You mentioned in your financials that you’ve got plans in place to arrest the market share loss that came after Vicinity. Apart from what you’ve already discussed, could you talk me through a few of those plans?
We’ve made some changes to the way that we price our assets. What we’re trying to achieve is just a more agile, faster response to market so that we can be competitive in our trading and meet customers needs more quickly. That involves new pricing tools and giving more autonomy to our frontline business managers and sales leaders so that they can be competitive in the trade.
We’ve also done a lot of work to prepare ourselves for [incoming measurement system] MOVE 2.0, which will give us measurement across all of our assets, all 35,000 of them. That’s going to be able to help us to meet more campaign objectives, more frequently, and understand the underlying value of all the various assets that we have.
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Nathan Jolly is the Features Editor at Mumbrella. He joined the team in July, 2023.
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