Why other outdoor operators don’t fear big giants JCD and Ooh
The end of 2018 saw an end to two outdoor brands in the Australian market: APN Outdoor and Adshel. The newly merged businesses, JC Decaux and Ooh Media, have outlined their plans for the new year. But what does this all mean for the other outdoor operators? Mumbrella’s Zoe Samios spent the end of last year chatting with some of the industry’s bosses to find out.
Decades ago, a late outdoor ad booking caused chaos. Before screens went digital, businesses would chase up the artwork, organise the pre-production and rush it to the screen printers before labourers would set out with buckets of glue and brushes.
In 2019, there are bigger challenges. Halfway through last year, the four biggest players in the industry became two, as JCDecaux merged with APN Outdoor and Ooh Media bought Adshel.
The 2019 outdoor landscape is very different to the decades prior
For a consumer, the change is barely noticeable – a tweak of a logo at the bottom of the screen – but the implications are far bigger for the industry. The sales mean consolidation of staff and contracts, the loss of two huge brands, and less competition for highly sought after tenders – the processes where government and institutions invite bids for large projects.
Ooh Media completed its $570m sale in September last year. Since then a number of staff have been made redundant, the Adshel brand has left the market, replaced with Ooh Commute, and some of the country’s biggest outdoor advertising contracts with businesses and local governments, have been consolidated under the joint entity.
Now, Ooh Media – which also owns Junkee Media – has contracts with Brisbane City Council, the South Australian government, The University of Sydney and The University of WA, and has billboards roadside, in airports, and train stations.
JCDecaux’s $1.2 billion purchase of APN Outdoor had similar implications. Consolidation across marketing and sales, the re-badging of APN Outdoor assets and focusing on ‘high priority’ contracts were among the priorities flagged by CEO Steve O’Connor. The joint APN Outdoor and JCDecaux business has contracts including Sydney Airport, Yarra Trams, Perth Airport and Sydney Buses.
The two mergers have meant both players can build out offerings in sectors of the Australian industry where they might have not had a strong presence before: outdoor street furniture for Ooh Media and airport and on public transport like buses, for JCDecaux. The mergers also came at the same time as the highly contested City of Sydney contract, the result of which is yet to be decided.
For calendar year 2017, Ooh Media’s revenue was $380m, while APN Outdoor reported $343m, and Adshel $221m. JCDecaux is not a publicly listed Australian company, so does not provide a breakdown of its revenue in this market.
But what do the big two’s increased market power mean for smaller players?
Over in North Sydney, Shopper Media CEO Ben Walker and COO Ed Couche sit in their offices focussed on a part of the market, as opposed to national reach.
Ben Walker (above) and Ed Couche (below) saw a gap in the market
The former Ooh staffers launched their company, which focuses solely on the retail sector, in 2014, after they saw a gap in the market to provide advertising space in smaller malls.
The pair knew they’d get “chewed up” if they sat still and did nothing to differentiate themselves, so they began to view their business as a “partner” of shopping centres by providing more value through customer information. “The data we give them is the catalyst for the sign ups,” Walker explains.
Shopper Media does this through two different systems. Mist, launched in mid-2018, provides screens with wifi, analytics and location-based services while Shopper AI is a heat-map tool that allows clients to target consumers more effectively. Essentially the device is a large map of Australia, which shows where Shopper Media’s outdoor signs are, as well as its competition. It also provides a demographic breakdown of particular shopping centres, providing details on age, gender, ethnicity and average salary in the area.
The Shopper AI map
“It’s easy to think the big guys are going to stomp on you, but if you keep servicing clients and shopping centres correctly, you might pick up businesses from companies not treating them so well,” Couche says.
Primarily, Couche and Walker compete against the Val Morgan Group, which consists of Val Morgan cinemas, as well as outdoor devices across gyms and petrol stations. Val Morgan’s CEO, Dan Hill, isn’t afraid of the implications of the merger and the consolidation that has occurred in the last few months. “We’re in a good position, because it will become a duke out between the big two and we can remain on the schedules due to our unique reach proposition,” he says. “I would hesitate in saying that JC Decaux and Ooh have clearly articulated what their point of difference is to each other, given they are operating in the same verticals.”
Hill was appointed to his new role as lead across both cinema and outdoor mid-way through last year. Since then, he’s been tasked with creating a new strategy. VMO Active, VMO On the Go and VMO Shop were all created to reach consumers in the right mindset and the right location.
His managing director for VMO, Paul Butler, says the offering allows agencies to buy what they want and target hard-to-reach audiences, like gym-goers.
“We don’t package our assets, meaning in order to get what you need, you are not obliged to take excess inventory, you don’t want,” he says. You can also hand pick your locations and not pay a premium. So, you only buy what you need. In addition, you can have full transparency on each of the screens you buy – down to the screen level.
“That fundamentally isn’t how the other operators sell,” Hill adds.
Location-based advertising is a huge part of how Val Morgan is moving forward
“We design our network so you can buy what you want. Location-based is a huge part of how we’re moving into the future because we’ve got petrol convenience, gyms and cinemas in shopping centres and digital assets. Location based around passion points is our sweet spot right now.”
Of the outdoor players Mumbrella spoke to, all believe they have an important point of difference, mostly through data and the ability to select where ads can be placed.
Chris Tyquin, CEO of independent outdoor operator Goa, is confident Goa will thrive in this new market, because the business has seen it all before, and cannily invested in opportunities beyond simple outdoor. “We diversified to spread the risk,” he says. “Media is a cyclical business and those cycles are not necessarily related to economic highs and lows.” When the government banned tobacco advertising in 1995, he estimated it led to the loss of 50% of the industry’s then revenue. “That led to the collapse of the major companies,” he says.
‘We can’t compete with them on the same ground’, says Tyquin
It’s one of the reasons the business has stayed rooted in Queensland. It was too hard and tedious to constantly chase government tenders on freeways and rail property, so, as a result, its focus remained on scaling up in his home Queensland market – a move he believes has been beneficial.
Goa also launched content platform Lowd in 2011, too. Initially, the plan was based around creating editorial content that would give commuters another reason to look at signs, but that has now evolved into what he calls a database play. Users can sign in with Google, Facebook, Twitter or create their own account, to post their ideas relating to a given question created by the platform. For example, ‘what’s got you fired up?’, or ‘what’s got you sharing?’
“It’s of value to clients and ourselves because we have greater insight into not just numbers and demographics, but exactly who these people are going past our screen. We are heading in that direction because we can’t really beat Ooh and Decaux merged. We can’t compete with them on the same ground,” he says.
For Val Morgan’s Hill and Goa’s Tyquin, transparency is also top of mind.
The industry debate in the last 12 months has mostly concerned transparency with regards to measurement. The Outdoor Media Association and measurement system Seedooh have both tried to address this issue by providing verification services to ensure ads are running on the chosen slots and are completely viewable. But there is still a way to go.
“The MFA has led discussions on legitimising our platforms and providing rigour to reporting. But if you want more information relating to your clients’ ads, then you are going to get it from us. We want to be 100% compliant and 100% transparent,” Hill says.
It’s the same for the other players, which believe transparency and compliance are not only valuable to clients, but will attract more business.
According to operators, marketers want to understand where their messages are appearing, and whether they are being seen.
However, CEO of the AANA, John Broome, also suggests marketers want more than verification.
“There are three things that advertisers do have top of mind,” he explains. “One is verification, particularly with moving to digitisation of outdoor – how do advertisers know they are getting what they are paying for and obviously there has been progress made in that area, some of the companies are now offering verification services as part of their package.
Advertisers have three things top of mind when it comes to outdoor, says AANA’s John Broome
“The second piece is value, so am I driving greater advertising effectiveness or value from digitisation? In the back of their mind is: ‘digital advertising rotates, and therefore how do I know that is as effective as an old static site?’
“Outdoor companies would be doing themselves a great service by re-assuring advertisers that the advertising effectiveness is true. A third one, which is not being spoken about a lot at this point in time, is around audience measurement. The big desire from an advertiser’s point of view is to understand the role and value of outdoor in the overall mix. That doesn’t matter whether you are a a large outdoor company with mass audience reach or a smaller outdoor company with specific reach.
“What is clear is that we are very soon going to have the technical capability to look at cross-channel audience measurement, and it’s critical that outdoor is part of that total package.”
He believes that data play will be of interest to some marketers, but it just depends on what they are looking for.
“What advertisers are looking for from some of the smaller players is different to the offering of the big two. It’s still a relevant offering, but the needs they are attempting to satisfy are different.
“Shopper Media are a classic example. The proximity to point of purchase is most probably high on an advertiser’s agenda, when using that particular channel, relative to the broad audience reach that you can achieve with a national outdoor campaign,” he says.
But overall, AANA’s Broome sees the consolidated industry as a positive.
“I’m optimistic that it will be a benefit to the industry because the technology changes should act as enablers, but it’s early days and advertisers are waiting to see how it does translate through to a better solution for them, particularly on value,” Broome says.
And like Broome, none of the operators are overly concerned.
“One of the things I would note on the mergers, is that when you have more people talking about a product, you tend to see growth in it,” Walker says.
“When there is more competition it is actually better.”
Seedooh is fine, but it’ll soon be superseded. It already has been in some markets.
It’ll disappear like the outrageous mark-ups some OOH companies place on their screens.
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Wow this is so nice, you have explained it very well.
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This is so nice and useful info. Thanks for this wonderful article
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Very interesting article. Oligopolies never work for long when the market is allowed to operate. It is good to see that the outdoor advertising market is operating successfully. I wish all the niche players well. The competition that they bring will make the outdoor advertising industry more competitive and drive a better product for the end consumer, which is the people of Australia that purchase goods and services. I particularly like the concept of more targeted ads in shopping centers promoted by Shopper Media. Too often I have been confronted by panel ads that have been of zero interest to me. Given that shopping centers are becoming places where people go to enjoy themselves and receive services and not just buy stuff this approach will only make shopping centers even more appealing to the average Australian.
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I’m interested to see digital outdoor handle a verification tool that will shave back R&F figures based on an advertisers SOV on the panels.
If we share space with several other clients, and the reach drops because of that, it’ll be hard to explain to clients.
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Another great industry article by Zoe. You are a treasure !
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surprised nobody has reported on the mass redundancies at APN/JCD yesterday…
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