Today there are no beer or tobacco advertisers in the top five spots in the outdoor sector.
In fact, Carling Black Label, which recently began outselling sibling Castle Lager, is currently in a lowly eighth place in the out of home media sector.
Over the past two to three years, outdoor growth has been spurred by the telecoms (cellular service providers), and gaming industries, as well as by FMCG retail manufacturers, says head of Primedia Outdoor, Pete Piccion.
But while the type of advertisers using outdoor media has changed substantially in the last few years, the outdoor media owners are still maturing.
Recently the medium got a new association Out Of Home Media South Africa (OHMSA). According to OHMSA general manager Les Holley, the nature of the outdoor advertising business is such that there will always be outdoor operators erecting and renting illegal advertising structures, mainly due to ignorance of the many regulations and by-laws of the industry.
The new association and its predecessors have been working to regulate and co-ordinate the sector, and have met with some success, says Holley. However, the association, created in July this year, has only six members, and while it does represent 85 percent of the market sector, it has not yet managed to entice many of the smaller operators into the fold.
Its predecessor, OAASA, boasts 15 members, including Ad Outpost the company currently involved in litigation with the National Roads Agency on the erection and continued use of outdoor structures that are illegal in terms of current rules and regulations.
The biggest players in the outdoor sector Clear Channel Independent and Primedia Outdoor resigned from OAASA, because of the Ad Outpost approach to national road outdoor advertising [see sidebar]. This preempted the other players to move.
Client reaction towards outdoor advertising on national roads has been extremely positive. This is due to the high traffic volumes on these routes, which offers advertisers excellent audience exposure and high levels of reach and frequency, says Primedia Outdoors Piccione. Unfortunately, by advertising on non-NRA approved sites, certain advertisers continue to support the apparent illegal actions of contractors who have chosen to disregard NRA regulations.
These actions have cast a negative light on the outdoor industry and resulted in delays in opening national roads to outdoor signage, says Piccione.
Speaking to Barry Sayer, group CEO of Clear Channel Independent (CCI), one finds it difficult to believe that this business leader operates in a segment that is considered by many to be on the fringes of the media sector.
If truth be told, the newly named out of home media sector accounts for about 4 percent of the total reported adspend of R10.6 billion, translating to some R418 million for the last 12 months to July.
OHMSAs Holley says that the market share should be higher.
There are still media owners not reporting figures to Nielsen. Many of these smaller media owners generally feel that there is no benefit to disclosure, while other dont really want to divulge their client lists to their competitors.
The additional R70 million estimated as not being reported would boost the share of adspend to roughly 5.2 percent.
Interestingly, the total adspend pie has decreased slightly during the same period.
Out of home follows behind television, print, and radio, beating cinema, the knock n drops, and the Internet, in terms of adspend, including self-promotion.
Out of home follows behind television, print, and radio, beating cinema, the knock n drops, and the Internet, in terms of adspend, including self-promotion.
Some pundits would even call it the poor cousin of adspend, when in fact it has the potential to do more good than most other media types in terms of conveying messages of national importance to communities which may not have access to other forms of mass media.
And while the sector is dominated by four big players, there are more than 28 other minor players operating in the sphere. This number was reduced recently with the announcement that Nail Outdoor had taken over Significant Signs and Randata Signs.
In terms of market share, the leader by a fairly long chalk is CCI with a stranglehold on the sector of some 52 percent, or R210 million. Being the dominant player one would expect some arrogance. This is not the case.
Being a part of an international business we adhere to the best business practices and we always approach our business dealings from a long term perspective. There really is no point to short term gain at the expense of long term advantage, says Sayer.
Turning back to the competitive landscape, Primedia Outdoor takes second spot with an estimated 35 percent of the market, while the Durban-based Outdoor Network is growing, and Ad Outpost is starting to make its presence felt.
The Nail Outdoor market share is unclear following the bulking exercise it went through.
The regional spread of this medium generally follows the money, and the majority of sites are located in Gauteng, with the main players maintaining a Johannesburg head office or representative office.
The regional spread of this medium generally follows the money, and the majority of sites are located in Gauteng, with the main players maintaining a Johannesburg head office or representative office.
Sayer says that in terms of the range of options available, the sector has been through some development phases and there is an increasing spectrum.
Out of home media now covers everything from municipal light poles, to boom advertising at garage entrances and exits, and branding the steel cups found on golf greens.
The so-called street pole ads seem to be gaining in importance and exposure, with an estimated 1000 to 2000 units now available. This option is gaining in popularity in the retail sector with several national operations now using the product.
To BEE or not to BEE
The holy grail remains the space in and around international and domestic airports, with long-term contracts, premium rentals, and hard currency the order of the day.
Generally, this property is owned by the Airports Company of South Africa. If any out of home operator wants to enter this space, black economic empowerment (BEE) issues must be addressed. As most other industry sectors have discovered, including the financial services sector, the issue is not an easy one to resolve.
Putting together meaningful and relevant black economic empowerment initiatives and deals is tricky at best, and in most cases doesnt filter down to where government wants the effects to be felt at grassroots.
Putting together meaningful and relevant black economic empowerment initiatives and deals is tricky at best, and in most cases doesnt filter down to where government wants the effects to be felt at grassroots.
At the core of the conundrum is that fact that ACSA considers meaningful BEE to mean a 51 percent black-owned business, and it will only do business with such operations.
As Sayer puts it, this limits any kind of foreign involvement as there are very few investors looking for a return that has been diluted by 51 percent.
The bottom line – no black economic empowerment, no ACSA deals.
A question of quality
One of the primary disadvantages of out of home is its reliance on the quality of creative execution advertised thereon, says Piccione.
If the execution is not effective, the medium is labelled as ineffective by advertisers. In addition, the lack of measurability of outdoor campaigns often results in advertisers opting for more measurable mediums such as radio and television.
Add to this the high levels of competition amongst outdoor media owners to secure prime locations, and the proliferation of new structures in high demand areas potentially results in over-trading and clutter, thereby devaluing the medium.
Another middle man added
Another hot button in the out of home sector currently is something that bugs most media owners the so-called agency commission. Like a plane leaving an airport, it seems to be set on climbing. Now theres the addition of a new phenomenon the poster specialist.
Another hot button in the out of home sector currently is something that bugs most media owners the so-called agency commission. Like a plane leaving an airport, it seems to be set on climbing. Now theres the addition of a new phenomenon the poster specialist.
This creation aims at introducing another level to the out of home media sector another middle person which undertakes to oversee the buying, servicing and standards of all out of home media placement
A good thing? Possibly. So long as you are not an out of home media owner. If you are, then you would be expected to add another 5 percent or so to the commission you pay the agency. Total now 20.5 percent.
So the agency gets a net 21.5 percent, and the media owner is another 5 percent down on the margin. Sayer wants to know why the media owners should be forced to use this new service.
Why should we entertain the hiked agency commission? We should only pay for the service we use.
Added to irk the out of home media, agencies have started charging fees and supposedly pass back the commission to clients, so clients benefit.
Sayer is advocating that the media owners go back to the rate card, charging a net rate so the client pays less.
In this way the client will begin to pay only for the services they require. They want creative, they pay for it, they want media planning, they pay for that.
Historically, the commission rate was based on the internationally accepted norm of 15 percent, while SA added an additional 1.5 percent because of the production costs of producing material in a multiplicity of languages.
Thats all become a joke as modern technology means that agencies no longer require large articulated trucks to deliver material, much less CD ROMs and stiffy discs, says Sayer.
Out of site out of mind?
Industry sources are also seeing a more aggressive approach to site acquisition.
Most of the media owners are throwing more legal advice and money at their site acquisition requests, tenders and applications. The question is whether the local councils will have the firepower, or in fact the inclination, to oppose or defend aggressive applications.
In truth, the legal brains are finding the gaps in local council rules and regulations and exploiting these so-called opportunities.
Some industry players are calling for more education and a responsible approach, through debate between the media owners and the local authorities. A reasonable balance is needed, says Sayer. We need to be supportive of the authorities. We shouldnt be party to the system breaking down. Big business must give back and be supportive. After all, we all live here.
And now to the future
Technology is playing a much bigger in this sector. It is conceivable that campaigns, creative and bookings could happen at a central location – instructions could be beamed to specific sites that display and run a campaign, with the creative changing on LEDs on instruction.
The days of the ‘bakkie’ are fast diminishing and in a few years we could well see advertising material beamed onto motor vehicle windscreens, via roadside beacons.
Piccione says that future prospects are promising as continued media fragmentation results in an increasing number of advertisers turning to outdoor as a more cost-effective means of reaching broad target audiences.
And the National Roads process continues to gain momentum, resulting in an increased number of opportunities for advertisers to reach new markets, and to grow the physical inventory of media owners.
Further, the implementation of a pilot study on outdoor audience measurement by SAARF holds positive prospects for the medium in terms of its ability to compete with above-the-line media.
But back in the real world of Africa, the medium is coming of age as clients use this avenue to convey messages to target markets across the spectrum from business people on daily business outings, to children in deep rural areas coming to grips with social issues.