You just can’t keep the billboard industry down. Penetration increases with every Amps survey – from 61% in 2000, to 73% in 2003 (Saarf AMPS 2003A). And each year, there’s more money in the adspend pot – spend on billboards in 2001 was 25% up on 2000, and 2002 was 36% up on 2001 (Nielsen Media Research’s AdEx). It’s easy to see why outdoor people like Primedia Outdoor’s marketing manager, Gary Nicholls, believe the local industry has the potential to double in size, as was seen in the UK market not too long ago.
But can this potential be turned into reality? Because there are two things that just might be able to pin this industry to the mat – unapproved sign erection, and the red tape of council bylaws.
The issue of unapproved signs has been simmering for quite some time and is now finally coming to the boil.
‘The industry is at a crossroads,” says ClearChannel Independent’s group CEO, Barry Sayer. ‘We must choose whether we take on the councils and work around them, or whether we recognise their authority and work with them.”
Most have chosen the latter, but some, notably Ad Outpost, have at times taken the road less travelled. Out of Home Media SA (OHMSA) estimates that Ad Outpost has between 26 and 33 unapproved billboard facings, in direct contravention of the new regulations governing outdoor which came into play on 13 July 2000. Ad Outpost says this is ridiculous, that it has only six in dispute, those on the Ben Schoeman. ‘If an audit was done of all billboards in all company holdings, Ad Outpost would have the least amount of unapproved billboards, by far.”
Says Max de Jong, Ad Outpost’s marketing manager: ‘We believe we have the right to apply for sites, and the right to advertise, guaranteed by the constitution. We go through councils and get permission, but we do play it close to the line, because we feel we need to challenge the laws. If council turns us down, we don’t just accept it lying down.”
De Jong explains that the sites at the centre of the controversy were erected before the NRA had come up with its policy on billboards facing the N-marked highways. After getting landlord and council approval, Ad Outpost went ahead with its signs.
‘When the NRA saw the signs, it then decided to object, so we proceeded with litigation,” says De Jong. ‘The NRA has since acknowledged the merits of our case against them, but we can’t get official approval until the litigation is over. Once we reach a settlement, however, it will be a victory for the entire industry, because we will have rewritten the laws.”
But that’s not enough to placate those operators who abide by the regulations.
‘Outdoor companies could all just ignore the government’s bylaws, and tie up councils for years in court while they raked in illegal revenue. But it would spell chaos and disaster for the industry,” says OHMSA executive director, Les Holley.
It could also spell chaos for clients, who could find themselves dragged into the fray, ending up in court alongside the offending operators. De Jong believes that clients are indemnified from action, and should not be involved. Yet already letters have been sent out from authorities to advertisers who’re supporting unapproved sites.
‘Clients using unapproved billboards are complicit, and action could be taken against them in terms of the regulations,” says Holley. Sayer says there is a long list of advertisers willing to funnel money onto unapproved signs, encouraging these practices. ‘This is no way to act. Companies should be standing up against this, and supporting the government and its sub-structures.”
Starcom MD Gordon Patterson warns that if allowed to continue, unapproved sign erection will result in municipalities introducing more rigid policies, which will strangle any growth and may even result in an outright ban of out-of-home advertising in certain areas.
And more rigid policies are in no-one’s best interests. Already many local councils’ bylaws are seen as draconian, putting the industry into such a headlock that it seems almost understandable why unapproved billboard erection is growing. ‘The red tape of legislation, and the months needed to get applications approved, create an environment which only encourages unapproved sites,” says Holley.
Nail Outdoor’s CEO, Tom Kretzschmar, points out that while some councils are highly co-operative, others are going overboard. ‘They will end up closing down this industry if they continue in this vein.”
It’s particularly bad in places like Durban and Cape Town. John Winton, marketing and operations director of Outdoor Network, says that while the Durban council will still approve the odd application in areas of minimal control (commercial and industrial areas), other keys areas such as the old townships have been off limits to billboards for the past four years. ‘No advertising is permitted until the council has completed its area surveys. The problem is they don’t have the personnel to speedily expedite the process,” he says.
The Durban industry is also very disappointed that council went about drawing up its new policy on outdoor advertising without consulting operators. ‘Had they asked for our input from the get go, we could have short-circuited the inevitable problems then and there, saving council a lot of hassle in the future,” says Winton.
As for Cape Town, it is impossible to put up financially viable free-standing structures outside of industrial areas.
‘Cape Town is so over-regulated that the growth of our local industry is stifled,” says Brent Dyssell, managing director of Amatuba Independent Outdoor Media. ‘At an official level at Cape Town Council, we’re dealing fundamentally with environmentalists, which results in an imbalance between environmental and economic imperatives which are key to our business. Without this balance, we’re left with little room for further growth.”
Debbie Evans of Cape Town’s Environmental Control Section, which handles the applications for billboards in the Mother City, explains that much of Cape Town, including the CBD, is an urban conservation area, “so we are justifiably concerned about the impact of signs on the environment. Some members of the industry believe our bylaws are restrictive, but there is wide consensus that we need to seek to strike a balance between outdoor advertising opportunities and economic development on the one hand, and the conservation of visual, tourist, traffic safety, environmental and heritage characteristics on the other.”
Holley notes that many local councils do appear to be anti the medium, despite the benefits which they could be enjoying by working with the operators. If sites are granted on council land, councils can earn around 25% of the site’s gross revenue each month.
‘We’re not looking to make as much money as we can though,” says Evans. ‘We’re looking for the smallest sign with the most public benefit.”
But Dyssell questions this, raising his longstanding concern over the continued bias that Cape Town’s Environmental Control Section exercises between first party and third party content signage types. ‘If a so-called first party content advertiser puts up a sign on its own premises, it pays a minimal fee for rights, granted in perpetuity. But if we want to put up a third party content sign on the same premises, we’re charged a heavier application and approval fee, for which we would only get exposure rights for a limited five year period, if at all.
‘If it’s not about the money, then explain this discrepancy. It’s unconstitutional to have different sets of rules for signs, depending on who’s putting them up. The decision to grant approval should only be about safety and size. It should have nothing to do with the visual content.”
Dyssell is not alone in his frustration with certain council bylaws. Such exasperation can be found throughout the industry. Operators all agree that there is a need for such regulations, because as Nicholls points out, ‘the industry isn’t cohesive enough to regulate itself in terms of where to put up sites. Without regulations, there’d be a total free-for-all.”
But it’s not hard to see why, in the face of such restrictions and the frustrations of waiting months for a council decision, some companies have simply circumvented the law.
And others, it is rumoured, resort to bribery to get the sites they need, though the big companies say this is sour grapes from disgruntled companies who didn’t think up the proposal first. Not even bribery is greasing the wheels of this industry.
All things considered then, how close to saturation are we? Is there a crunch coming for the users of billboards, when demand will so outstrip supply that they will be held to ransom by billboard owners?
‘In the old days, when there weren’t many boards, companies did put you over a barrel,” recalls Virginia Hollis, director of The MediaShop. ‘You signed up for five years or you couldn’t get into outdoor. But it’s not like that anymore. Prime sites have not been priced out of hand, despite the demand for them. Operators also don’t play one advertiser off against the other in a bidding war for sites. It’s simply first come, first served.”
This table, with costs supplied by The MediaShop, shows just how cost-effective billboards have remained despite demand.
[INSERT Costing analysis.doc]
It’s also still relatively easy to get signs. ‘As long as you don’t want a site overnight, and are prepared to wait a bit, you won’t have problems getting space,” says Sue Walker, connections director of TBWA Hunt Lascaris. ‘Even on big accounts like the SABC and the ANC election campaign, we got a large number of sites fairly easily, in the right places. Granted, they weren’t supersigns, because there is huge demand for the really big prime sites—most advertisers buy into them for years so they seldom come up for rental. But on the whole, our needs are met.”
Major players feel that despite the obstacles, they will continue to be able to meet these needs. ‘We’re nowhere near saturation,” says Kretzschmar. ‘With new development happening all the time, the prospects for growth are good. Markets aren’t static, so areas which aren’t important now in terms of billboards could become so in the future. And as new advertisers enter the medium, they may need to reach different audiences, who we can then provide.”
Sayer says that already a new group of advertisers is moving into the medium, attracted by the shorter term contracts, smart backlit structures and high-quality production of some of the new smaller format signs.
‘Outdoor was traditionally the beer and tobacco medium, but now we’re getting the so-called ‘magazine’ brands like fragrances, cosmetics and watches, who’re allocating spend to billboards for the first time.”
Yet De Jong believes that despite this optimism, municipality red tape and increased competition for sites will eventually see the industry reaching a glass ceiling, he reckons as soon as 2005. ‘Big development is a long-term thing, and won’t see the industry grow in the short term. Instead, we will have to grow through innovation. Innovation, not position, will secure this industry.”
So whether through organic growth of sites, or through using existing sites in a more lucrative way, most outdoor operators don’t feel they will run out of opportunities any time soon. Advertisers will still be able to secure their place in the sun. And, with OHMSA sharpening its teeth as it gears up to enforce the regulations, soon that place should be a legal one.