• by Erik Sass  @eriksass1, December 28, 2006

2006 was a banner year for outdoor ads. The last quarter of the year saw several big moves in the industry, including the awarding of the country's most valuable municipal mass-transit contracts and a new state law to substantially reduce outdoor signage--which could become a model for copycat legislation by other states. Outside the United States, however, the second-largest city in the world--São Paulo, Brazil--passed even more drastic legislation banning outdoor advertising altogether.

First, the good news. In the first half of December, New York City awarded big advertising contracts to two companies: Titan and Van Wagner Communications.

Titan's 10-year, $823 million contract will allow it to sell ads on commuter railroads under the control of the Metropolitan Transportation Authority (MTA), including the Long Island and Metro-North Railroads, as well as New York City Transit (NYCT) and MTA buses. Van Wagner's 10-year contract covers all of NYCT's outdoor billboard advertising, giving it control of over 300 billboards around the city.

CBS is holding onto the key NYCT subway advertising contract, for which the company is installing new LED screens. The screens will boost revenue by allowing multiple ad displays. It could be especially lucrative if CBS sells ads by dayparts, calibrating prices to different levels of commuter traffic over the course of the day.

Although the loss of other New York City contracts is a definite setback, CBS Outdoor also scored a huge victory overseas when it won a contract to sell ads on the London subway system--one of the world's largest and most heavily trafficked.

Also in New York, Spanish outdoor firm Cemusa revealed the first of its new bus shelters, which it designed as part of a 20-year contract to install a comprehensive system of street furniture for the city. The contract includes 3,300 new bus shelters, 330 newsstands and 20 public toilets. The City of New York expects street furniture advertising to generate about $1.4 billion of revenue over two decades.

On its home turf, Cemusa is partnering with Clear Channel Outdoor on a big municipal contract tendered by the city of Madrid, Spain. In a 50-50 joint venture, the two companies will be responsible for management of Madrid's billboards and street furniture. Among the 600 ad faces included in the contract are Spain's first digital LED advertising displays.

Now brace for the bad news.

Initiatives to limit outdoor advertising are percolating both at home and abroad, including a state law already passed in Michigan and a sweeping ban being considered in São Paulo, Brazil.

The Michigan law bans any new permits for billboards along roads and highways; the goal is to clear away clutter and showcase natural beauty. Outdoor advertisers incurred the wrath of Michigan's lawmakers by populating roadsides with billboards that were not subsequently maintained.

The new law also requires billboard owners to maintain all 14,000 roadside billboards. Companies that were granted contracts to build new billboards before the law was passed have one year to do so.

There is some concern that Michigan's ordinance may spread to other U.S. cities.

But Michigan's new law is mild compared to legislation being considered in São Paulo. The government of the city, which has 11 million inhabitants, has vowed to clear the city of every last piece of outdoor advertising--period. That includes 13,000 billboards, as well as neon signs and electronic message boards. Even flier distribution and banners towed by airplanes will be banned.

Brazilian business advocates are lobbying furiously against the law, but their arguments for free speech and the city's economic health appear to be falling on deaf ears. A large part of the city's motivation is a desire to crack down on thousands of illegal billboards, which are often unsightly.

There is precedent for São Paulo's initiative.

Brazil has a history of sweeping urban planning through government intervention. Its capital, Brasilia, is one of the largest planned cities in the world--covering almost 1,500 acres and built in just four years, between 1956 and 1960. Brasilia, however, is a cautionary tale.

Urban planners have criticized the city's monumental scale, describing it as "totalitarian" and "inhuman," and insisting that its transportation setup discourages pedestrian movement and the use of public spaces. A common complaint is that Brasilia's planners did not allow organic growth or signs of life, like colorful signage--a dubious achievement that São Paulo seems set on reproducing.