• by Joe Mandese  @mp_joemandese, July 19, 2005

Continuing with its theme that bigger must be better when it comes to media planning and buying, WPP Group is once again consolidating components of its massive media services organization to dominate an important, emerging market. That market, ironically is one of the oldest forms of advertising media - out-of-home - which is expanding rapidly as it becomes infused by new digital technologies, measurement systems and new place-based venues, which have analysts projecting it will be one of the fastest growing sectors over the next several years. Another big driver is the fact that marketers are growing nervous about their ability to deliver ads through conventional electronic media like TV and radio as consumers gain control via new media technologies. By contrast, out-of-home - whether it's on billboards, in cinema, elevators or even retail-based media networks - is looking like a surer bet for reaching "captive" audiences.

That fact has not escaped the major agency holding companies, which have been reinvesting and restructuring their outdoor media assets in an effort to grab share in what is projected to be a rapidly rising market. A report released this week by Publicis' ZenithOptimedia Group, for example, revised overall ad spending downward, but increases the outlook for online digital media and out-of-home. A survey conducted by the American Association of Advertising Agencies earlier this year projected out-of-home would be the hottest ad medium in 2005 - surpassing everything except for online and branded content - among the AAAA's membership.

Those facts apparently have not escaped WPP chief Sir Martin Sorrell, who has been talking up the value and role of out-of-home, and who on Monday announced a restructuring that would combine the outdoor media operations of Mediaedge:cia and MindShare with leading out-of-home media company Poster Publicity to form a new entity: Kinetic.

The new unit, which WPP claims to be the largest in North American and most likely the largest in the world, will be headed by John Miller, a long-time WPP outdoor media vet, who most recently was managing partner for out-of-home media at Mediaedge:cia.

Miller will serve as chairman of Kinetic, while Steve Ridley, former president at Poster Publicity, was named CEO.

With offices in New York and Miami, Kinetic will start with 26 employees and $350 million in billings in North America. By the end of the year, the unit expects to double its size in North America, which ironically is an under-leveraged out-of-home media market.

"In the U.S., it's a 3 percent medium at best," concedes Miller, referring to the percentage of U.S. advertising budgets out-of-home media typically gets. ZenithOptimedia estimates out-of-home currently represents 5.4 percent of ad spending worldwide.

"I think the real question is why is it so big elsewhere. And that might be because other countries have spent the time and money to develop better research about the medium works and because they put better creative resources behind it," says Kinetic's Miller, noting that the U.S. is poised for change.

Among other things, the U.S. is leap-frogging the outdoor media research process. Nielsen Media Research is deploying and Arbitron is researching new methods for measuring the demographic composition of out-of-home media utilizing state-of-the-art global positioning satellite technologies, and the Traffic Audit Bureau is fielding new research on so-called "visually adjusted indexes" (VAI), which advertisers and agencies could use to factor actual exposure to out-of-home ads.

Miller says the U.S. still has a long way to go vis a vis creative services, but he noted that Kinetic has its own creative staff and plans to grow that in an effort to craft better out-of-home advertising messages.

The restructuring is the second major media services reorganization by WPP this year. Earlier, it consolidated the digital interactive and direct marketing operations of its media services agencies into a new consolidated play dubbed Outrider. Some observers expect WPP to consolidate media services further, though it already has Group M, a holding company level unit that oversees all of its operations.

Meanwhile, Miller estimates Kinetics global media billings to be about $2 billion, and projects it will grow by another $1 billion within a year, through a combination of "organic growth," acquisitions and consolidation with other WPP units. That, he says, would make Kinetic the world's largest out-of-home media buyer, surpassing Aegis Group's Posterscope, Omnicom's Outdoor Media Group, Interpublic's Outdoor Services unit, and Publicis' outdoor media operations.