• by Erik Sass , May 4, 2006

Outdoor ad spending rose 11.4 percent in March, making it the fastest growing major ad medium next to the Internet, according to estimates released Wednesday by the Outdoor Advertising Association of America. Overall first-quarter revenue grew 7.7 percent compared to the first three months of 2005, suggesting that revenue growth is accelerating as the year goes on.

According to Stephen Freitas, this acceleration is due in part to seasonal variations that have traditionally governed the outdoor industry, which usually sees a dip in spending during the winter months. This means summer could see even more expansion, Freitas explained: "January tends to be the slowest time, and summer tends to be the real boom period."

But the industry itself is also experiencing a long-term expansion, as reflected in the year-on-year growth. "Brands are investing more heavily than we anticipated," Freitas explained: "I think we're starting to see an acceleration in ad dollars moving from other traditional media to out-of-home." Asked why this might be so, Freitas mused: "I think there continues to be uncertainty concerning the future vitality of other media formats, and there's a lot of interest in using out-of-home to reach consumers when they're 'on the go.'"

Beth Gray, of Foote, Cone & Belding, said she's seen an uptick in outdoor ad spending too--pointing to the advent of new technologies, including digital billboards, as a way to "cut through the clutter." "I believe it--especially because in some markets people are buying and creating premium outdoor ads, not just regular 30-sheets. You can just look in Times Square--people are really starting to get into LED displays, and it's driven by the desire to create something that's truly impactful."

Freitas echoed Gray's observation, noting that while the digital billboards "segment is still relatively small, the outdoor companies are being very aggressive." According to Freitas: "A lot of outdoor companies are telling us that even before a sign is built, it's sold out more than a year in advance." By allowing advertisers to display multiple advertising faces, he went on, the digital billboards can boost revenue substantially.

Finally, Freitas noted a push for increased transparency and accountability in the outdoor market: "There's new methods for 'proof of performance,' where advertisers can go in real time and see exactly what kind of delivery they're getting. So all this granular information is readily available at the advertisers' fingertips."