• by Erik Sass  @eriksass1, August 2, 2006

The outdoor advertising industry is booming. It continued its dynamic growth in June, according to figures released Monday by the Outdoor Advertising Association of America (OAAA), which noted an 8.9 percent rise in revenue in June, compared to the same month last year. This represents a steep rise from May's year-over-year growth rate of 4.4 percent--an increase that reflects seasonal shifts as well as the industry's long-term growth. Overall, revenue for the first half of the year grew 8.2 percent, compared to the first half of 2005--topping $3.2 billion. The OAAA is forecasting an overall annual growth rate of 8 percent or more.

This would be an especially impressive accomplishment, since outdoor ad revenue's growth was brisk in 2005 and accelerated as the year progressed. After a slow start, with revenue for first-quarter 2005 increasing only 2.9 percent over first-quarter 2004, the industry surged to 7.9 percent total growth in the first three quarters--including a remarkable 10 percent growth rate in the third quarter. If the industry matches its 8 percent overall annual growth rate in 2005, 2006 revenue could top $6.8 billion by year's-end.

This rise was due, in part, to entertainment advertising--including movie and TV promotions, as well as heavy competition between telecommunications providers, says Stephen Freitas, CMO for the OAAA. "Brands are investing more heavily than we anticipated. We're starting to see an acceleration in ad dollars moving from other traditional media to out-of-home." Why the shift? He thinks there is continued uncertainty about the future vitality of other media formats. In addition, there is "a lot of interest in using out-of-home to reach consumers when they're on the go."

Beth Gray, of Foote, Cone & Belding, says she's seen an uptick in outdoor ad spending--pointing to the advent of new technologies, including digital billboards, as a way to cut through the clutter. "You can just look in Times Square. People are starting to get into LED displays, and it's driven by the desire to create something impactful."

Freitas echoes Gray's observation, noting that while the digital billboards segment is still relatively small, outdoor companies are being very aggressive. "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," he says. By allowing advertisers to display multiple advertising faces, the digital billboards can substantially boost revenue.

Finally, Freitas notes 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." The OAAA also recently partnered with Spot Buy Spot to create an XML schema that enables online trading between different types of software and proprietary systems.