Outdoor Continues To Build, Surges 8.2% In First Half

The outdoor ad industry continued its meteoric growth in the first half of 2006. Total revenue expanded 8.2 percent over the same period in 2005 to top $3.5 billion, in line with forecasts from trade organization Outdoor Advertising Association of America. If the industry matches its 8 percent overall annual growth rate in 2005, 2006 revenue could top $6.8 billion by year's end.

The rise has been 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? Freitas credits continued uncertainty about the future vitality of other media formats. Plus, there is a lot of interest "in using out-of-home to reach consumers when they're on the go."

In addition, advertisers are showing special interest in new outdoor ad technologies, including digital signage. Freitas says that while the digital billboard segment is still relatively small, outdoor companies are aggressive: "A lot of outdoor companies tell us that even before a sign is built, it's sold out more than a year in advance." By allowing advertisers to display multiple ad faces, these digital billboards can substantially boost revenue. They charge premium prices for certain dayparts--like heavy commuting hours.

Clear Channel Outdoor is also expanding the field.

The company is pushing the envelope with a new technology that allows users to shrink outdoor digital signage to a fraction of the size and power consumption of existing electronic systems. According to Paul Meyer, CEO of Clear Channel Outdoor's global operations, the new technology, called Magink, is currently being tested in a few locations in Europe by Clear Channel Outdoor and European competitor JCDecaux. Although Magink still hasn't showed up on outdoor's bottom line, the new tech could enhance the outdoor boom.

In the Magink system, small plastic tiles are smeared with a specially formulated paste containing helix-shaped molecules one micron long. When exposed to an electrical charge, these molecules move in regular, predictable patterns--which can be calibrated to respond precisely to different wavelengths of light, forming colors and shapes. By varying the electrical input, Magink displays can be changed to showcase myriad images.

Another long-term factor that will sustain the outdoor boom is the desire for increased transparency and accountability in the outdoor market. Freitas says there are "new methods for proof of performance, in which advertisers can see exactly what kind of delivery they're getting in real time." 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.

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