Can you identify which industry I am? Here are your clues…
- You’ll see me in your local café, street or airport
- More and more companies are embracing me
- I am everywhere, you can’t avoid looking at my assets
- I am continually taking share off traditional players
- I am constantly changing…….or remaining static
- My market is growing at over +15% per annum
…..I am the Out-of-home media industry.
Last week, the Outdoor Media Association (OMA) which collects data on the Out-of-home industry (OOH), released its latest figures ending 31 May 2016. It showed the OOH industry has grown +21% year-to-date, after recording +18% growth in the 2015 calendar year and +11% in the 2014 year.
To put this in contrast, traditional media has actually been flat to declining as it struggles to maintain audiences. Television revenues have fallen -3% so far this calendar year and print revenues have fallen -13% for the same period.
So why is there such aggressive growth in the OOH industry?
Industry players such as Ooh! Media (OML) and APN Outdoor (APO) are pioneering the OOH market. Both are going through a digitalisation phase, whereby they are converting static billboards to digital ones. This creates a revenue uplift of three to four times, as it allows more instantaneous and recurring advertisements which were previously unachievable with the static format.
This digitalisation has also opened up the OOH market to new entrants and more instantaneous advertising campaigns. For example, when there is an interest rate change, banks can have billboards across Australia and New Zealand stating their new rates within seconds. Previously this was not possible, as a static advertisement took a lot longer to implement. This allows the OOH industry to access more revenue from the total advertising pie. But penetration is still very low, at around 4% of the total advertising pie. This compares to more mature markets, such as United Kingdom at 7% and France at 12%.
APO and OML have also both performed particularly well since listing approximately 18 months ago, with both company’s share prices up over +250%!
However, industries like this with strong structural growth become increasingly attractive to new entrants. These two dominant players will have to ensure they continue to lock in key sites, establish long-term relationships with landlords and continually innovate their digital offering to attract new customers.
Disclosure of interest: Milford Funds Ltd. holds shares in Ooh! Media and APN Outdoor on behalf of clients.
Disclaimer: This is intended to provide general information only. It does not take into account your investment needs or personal circumstances and so is not intended to be viewed as investment or financial advice. Should you require financial advice you should always speak to an Authorised Financial Adviser.