IN DEPTH: Green shoots in outdoor, but U.S. lags
First-quarter financials from the big out-of-home operators show a broadly similar picture of a switched-off U.S. outdoor market failing to display the modest signs of recovery seen elsewhere in the world.
The best quarter was enjoyed by JCDecaux, which recorded 14.7 percent revenue growth compared with the same period last year, driven by recovery in outdoor advertising in its home territory France and, particularly, the UK. Total revenue was €487.2m ($616.2m).
Revenue from billboards grew 5.3 percent and accounted for about a fifth of the total, while street furniture’s contribution soared by 23.5 percent. Transport gained 8.1 percent, although JCDecaux’s advances in this market were fuelled by the U.S. and Asia, with European revenue from transport advertising continuing to fall.
It appears likely that JCDecaux’s British business will maintain its momentum. In January the firm bought Titan Outdoor, and earlier this month it once again secured the advertising contract for London’s Heathrow Airport as well as the Heathrow Express rail service and three Scottish airports in Aberdeen, Edinburgh and Glasgow. Airports operator BAA handed only two of its sites to smaller out-of-home rivals.
At CBS Outdoor in the U.S., revenue rose 3.2 percent to $392.2m, although in constant-dollar terms – which exclude the effects of price inflation – there was a one percent decline.
The North and South American markets were up one percent in actual dollars but down two percent in constant dollars; Europe drove most of the growth – or in constant-dollar terms minimised the loss – with a seven percent increase in actual dollar revenues, or one percent in constant dollars.
At fellow U.S. giant Clear Channel Outdoor, meanwhile, revenue grew five percent to $608.8m, although most of that growth was attributable to foreign-exchange variations. The firm cut its net loss nearly in half.
Revenue was essentially static in the Americas, but up about eight percent internationally – where nearly two thirds of Clear Channel Outdoor’s business is done – although again that apparent growth was largely down to forex.
Within the U.S., Clear Channel Outdoor did cite digital displays as having a positive effect on revenue; it now has 485 of them, including 28 installed during the first quarter.
And internationally the firm, like JCDecaux, found the British billboard market performing strongly.
Revenue at Lamar Advertising, another big player in the U.S. out-of-home sector but one which unlike its counterparts does not have extensive overseas operations to compensate for problems in the domestic market, was down 1.3 percent to $244.1m.
However, the company did manage to nearly triple operating income and is optimistic for the second quarter, expecting growth of around two percent.
It has substantially cut its digital-billboard expansion programme since last year – spending $1.7m on them in the first quarter of 2010, against $4.3m in the same period of 2009 – but it is still investing slightly more in digital than in conventional billboards.
And there may be a good omen for U.S. digital out-of-home operators like CBS, Clear Channel and Lamar in a recent Florida decision. Across the sector, development plans have been stymied not only by the economic downturn, but also by local jurisdictions’ resistance to the digitisation of billboard sites.
Yet the city council in Tampa, Florida, bucked recent trends to denying permission for digital billboards when it gave preliminary approval to plans by Clear Channel Outdoor and CBS Outdoor to erect the signs. Although the hurdle of a final vote is still to come, they appear likely to get the go-ahead for six digital billboards each in Tampa.
Down, but not out
Also filing results was U.S. digital-signage systems supplier Wireless Ronin Technologies, which put a brave face on what superficially appeared to be weakening first-quarter financials.
Listed on the NASDAQ market with the ticker symbol RNIN, the firm recorded revenue down 25 percent to $1.1m compared with the same quarter a year ago, saying it was “primarily the result of fewer digital-signage deployments”.
But Wireless Ronin added that it had received about another $1.1m in purchase orders not reflected in that figure. And it appeared confident of continuing business with Chrysler, for which it is building a showroom network, and Yum! Brands, for which it has completed ten pilot digital menu boards in branches of KFC and Taco Bell.
President and COO Scott Koller said his company was “lay[ing] the groundwork for a large-scale digital menu board initiative” for Yum!’s KFC, and has now installed a thousand digital menu boards for a range of food-service customers.
He will undoubtedly be hoping that the Obama administration’s introduction of rules compelling fast-food restaurants to display nutritional information will bring about chain-wide orders.
www.cbsoutdoor.com
www.clearchanneloutdoor.com
www.jcdecaux.com
www.lamar.com
www.wirelessronin.com
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