Outdoor Spending Plummets 15%
16 march 2009 | 18:19
After strong growth through most of this decade, the outdoor advertising industry couldn't escape the effects of the worst economic downturn in decades, with revenue tumbling 15% in the fourth quarter of 2008, according to figures released by the Outdoor Advertising Association of America. The fourth quarter dragged down outdoor revenues for the year, which sank 4% to $7 billion.
During the last quarter, outdoor's performance was a little worse than radio--which fell 11% in the fourth quarter, but fared better in the year overall compared with a 9% drop in radio revenues. What's more, outdoor's overall results are cushioned somewhat by six years of gains before the downturn hit: from 2001-2007, total outdoor advertising revenues rose 40%, from $5.2 billion to $7.3 billion. By contrast, in the same period radio grew 8%, from $17.9 billion to $19.2 billion--and it was already declining in 2007 with a 2% drop.
Nonetheless, the fourth quarter's results are unambiguous: the happy times for the outdoor advertising industry have ended, at least for the time being. The industry's woes were evident in OAAA's decision in mid-February to cancel the upcoming out-of-home advertising convention, originally scheduled for May 17-19 in Miami.
And while the expansion of new digital platforms promises long-term growth, the next year looks fairly grim, given the wide-ranging retrenchment in local advertising, the medium's bread and butter. A recent forecast from BIA Advisory Services has local advertising revenue sinking by 1.4% a year through 2013; according to the same forecast, local revenues in traditional media are set to fall even further, with a total 21% decline between 2009-2013.
Out-of-home advertising industry revenue fell 4 percent in 2008, accounting for $7.0 billion in advertising revenue and performing better than the overall ad industry. In the fourth quarter of the year, out-of-home fell 15 percent, accounting for $1.5 billion in total advertising expenditures.
"The outdoor advertising industry performed better than most traditional ad segments in 2008", said Stephen Freitas, chief marketing officer for the Outdoor Advertising Association of America. "Out-of-home advertising is well-positioned for the new year, even in the midst of the recession. Advertisers are looking for ways to reach highly mobile consumers, and out-of-home provides the most effective and cost-efficient way to do so."
Consumers continue to spend most of their waking hours in the out-of-home space, exposing them to out-of-home advertising. As other media fragment, outdoor advertising remains one of the best values in advertising, providing highly targeted marketing at a very low cost per thousand.
"The fundamentals of the outdoor advertising industry are strong," said OAAA President and CEO Nancy Fletcher. "Historically, the industry comes out of recessions stronger than before and it is well-positioned to do the same after this recession."
OAAA issues full industry revenue estimates that include--but are not limited to--Miller Kaplan, TNS data on out of home, member company affidavits, and media projections based on a mix of recognized nationally syndicated data sources. Revenue estimates include billboard, street furniture, transit, and alternative out-of-home media spending.