Out-of-home advertising, long considered a backwater on Madison Ave., is getting tougher to ignore as it branches out beyond the old-fashioned billboard.
New technologies are transforming out-of-home ads, a sector which includes roadside billboards, ads on buses and trains and now even coasters in bars. As advertisers find it harder to reach consumers through television and radio, the increasing array of out-of-home ads is looking more attractive.
In a sign of growing interest in the medium, the out-of-home media-buying units of Mediaedge:cia and MindShare, both part of WPP Group, this week began sharing Manhattan offices with Poster Publicity, a leading international player in outdoor advertising. The firms are part of a joint venture called Kinetic formed earlier this year by WPP and Poster aimed at grabbing a bigger share of the global out-of-home business. The venture has been up and running in London since June and is billing itself as the largest out-of-home company in North America.
"The business has changed dramatically," says John Miller, formerly the managing partner for out-of-home advertising at Mediaedge:cia who is heading the North American operations of Kinetic. Mr. Miller entered the advertising business as an outdoor specialist in 1965, when roadside billboards were the primary option offered advertisers in the out-of-home segment. He counts at least 200 out-of-home formats in use today.
In May, the advertising agency R/GA helped create an interactive display for Nike on a 23-story digital billboard in Times Square. Passersby could temporarily control the billboard and design their own shoes on the huge screen by communicating through their cellphones. "Now it's very practical to think about outdoor almost exactly as you think about online," says John Mayo-Smith, vice president of technology at R/GA.
Advertisers are trying all sorts of new venues. Starcom USA, a Publicis Groupe unit, is in talks with city officials in Chicago about attaching ads to manhole covers to promote a local museum exhibit that features a German submarine. "The world is our canvas," says Jack Sullivan, the out-of-home media director at Starcom.
As a result, outdoor advertising is growing faster than most other media segments. TNS Media Intelligence estimates that outdoor-ad spending made up only 2.3% of the overall advertising pie in 2004. TNS forecasts that the segment itself will expand 5.5% this year, a faster clip than newspapers, network TV and radio. Industry executives see out-of-home as one of the hottest advertising media this year, according to a recent survey by the American Association of Advertising Agencies, behind only online and the placement of brands within entertainment programming.
New York City's packed streets could see even more advertising before too long. Officials plan in the next few weeks to award an outdoor-advertising company a 20-year contract to put ads on the city's newsstands, bus shelters and public toilets. Some have estimated the deal could generate $1 billion in ad revenue.
Through Kinetic, WPP and Poster hope to get a bigger share of the fast-growing genre. Kinetic will have 50 employees spread across offices in New York, Miami and the West Coast by year's end. Eventually Kinetic will have a global staff of more than 300 professionals in 35 countries.
"We'll be able to develop international campaigns with our global clients," says Mr. Miller, adding that Kinetic expects its billings in New York to be around $350 million in its first year and $2 billion globally.
Mike Esterl, The Wall Street Journal. July 21, 2005
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