Market Watch

Strong Q1 Results for UK Out-of-Home Market



The UK Outdoor Advertising Association (OAA) reported Q1 2010 industry revenues of £204m, a 14.6 per cent year-on-year increase. The billboard and small-format retail segments saw the biggest revenue increases but no specific segment growth figures were provided by the OAA.

Based on Nielsen market monitoring, the Central Office of Information (COI) was the biggest out-of-home (OOH) advertiser with £8m spend in total during the quarter, largely ahead of second ranked McDonalds and BSkyB who invested £3.6m each.

Analysis
The strong Q1 performance for out-of-home (OOH) advertising comes on the back of a 19 per cent decline in Q1 2009. OOH underperformed the overall UK advertising market during 2009 with revenues decreasing by 17 per cent compared to a total market decline of 10 per cent. By contrast, during recovery phases, OOH tends to outperform traditional media growth thanks to a favourable year-on-year comparative effect, and advertisers' eagerness to resume more varied media spend and benefit from low OOH price levels. In the UK, a strong digital OOH sector (DOOH) representing near 10 per cent of total market, will further help this recovery process in 2010.

During the 2009 recession, the out-of-home market hit its lowest point in Q2. Therefore Screen Digest expects an even more favourable comparative effect for Q2 2010. However, the year-on-year growth rate will only moderately exceed the one recorded in Q1 2010. Q1 benefited from one-off political party investments towards electoral campaigns which only the first month of Q2 will have benefited from. Furthermore, the COI's high Q1 investment will not be reflected in Q2 as it was not allowed to advertise for several weeks prior to the general elections in May.

For the second half of 2010, Screen Digest expects OOH advertising growth to slow down due to economic uncertainty as well as drastic COI advertising budget cuts announced by the new coalition government which will negatively affect OOH media as only campaigns deemed "essential" will be authorised. For FY 2010, Screen Digest expects OOH to total high single digit revenue increase.

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