Consolidation is sometimes necessary and seems to be happening all over the place, including traditional out-of-home with U.K. OOH media company JCDecaux and CBS Outdoor. With the supposed 15.2% growth of DOOH between 2011 and 2016 touted Magna Global, but I find it hard to believe that just because DOOH is digital that it will remain impervious to the pressures on pricing which are affecting the out-of-home advertising sector generally.
“It’s impossible to forecast growth and whether the market will rebound next year, we don’t expect further deterioration in the market but there will be no improvement,” says Jean-Francois Decaux, owner of JCDecaux.
Decaux said TV broadcasters are slashing rates by 50 percent to 60 percent to cope with the decline in advertising amid the recession and the rise of cable TV and the Internet.
“We can gain market share but pricing, especially from TV, is putting a lot of pressure on us to decrease our rates,” Decaux said, adding he expects the company’s performance in the third quarter to be broadly in line with the first half.
Internet advertising will certainly continue to grow, but with consolidations like this for CBS Outdoor should be very good. There has been some talk about the media giant’s failed digital signage network in CBS Outernet. Certainly if the ad dollars don’t start to flow again there will be many hurting DOOH and signage networks out there, looking to find partnerships with similar or larger firms, something that has been happening now since the economy tanked. Frankly, all the shake-out, while it has been difficult for individual firms, has been very good for the industry at large. Out with the old and dying business models and in with those that will be more long-lasting and viable.