Out of home won’t be immune from the next recession.

Insider thinks the US economy is probably headed for a recession within the next couple years.  Take a look at this chart of out of US out of home advertising revenues.  Insider has highlighted the recession years in yellow.  Looks like we’re about due.

Out of home advertising is cyclical and declines faster than the economy during a recession.  When a company is retrenching the first thing that gets pulled is feel-good brand advertising.  The data shows that during the last three recessions, US out of home revenues declined by 2-3 times as much as the economy.  In other words if GDP shrinks by 1%, out of home revenues will shrink by 2-3%.

Change in US GDP versus Change in US Out of Home Revenues During Past Three Recessions

Your out of home revenues will be less volatile during a recession if they are concentrated in location based, local advertising.  Your out of home revenues will be more volatile during a recession if they are concentrated in national, agency-driven brand advertising.

What does this mean for your out of home company?  Prudence is the word.  Don’t do anything crazy.  Get your financial house in order.  A little rain never hurts as long as the roof doesn’t leak.


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