• Jeremy Male on a changing sales model, the economics of digital conversions and Google and Facebook as competitors

    Jeremy Male appeared last month at the Bernstein Future of Media conference.  Here are the highlights.

    On a changing sales model

    We used to be sign sellers whereas now we engage with local advertisers in a much broader way.  We talk about how out of home is going to work with mobile.  So we can sell mobile overlays onto their out of home campaign through geofencing.  We talk about social.  We have a social influencer product and talk about how we can maximize their campaign on social…It’s been one of the reason local is growing so well for us.

    On Outfront’s liveboards

    They’re like ipads on a wall.  That’s what they do…

    On the economics of a digital billboard conversion

    When we convert a billboard from static to digital we typically get around 4x revenue from that billboard…We may have 2X rent…When you factor in the $250,000 cost to convert we will get great IRR’s.  We don’t do anything unless its going to be better than a 20% IRR.

    What about the business cycle?

    Look back at the crisis of 2008-2009.  GDP back 5%…We saw a 15% setback in media as a whole.  Out of home was not dissimilar.  And there was a two year snapback…As we look forward…we’ve got an out of home industry that is outpacing the growth of other media.  So that even if we see a step down out of home could still potentially grow…One of the things that does support out of home…is local…and quite a large part of that local advertising has been with us a long time…so we have that base of business which is very solid…it’s really the national piece which is at risk in a downturn.

    On mergers.

    Ourselves and Lamar are both low 20’s in terms of market share, Clear Channel is 20-ish, maybe a little bit less than that, JCDecaux is at around 4%…the balance…is in a very long tail of players…The DOJ have always had quite an interest in this industry which is misplaced given that we are talking about only 4% of ad spending.  It seems nuts to me.

    Has Outfront thought about partnering with Google or Facebook to sell digital billboard ad space?

    We’ve had discussions along with way with both…Ultimately I believe we should control our own destiny in terms of our platform.  I’m not saying I want…my media traded by my most significant competitor…What is interesting is that two of the most data led businesses in the world are significant over-users of out of home…That says something about how they use their data to understand the benefit of utilizing out medium.

    Insider’s take:

    Agree 100% with Male that it makes no sense to partner with Google and Facebook to sell digital billboard ad space.  That’s a great way to lose control of your pricing and client relationships.


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