Lamar CEO Sean Reilly was upbeat about the out of home industry at last week’s Goldman Sachs Communicopia Conference.
On industry prospects
First of all you’ve got an industry that’s in the best place I’ve seen it and I’ve been doing this a long time. The other two big companies in the industry are hitting their stride…It’s true that the large markets are doing better than the smaller markets…but I’ve been doing this for a long time. That ebbs and flows…Increasingly our customers are using our big digital screens to augment what they are doing on the little screens…they can use geofencing…they can use whats ending on their facebook twitter or webpage…to inform what goes on the big screen…That’s what’s going on…
The streaming wars are an opportunity for growth
The most fertile ground is going to be the streaming wars…The nature of their digital content is the slicing and dicing of the demographics a little more thinly…
As you slice the demographics more narrowly – let’s say it’s Neflix coming out with a documentary about veterans – they want to have a presence near every army base in the country. Well, that’s a different buy.
On programmatic
This year we made the leap into programmatic. Our traditional channels are tapping into traditional ad budgets. The digital buy has traditionally never looked at us because we don’t speak their language. We spent last year pulling together our pipe so that we could execute…It was a science project last year. It’s a real business this year….I think we’ll do about $12 million in billing and it’s growing every month.
I think we’re gravitating slowly on the way we deploy ad tech. We’re not there now. OUTFRONT has a proprietary black box that they’ve built that has their dat sets and their attribution…I think that’s a valid approach. Clear Channel has a model that’s a little more open. They’ve developed and branded Radar. Our approach has been open architecture, use third party data, pay for it on a campaign by campaign basis.
On digital conversions
We’re going to do as fast as we can. This year was a tad bit slower than we thought, primarily because we did the big Fairway acquisition. …The ROI’s have gotten better because the cost has been coming down. When we started doing this a 14 by 48 digital unit that lasted 7 years and didn’t have the same resolution and used a lot more energy costs $500,000…Today a 14 by 48 – $160,000-170,000, weighs a lot less, uses a lot less electricity has a crisper pictured…but I do think we’ve run the cost down about as much as we can.
The pipeline of M&A
We have cookie cutter fill-in M&A that just happens…most inventory we purchase is going to be fill-in….Year in year out we’ll do $100-120 million of those transactions…we don’t even announce them. We typically bring those in at 10-10.5 our cashflow contribution…
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