It’s fashionable to say that out of home is a GDP plus business – shorthand for out of home is growing faster than the US economy. The numbers don’t support this over the business cycle. Here’s a comparison of nominal US out of home revenues as reported by the OAAA versus the US nominal GDP (e.g. the US economy) since 1990. Some thoughts:
- Out of home revenues have grown faster than US economy in 20 of the past 34 individual years.
- The numbers tell a different story when you look at longer periods. The table below shows that US out of revenues have had a lower compound growth rate for the past 5 year, 10 years, 20 years and 30 years. . The reason out of home growth lags GDP growth is that out of home drops farther and faster than the US economy in a recession and it recovers slower from recessions than the US economy.
Billboard Insider’s take: Out of home is a great business with barriers to entry and limited technology risk but it grows only about 75% as fast at the US economy because it does worse than the US economy during and just after recessions.
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