oOh!Media’s sees further growth ahead in a rising outdoor media advertising market, helped by strong bookings from media agencies.
The out-of-home (OOH) media group told a briefing of market analysts that bookings direct from brands are more “sensitive” to economic shocks.
“In a short-term market, it's very hard to predict which way it will turn,” Cathy O’Connor told the briefing on results for the June half.
“We're seeing both improve, but certainly agency is driving the recovery into Q3.”
The company is enjoying the fair winds from the OOH sector’s reported revenue growth in the first half of 11.9% with digital revenue continuing to drive sector growth.
OOH captured 14% of agency media spend, passing the same six months in pre-COVID 2019 peak of 13.7%.
Outdoor was also the fastest growing agency media segment, with growth of 14.7% compared to a 4.2% decline for total advertising agency spend for the industry.
Revenue momentum appears on oOh!’s side.
The company reported revenue up 7% to $296.6 million for the half year to the end of June.
And the last two months of that, May and June, had “strong double-digit sales growth”.
While the advertising market is still volatile there was a strengthening of performance in the June quarter.
And in The September quarter, media revenue is currently pacing up 7% on the the same three months in 2022.
Also ahead is the impact from three new contracts -- Sydney Metro, Sydney Metro Martin Place Station and Woollahra Council -- representing about $30 million in annualised revenue from mid 2024.
“These contracts, including also provide significantly enhanced coverage across the key Sydney CBD and inner metropolitan market to deliver network advertising solutions for our customers,” says O’Connor.
And oOh! is active in talks with commercial partners on renewing key concessions.
“While there has been no material change in status for leases expiring in CY23 since our last update in February, we continue to have positive active dialogue with our lease partners,” says O’Connor.
“We remain confident that the strength of our market-leading OOH offering positions us well in these renewal processes.”
O’Connor told AdNews that the outlook is more positive than commentary by other media groups indicates.
The SMI (Standard Media Index) trend to June is 15% growth for outdoor compared to television which is down 15% and radio eight per cent.
oOh! expects OOH to continue to take revenue share from other media
“Media agency bookings are eighty five per cent of what we do,” says O’Connor.
“So our performance is always going to be driven by agency. Direct, in relative terms, ahs performed more poorly in out of home as a sector but it’s a small part of it.
“Certainly the shape and pace of Q3 revenue suggests that agency is continuing to remain strong.”
oOh!’s update by segment:
Road
Revenue for the Road (billboard) division increased by 12% to $103.4 million over the six months to June. This accelerated in the last three months, with revenue rising 17% compared to the same quarter last year.
Street Furniture and Rail
Revenue in Street Furniture and Rail fell by 3% to $93.5 million, impacted in the first half by the introduction of a competitor’s expanded City of Sydney offering in September 2022. Revenue recovered in the second quarter with sales in May and June ahead of the same months in 2022.
Retail
Revenue in the Retail format increased by 3% to $65 and the growth was stronger in the second quarter following a relatively flat start to the year. oOh! continued to gain share in the Retail segment in Australia.
Fly
The continued recovery in air travel helped by 73% to $21million. Revenue growth moderated in the June quarter in percentage terms, as the second quarter in 2022 was much stronger than the first following the lifting of COVID-related travel restrictions.
oOh! has been building its data to offer finely tuned targeting.
“We continued to make good progress on our strategy which remains focused on driving revenue growth through leveraging our portfolio of existing assets with continued investments in digital and data capabilities to improve advertisers’ return on investment,” says O’Connor.
“We refreshed our data planning and attribution feed, partnering with Unpacked by Flybuys, Australia’s top-rated customer loyalty program, and DataX from Westpac.
“These new partnerships continue to position oOh! as offering best in class data-led planning and attribution insights to demonstrate the return on investment for customers’ OOH spend.”
A slide from the analyst briefing:
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