Rosier and rosier for out of home

Rosier and rosier
for out of home

Fast growth forecast in U.S. and around the globe

By Elizabeth White

    Despite setbacks in 2001--the evaporation of dot.com advertising and a weakened economy, to name two--out-of-home media has had a decent year and is on its way to even better years.
    In the coming five years, it will rank among the most vital media sectors, and for two reasons, say forecasters.
    One is ever-improving technology, which allows for the distribution of messages instantly to far-flung locations, as well as better tracking of ad impressions.
    The other is the rapid development of new markets outside the U.S., especially in Latin America.
    U.S. out-of-home spending should grow 11.1 percent in 2002 versus 2001, to $6 billion, after a sluggish 3.2 percent growth this year, according to PricewaterhouseCoopers’ "Global Entertainment and Media Outlook: 2001-2005," an annual forecast of industry-wide ad spending.
    Through 2005, U.S. out-of-home spending should grow at a compound annual rate of 7.6 percent, totaling $7.7 billion by 2005.
    Much of that growth will be driven by newer technologies, such as digital billboards that can display video.
    The digital billboards and flat panel screens now make it possible to put brief video ads in more places, like ATMs, gas station pumps and elevators.
    In addition to making distribution of messages both instantaneous and much easier, since they'll come from a central point, the new digital screens will increase the available out-of-home inventory.
     Yet another big advantage is the increased accountability, with advertisers better able to know how often and where their ads are appearing. This increased accountability should make such venues far more attractive to those mainstream national advertisers who have shied away from out-of-home in favor of television and print.
    Among markets outside the U.S., Latin America is expected to see the fastest growth in out-of-home over the next five years, with double-digit growth every year through 2005. By that year, out-of-home expenditures will be at almost twice 2000 levels.
    The region has a projected compounded annual out-of-home growth rate of 11.2 percent, going from $661 million in 2000 to $1.1 billion in 2005.
    Within the region, Venezuela will lead in growth, with a 22.2 percent annual rate. But the bulk of the money will still be spent in Brazil, an estimated $640 million in 2005. Argentina, which is still suffering from a wobbly economy, will trail behind, with a 4.3 percent annual growth rate through 2005.
    Latin America is followed by Eastern Europe as the projected fastest-growing out-of-home region. Its forecasted annual growth rate for out-of-home spending is 10.7 percent, from $373 million in 2000 to $620 million in 2005.
    Western Europe’s out-of-home projections resemble the U.S.’s. Out-of-home spending in Western Europe is predicted to increase at a 6.8 percent annual rate, from $5.8 billion in 2000 to $8.1 billion in 2005.
    In the Middle East and Africa, the compounded annual growth rate should be 6.4 percent, from $192 million in 2000 to $262 million in 2005. Canada’s out-of-home spending will increase at an annual rate of 7.7 percent, to $275 million in 2005.
    Countries in Asia and the Pacific will have the slowest rate of out-of-home growth, held back largely because of Japan’s continued financial woes. Japan currently accounts for 87 percent of all out-of-home advertising in the region, and that number will drop to only 80 percent by 2005.
    Hong Kong, India, Indonesia, Thailand and Singapore all have projected double-digit annual percentage growth rates through 2005, but Japan’s sluggish economy should keep total out-of-home growth in the region at a 2.9 percent annual rate.

The Outlook for Out-of-Home Advertising ($ Millions)
Region	2000	2001	2002	2003	2004	2005	CAGR
United States	5,235	5,400	6,000	6,500	7,010	7,550
% Change		3.2	11.1	8.3	7.8	7.7	7.6
Canada	190	200	215	235	255	275
% Change		5.3	7.5	9.3	8.5	7.8	7.7
Western Europe	5,862	6,166	6,491	6,922	7,469	8,127
% Change		5.2	5.3	6.6	7.9	8.8	6.8
Eastern Europe	373	405	455	510	565	620
% Change		8.6	12.3	12.1	10.8	9.7	10.7
Middle East/Africa	192	205	218	233	248	262
% Change		6.8	6.3	6.9	6.4	5.6	6.4
Total EMEA (Europe, Middle East, and Africa)	6,427	6,776	7,164	7,665	8,282	9,009
% Change		5.4	5.7	7.0	8.0	8.8	7.0
Latin America	661	738	826	920	1,020	1,125
% Change		11.6	11.9	11.4	10.9	10.3	11.2
Asia/Pacific	4,767	4,792	4,920	5,098	5,296	5,494
% Change		0.5	2.7	3.6	3.9	3.7	2.9
Source: PricewaterhouseCoopers’ "Global Entertainment and Media Outlook: 2001-2005," from PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

U.S. Out-of-Home Advertising
Year	Out-of-Home ($ Millions)	% Chg
2000	5,235	8.3
1999	4,832	9.7
1998	4,405	8.8
1997	4,047	7.6
1996	3,760	7.4
1995	3,500	10.8
1994	3,159	10.2
1993	2,867	8.7
1992	2,638	-3.3
1991	2,728	4.9
1990	2,600
Source: PricewaterhouseCoopers’ "Global Entertainment and Media Outlook: 2001-2005," from Universal McCann, Outdoor Advertising Association of America, Radio Advertising Bureau, Paul Kagan Associates

U.S. Out-of-Home Advertising by Major Category ($ Millions)
Category	1999	2000	% Chg
Local Services, Amusements	534	710	33.0
Retail	522	569	9.1
Public Transportation, Hotels, Resorts	438	507	15.7
Media & Advertising	400	459	14.9
Restaurants	360	382	6.2
Automotive Dealers	319	327	2.5
Automotive Equipment	264	268	1.4
Insurance, Real Estate	236	256	8.3
Telecommunications	181	255	40.9
Financial	215	247	14.7
Other	1,363	1,255	-7.9
Total	4,832	5,235	8.3
Source: PricewaterhouseCoopers’ "Global Entertainment and Media Outlook: 2001-2005," from Outdoor Advertising Association of America

-Elizabeth White is a staff writer for Media Life.

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