Banned in the Big Apple: Illegal Outdoor Ad Displays

New York City Council Cracks Down on a $25-Million-a-Year Bootleg Industry

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NEW YORK (AdAge.com) -- New York is a marketer's playground, every wall an opportunity, its buildings seemingly knit together by a patchwork of advertisers' efforts to reach its influencer inhabitants. Not anymore -- not if the City Council has its way.
New York's crackdown on illegal outdoor signs, like this one on Lafayette Street, comes as the city begins a 20-year revenue-sharing contract in which it gets 20% of the $20 billion the contractor, Cemusa, expects to make from ads on bus shelters and other structures. | ALSO: Comment on this story in the 'Your Opinion' box below.
New York's crackdown on illegal outdoor signs, like this one on Lafayette Street, comes as the city begins a 20-year revenue-sharing contract in which it gets 20% of the $20 billion the contractor, Cemusa, expects to make from ads on bus shelters and other structures. | ALSO: Comment on this story in the 'Your Opinion' box below. Credit: Darryl Estrine

New crackdown
The council has started a crackdown on what has become a $25-million-a-year illegal-ad industry in which almost every outdoor company and major consumer marketer has dabbled at some point. Specifically, the council is going after those billboards, paintings and banners that appear on street sheds, scaffolding, highways and residential buildings.

Despite costing $40,000 to $50,000 a month in media dollars, those sites are sought after by advertisers and popular with creatives for whom they provide large and customizable canvasses. But often these eye-catching boards are also illegal, according to the city, which estimated that as many as 20% of New York's billboards violate at least one of its laws.

New city contract
Of course that's nothing new, but the city is suddenly going after offenders much more aggressively, a push that coincides with the start of a lucrative new street-furniture contract the city recently signed with Spanish outdoor contractor, Cemusa.

Major-brand marketers such as Citibank, Apple and Coors Brewing Co. have all shown up on illegal sites or without permits. A Citibank spokesman said the company was "looking into the matter" and referred calls to its media-buying agency, Kinetic, which was unavailable for comment. Coors said it "purchases all out-of-home from reputable outdoor vendors legally." Apple did not return calls for comment.

"There's a lot of money floating around here," said one outdoor seller who wished to remain anonymous. "It's so big, you have to wonder why nothing's been done about it."

Dark side of an industry
Indeed, few wanted to talk publicly about what is, arguably, the dark side of an industry that has been largely professionalized and is becoming increasingly high tech.

But off the record, those with experience in the business said it works like this: Illegal ads are sold directly by building owners or through outdoor vendors who contract with landlords. The vendors take the inventory to outdoor buyers, who may turn a blind eye because they need to rack up impressions and, hey, inventory's tight. Companies big and small have advertised in the illegal spaces, insiders said. (Any ad in New York without an outdoor company's name on it most likely is illegal.) In buyers' defense, they may not know that a site is illegal -- often agencies don't require vendors to present permits for every site.

"If we're aware of what signs are illegal, we don't use them," Matt Leible, president of Generation Outdoor, an outdoor-buying firm. "Then there isn't anything for us to worry about."

Borough President
For a long time, reaction from the city was the equivalent of a whatcha-gonna-do shrug. But in the past few years, new regulations from the Department of Buildings have been put into effect, and a campaign to clean up the streets was launched by Manhattan Borough President Scott Stringer.

"I'm not opposed to advertising; it's an important business component to the city, but you should not create an illegal market where the city gets no benefit and legitimate businesses are hurt," said Mr. Stringer, who began work about a year ago with the Municipal Arts Society of New York to rid the city of egregious and often illegal signs, particularly in historic districts and on city landmarks. Construction sidewalk sheds are also a target; only signs for the businesses they obstruct are legal.

$25,000 fines
Previously, the city only targeted building owners, but as of Aug. 25, ad vendors with inventory near arterial highways and parks must register ads, a practice that used to be voluntary. Companies with ads that lack registration numbers could be fined up to $25,000 per day. They also could lose their registration and ability to do business in the city.

"Between the registration program and other initiatives that we are trying to put together, we hope to address these problems so we have more enforcement power," said Department of Buildings spokeswoman Jennifer Givner.

Of course, it begs the question: Why was the crackdown so long in coming? That's where the street-furniture deal comes in. The city has just embarked on a 20-year revenue-sharing contract in which it gets 20% of the $20 billion the contractor, Cemusa, expects to make from ads on bus shelters and other structures. The city has similar agreements for ads on subways, phone kiosks and buses. Cutting down on illegal inventory will almost certainly boost pricing for legitimate sites.

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Abbey Klaassen contributed to this report.
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