LOOK UP! SEEING IS BELIEVING; OUT-OF-HOME BONANZA: SHOPS PROMOTE SELECTIVE SEGMENT CHOICES

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An increase in the demand for premium outdoor locations is driving up prices and changing the media buying and planning process.

As buyers strive to secure the best locations at the best prices for their clients, they must plan more strategically in setting outdoor's percentage of the media mix.

"You don't buy out-of-home advertising from behind a desk," says Jack Sullivan, VP-media director for out-of-home at Starcom USA, Chicago. Its clients include The Gap, Miller Brewing Co. and Kraft Foods' Altoids.

In fact, media agencies like Starcom send strategists into the field to find locations in particular cities and towns so that it can advise clients like Procter & Gamble Co. where to advertise Luvs diapers based on the relative location of daycare centers and hospitals.

"We use the learning to help our clients target a little better," says Mr. Sullivan, who adds outdoor companies, especially since the recent wave of consolidation, have become more sophisticated in their ability to sell locations based on information about target audiences.

Karl Eller, chairman-CEO of Eller Media, a division of No. 2-ranked outdoor company Clear Channel Communications, agreed planning has become more strategic, and added that it has become more long-term than in the past.

PACING FARTHER AHEAD

"It's pacing a lot farther ahead than it has in the past," he says.

"There's been a somewhat tight space situation in some markets. There's been much more long-term planning [by media executives] in general," says Mr. Eller.

A company like The Gap, once it secures a desirable location, is likely to hang on to it.

Advertisers' increased desire to send consistent brand messages across media has posed another challenge to planners and buyers who must translate TV and print messages to effective outdoor.

"You can't look at any one medium in isolation anymore," says Jean Pool, exec VP-director of North American media services at J. Walter Thompson USA, New York, which bills about $80 million in outdoor advertising. "The buying of [outdoor] is a specialty, but planning of it should not be. Planners are generalists."

"The vinyl and the mapping technology has changed everything," says Andrea MacDonald, president-CEO of MacDonald Media. Vinyl and vinyl-mesh technology make it easier for advertisers to run gorgeous creative images while maintaining a consistent brand image.

Geodemographic technology has become standardized. Outdoor companies and agencies alike can provide consistent information, such as ZIP code targeting, to help a marketer zero in on a particular audience. Despite mapping standardization, planning remains a challenge due to lack of good basic research tools.

"There's very little information," says Ms. MacDonald. "The challenge rests on our shoulders because outdoor companies themselves do not provide enough research.

GILES CRITICIZES GROUP

Helen Giles, VP-manager of outdoor operations for GM Mediaworks, Warren, Mich., says nothing has changed in years.

"We're talking about the same issues, problems and complaints with research today as 15 years ago," she says. "I don't think [the Outdoor Advertising Association of America] has put enough thought and effort and time into it."

She says tobacco has supported the industry for many years. "Now with tobacco gone, I think [the association] will have to work harder."

Outdoor ad revenues continue to post healthy gains. Revenues for first-quarter 1999 increased 7.5% to $503.5 million over the first quarter last year, according to Competitive Media Reporting. Total 1998 spending was $2.3 billion.

Audited traffic measurements from the Traffic Audit Bureau for Media Measurement are based on the official vehicle traffic counts provided by government agencies and manual counts by TAB auditors.

More sophisticated research is hard to find. In fact, the first study commissioned by the OAAA in 15 years included too small of a sampling -- 50 people -- to draw any meaningful conclusions.

Market Information Services of America offers customized software with mapping applications, as well as traffic audit studies. Other companies, such as Harris Media and Media Audit, provide localized data.

CLOUT RULES

The clout of the consolidated companies and the new desirability of the medium itself combine to hike prices.

"There's such demand in the marketplace, coupled with the consolidation, [that it] makes for higher rates," says Ms. MacDonald.

The upside to consolidation is the ability to cover more ground with few phone calls, but not without some price.

"Instead of calling five companies to access their inventory, we're calling one or two," says Ms. MacDonald. "That's also made it less competitive and raised rates."

Mr. Eller says the pricing is still very competitive, but he agrees that "what drives the pricing is the demand."

At least one media executive doesn't seem to mind the price increase.

"Consolidation has made our lives easier in terms of talking to less people and developing media plans," says Mr. Sullivan.

The medium is also still considered a bargain when weighed against the cost per thousand of print and TV.

MARKETERS RETURNING

New money is flooding the outdoor industry from new categories like Internet companies; from marketers who never used the medium before, such as public utilities and investment companies; and from those coming back to outdoor advertising after a long absence.

Many advertisers that used outdoor years ago are coming back to it with significant budgets. P&G, for instance, spent virtually nothing on outdoor in 1994. In 1997, it spent $3 million, and it more than doubled that figure for 1998, spending a total of $7.5 million.

"Selected companies' brilliant use of the medium . . . changed the rules of the game," says Michael Forte, CEO of Spectacolor, an outdoor company that handles Times Square-area spectaculars and boards.

Times Square has become a mecca for outdoor media. It "is a microcosm for what is going on in out-of-home," he says.

New advertisers expected this year in Times Square include Consolidated Edison,

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