Troubling signs for out-of-home amid COVID-19
All signs point to a struggling out-of-home industry as consumers stay indoors amid the novel coronavirus outbreak.
Outfront Media's stock, for instance, has fallen 64 percent to about $11 a share since late February; Lamar Advertising is down 52 percent to $41 a share during the same time period. Clear Channel, meanwhile, is coming in under a dollar ($.45) for the first time in its history.
Lamar declined to comment; Clear Channel and Outfront did not comment at deadline.
“There is no way to sugarcoat that demand is incredibly soft right now,” says Matthew O'Connor, co-founder and CEO of AdQuick, a tech company that’s applied programmatic to buying out-of-home media. “Nobody wants to do a huge product push right now, so business is down and will continue to go down until things go back to normal.”
Prior to the coronavirus outbreak, out-of-home had been enjoying an incredible run. Revenue for the vertical rose 7 percent in the third quarter of 2019 to nearly $2 billion, according to the latest figures from the Out Of Home Advertising Association of America. Year-to-date, the out-of-home industry generated $6.4 billion through the first three quarters of 2019, a 7 percent uptick when compared to the same time last year.
“Like every industry, out-of-home is currently navigating the COVID-19 crisis in real-time,” says Anna Bager, president and CEO of OAAA, who adds that it’s “too soon to know exactly what the impact of this crisis will be in the near-term.”
“We’re taking this day-by-day,” says Bager. “I can say with confidence that the fundamentals of our industry are strong.”
Still, companies such as AdQuick are reacting to the pandemic now. Just yesterday, AdQuick said it was waiving its 3.9 percent buying fee in an effort to drum up business — a practice some billboard owners are also applying.
Such moves are a direct result of cancelations for major tentpole events. Concerts such as Coachella, for example, increase the cost of acquiring prime billboard inventory near the music festival by 40 percent, but it — along with nearly all other events — have been canceled or postponed until further notice. Overall, prices for out-of-home inventory are down about 15 percent, says O'Connor.
“It’s reflective of the amount of people willing to leave their homes,” says O’Connor, who adds that consumer foot traffic has fallen between 30 to 70 percent.
Brands do PSAs
The ad industry overall hasn’t been immune to COVID-19, as agencies, brands and publishers all feel its impact. Although many brands have paused media spend, some are moving forward with campaigns that couple traditional out-of-home advertising with public service announcements.
Ro, which owns male-focused prescription delivery company Roman, launched its out-of-home PSA campaign on Sunday with help from Wieden+Kennedy New York and Quan Media. The effort includes billboards with simple messaging such as, “Stay home. Save lives” while offering free COVID-19 telehealth assessments through its website, says Rob Schutz, co-founder and chief digital officer at Ro.
“There are two prongs,” says Schutz about the campaign. “There’s the message of unity to tackle the spread of COVID-19, and then there's making sure people are aware of our free service ... Health officials are saying don’t overburden the health system so we’re encouraging people to take advantage of this free tool."
"We are doing a public good," he adds.
Schutz says the campaign was able to get up and running within 72 hours with help from AdQuick, which fast tracks the process of getting the right creative on the right billboard through software. “That process typically takes weeks,” Schutz says. “Companies like AdQuick have democratized the process so there's a much quicker turnaround with creative.”
Like AdQuick, Vistar Media also sells inventory programmatically, but is laser-focused on digital out-of-home, says Michael Provenzano, CEO at Vistar.
"Digital gives marketers the flexibility in budget to turn things on or off,” Provenzano says. “That’s helpful if a brand’s messaging is no longer appropriate” amid COVID-19.
To hear Provenzano tell it, inventory along the way to big-box retailers and grocery stores has become a lot more valuable.
“What we’re seeing is more of a shift from where clients are spending,” Provenzano says, adding that the company is using mobile location data to see where consumers are going. “They’re still doing a lot of shopping at big-box retailers. What’s changed is the commute.”
About 10 percent of Vistar clients have canceled their out-of-home ad spend going into the second quarter while about 20 percent have paused their media buying, says Provenzano. Overall, Provenzano — and everyone else interviewed for this story — believes people will come out in droves once the pandemic tapers off.
“It will be a rejuvenating feeling for people,” he says. “The type of messaging brands can associate with that feeling through out-of-home will be an important psychological element ... It’s going to be a once-in-a-lifetime chance.”