Outdoor advertising weathering the shift to online

Brendon Cook is the CEO of oOh! Media, the outdoor advertising firm. Brendon actually started the business in 1989 so he’s coming up to 30 years in the job, he’s been continuously the CEO since then. He must be the longest serving CEO in the market although I can’t absolutely attest to that but he certainly would be one of them. oOh! Media is going quite well. The outdoor advertising has not only survived the influx of online advertising which is destroying the newspapers and beginning to eat into TV but it has flourished because outdoor advertising remains a good way to establish brand advertising and so they’ve done a good job in preserving that and outdoor advertising is growing as a proportion of media and oOh! Media is holding its market share. They’ve had a terrific half year and we’re talking to Brendon about that half year but also about the past and what they’re doing in the future. 

Here is Brendon Cook, the CEO of oOh! Media.

Brendon, you actually started this company in 1989, it wasn’t called oOh! Media then it was – what was it called?  Something else.

Yeah, Network Outdoor.

Outdoor Network, that’s right.  Have you continuously been CEO since then?

Yes, that’s correct.

30 years, so you must be one of the longest serving CEOs on the market surely.

I don’t know about that, I don’t check but certainly it’s been a great long journey.  Taking a business from one person and growing it and bringing various investors on along the line and then listed twice and had private equity and had various other investments, so it’s been a great journey over that 30 years.

You’ve made quite a few acquisitions and so on, what’s been kind of the underlying strategy of the business?  You’ve always been focussed on outdoor advertising and I think you’ve developed along those lines but what have you been trying to achieve?

Yeah, the last eight years we pivoted quite significantly where we saw the future of the medium going being we managed to just focus on a single category, like a single product within out of home whether it be a roadside billboard or whatever.  We realised that ultimately you needed to have multiple products because there was different ways people would breathe into the future around audience delivery.  So the last eight years has been a very active journey of investing in those acquisitions and within existing organic developments to grow our capability to answer more client briefs based on what their true objectives are.  Then as that comes up we knew that data was going to be captured at locations so particularly in the last few years we’ve been really able to look at that data very differently and we’ve got the first buyergraphic data, this morning as a partner about the [0:03:22.7] globally and we’re taking that to market now and that’s showing advertisers how that we can plan to reach minimum 20% more audience than are their potential buyers than using the old demographic type system.

For us it’s been a lot of work around meeting that capability of how we can answer more client briefs and then the investment in digitisation really what that’s been about is out of home, with only our great classic inventory product, could only really ever picture about two thirds of the potential 14 billion media industry and what digitisation is allowing us to do is to target more clients with more objectives and more opportunities and meet more creative briefs and the combinations of two is a big part in why we’re seeing the growth of the medium.  Certainly, our trajectory is still striving towards as an industry getting us to that 10% of the media pie.

Obviously, the digitisation you’re talking about is simply that the billboards aren’t static anymore, it changes all the time, right, so you can serve more ads on the same billboard.

I think the reality is it’s ultimately going to be less about serving more ads, that is obviously the outcome but it’s more about matching the data and serving the ads at different times.  The other big expense we’re working through at the moment is the media tech of the future that we’ve been building for a while now that changes the way we can deliver campaigns and operate structurally across out of home business.  At scale with the right staff numbers, with the right talent in data scientists, data architects, quiet partnership directors talking a lot more with marketing directors, etcetera, about their needs and requirements.  It’s a fairly massive fundamental shift from what I like to term is what out of home has always been to where it’s going to be and that’s new out of home, and we’re really making sure that all the investments we’re doing is leading to no later than 2020 being very much what new out of home will be for the future.

Perhaps you could explain to us what the data thing that you’re doing is because I think you referred to it in previous answers, something about bio data.  What is it, bio what?

Buyergraphics is the term we use.  Have you heard of Quantium by any chance, have you?

Quantium, yes I have.  Exactly how does the biographical data work?

Basically, what it means is we have 400 what we call Q segments which can be for a product category and or a lifestyle stage and based on true buying behaviour through a whole range of data that Quantium collects we’re able to determine right down to each one of our 20,000 particular assets what sort of buyers are really passing signs in particular areas and what do they look like.  Using a simple one, if I’m after people that have a high propensity to buy lots of cheeses to be entertainers in the old world you would have just answered that brief based on maybe a grocery buyer type definition, you would have distributed revenue by population whereas the reality is there is very specific geographic areas of Australia and right within states and right within cities that there is a greater propensity of people in those areas to buy a lot more combination of cheeses to be entertainers.  Therefore, you get a far more efficient campaign when you think location and you start to think locality based around strong buyer data that you can concentrate your campaign in more geographies that are going to be likely to buy more product and the end result of that should be a greater sales result for the client.

That’s a new way of thinking, before it would have, as I said, just been on demographics, spread of population, rather than something that’s far more precise, covers over 11 million people, it covers more people per suburb and postcode.  An example might be in a simplistic sense we have a billboard near Geelong on the main road.  Most people take a postcode view to that and so they would say that generally that represents a younger skew audience and probably overall a lower socioeconomic area.  But that particular billboard based on the people who go past it and what they buy actually shows something very different in that particular spot converse to somewhere else that might only be three kilometres away in the same technical postcode.  It’s the ability to provide far greater data and insights at location around audiences and it’s called buyergraphic because we really are treating buyer behaviour rather than just demographic or audience reach behaviour.

You have to do that, don’t you, the way Facebook is able to target advertising incredibly precisely.  In a way there’s a plus and a minus about what’s going on in the advertising world for you in that outdoor continues to provide unique spots that are unmissable in a way whereas online advertising can be missed, likewise TV advertising people tape stuff, record stuff and then skip over the ads and so on whereas yours are a bit more unmissable.  On the other hand, the new style of digital advertising online is much more targeted than outdoor advertising so you kind of have to do something, don’t you?

The strength of out of home has always been its broadcast capabilities but what we’re saying is how do you define a better one to many.  We’re not a medium that needs to know one to one communication, we’re not [0:09:36.6] but if you can define better one to many attributes you can define a better way to reaching cohorts of people.  The value is that for many brands the biggest problem with one to one communication only is that they don’t reach the new brand of people also that come into it.  If we’re reaching one to many of the right buyers better, we’re also still technically also reaching people that are likely to come into that product some time in the future.  As you quite rightly point out the unmissability of out of home is one of its great strengths, that and the fact that we are very much a medium that’s brand safe and transparent.  As a medium people forget that we’ve always been brand safe because we have to deal with property partners who have consumers going past them. 

For us our property partners, without them we don’t have a business so their brand safety is far more important to us than it is in advertisers.  We have more stringent rules, today our system can say to our reps you can’t put that site in for that client because of a whole range of reasons, for example if it’s alcohol it’s within a certain proximity of a school, if it’s gambling it’s similar, there’s a whole range of those.  Brand safety and transparency of course at the very least we’ve got a whole lot of other systems that do this, but at the very least if an advertiser wants to know they can just drive down the road and stop or walk in at the shopping centre and stop in front of the sign they’re supposed to buy and see their ad. 

We’ve always had those strengths, I think those strengths have just been articulated stronger as we see other challenges that people are having in understanding how much audience did they really reach and how much of a percentage of it was flawed, etcetera.

It's interesting because the digitisation, the digital media that has so disrupted newspapers and is beginning now to disrupt TV, doesn’t seem to have caused you problems.  You’ve just reported your half year and I think your cash generation was the highest in your history so things seem to be going okay.  What’s at the heart of that do you think?

I think the first thing is if you think about it some of our biggest customers are not only the most advanced companies in the world like Apple and Samsung but you see even Facebook for their global campaign bought out of home in multiple environments to say they’re not about fake news and they’re not about other things.  When you see online retailers who started out as only doing online to are now big spenders in out of home as well because they need to reach more people and put their brand in the bigger position in the market than just one to one marketing. 

The strength of out of home is the reality that as audiences behaviours are changing not only in everything including online we are consistent, people are connected, they’re out and about, they’re going shopping, they’re going for drives, they’re catching planes, they’re going to universities, they’re going to office buildings and all those environments we have a way of connecting brands to them and we’ve getting full results for those brands who are embracing a new way to do it with us.

You tried to merge with APN Outdoor last year and that was kind of knocked back by the ACCC although they didn’t actually knock it back they just said they had some issues and you guys gave up whinging, if I may say, about it.  You didn’t agree with ACCC at all but anyway, you’ve gone on with life.  How much of a disappointment was that?

Obviously, that’s an old deal now, we’ve moved on and we see the opportunity arose to chat with Adshel and clearly not just ourselves but HT&E and others from the hard work that was done around the opportunity for the ACCC to review the market.  We clearly felt positive that we’re not in any way reducing competition within the outdoor and the way the medium operates. We’ve obviously respectfully allowing the ACCC to do their process in providing our information to them, I’m sure they’ve done their market sounding so hopefully on August 30 all the various lawyers that did the review will be proven right. 

Right, but as you say you moved on Adshel or you bought Adshel from HT&E, so has that been kind of a sufficient alternative?

For us Adshel is a wonderful business, we’ve always been building a business around complementary products that allow us opportunities to enter briefs from clients that are very specific and what you see in out of home.  People don’t brief out of home per se, they brief products within out of home for very specific reasons.  Our goal has always being able to provide for our customers as many answers to their challenges by the different products we have and their different strengths and weaknesses.  What Adshel brings to us is complementary products.  We weren’t in the street furniture market, we weren’t in the rail audience market, they are discrete markets in their own right.  It brings us the opportunity to answer more of those clients briefs as we talk to them about ways they can use different products within out of home to deliver on their objectives.

Are you able to bundle them with clients, a billboard and a bus shelter and so on?

In out of home you’ve got five major agency groups who clearly control a significant proportion of the expenditure in the medium and as I said, different briefs meet different criteria so it’s not a bit like saying you bundle.  The reality is that occasionally you will find that different products work well together and in another brief it’ll be another set of different products for the same client.  It’s about really understanding what the clients want and for us to be able to present to them different ways they can reach the medium.  Out of home has always been a very competitive media and I don’t see that changing, we’ve got to deliver on ROI performances for our clients or they’ll go and move their money somewhere else. 

We have the ad agencies in a position where they are doing their job to make sure that the clients are getting the best rates in town so the reality is we see it from our point of view it’s just an opportunity for us to look at our business and be able to try and answer more client briefs.  If we can answer more client briefs that helps the industry go from 6% to 10% and hopefully we will get our share of that growth.

You’ve done an interesting deal with Qantas I think where you’re starting to do in-flight advertising as well as billboard or small billboards in their lounges, is that right?  Tell us about where that’s heading?

At the end of the day we had a view if you think customer and if did the advertising it is about how do you connect with people at multiple touch points on a particular journey and flying is a journey.  You’re going to airports, you’re then getting on planes then getting off planes and then you’re coming back and repeating the process again.  We already looked at the in-flight as the missing link and we have been talking to Qantas, we’ve had a 16 year relationship with Qantas, we’ve been talking to Qantas about that missing link and they agree with our strategy and appointed us to look after it.  For the first time any out of home company in the world has taken on both domestic and international marketing of in flight media. 

It’s fair to say the results have been outstanding, we took over from June the forward billings and bookings, and both Qantas and ourselves are very happy they’re well ahead of our projections as we started out on a different journey to market the product.  I think it’s about meeting the advertiser needs and audience understanding, than it is about the names of out of home or in flight and that’s what we’ve been able to deliver.

Is that an exclusive deal with Qantas in the sense that are you allowed to do other similar deals with other airlines or not?

We haven’t thought about other airlines at this point, it’s a big enough stretch to start the ball rolling and getting advertisers to think differently.  We’re very much concentrating on Qantas and doing a great job there and that’s what we’ll focus on for some time I would have thought.

It’s just that I’m involved in supplying content for Qantas in flight and I’m conscious that the content suppliers for their in-flight entertainment serve multiple airlines and do quite well out of that so it’s a question of whether your deal with Qantas actually allows you to do that, not whether you’re thinking about it now but whether that’s permitted under the deal.

I’m not going to speculate on anything at the moment, we’re just focussing on what we’ve got to do.

Right, okay.  What’s the outlook for the business do you think?  What’s your kind of view about and what are you telling the market about the outlook over the next year or two?

We still firmly believe that the investments we’re all making, us as a company and others, will help drive out of home towards that 10% of the media revenue pie in this country.  We’re certainly seeing the proof points on that with some great major advertisers that are leading the charge of innovation and change, spending more than 10% of their media dollars in out of home.  I think that as we continue to improve our capability to be able to deliver that, deliver it with data, deliver it faster and better then I think there’s no doubt that we will see the medium continue to escalate and grow towards that 10%. 

It makes sense, it works for advertisers, it makes sense in the way fragmentation of audience behaviour is occurring.  We are the medium that really does deliver those unmissable audiences and we do it brand safe and with transparency and we want to be able to make sure we’re showing cases to advertisers how they can better use the medium, how they can creatively use the medium, how they can connect their content as well as straight advertising of out of home as well and how we’re bringing that to light.

What’s your market share of the 10%?

Well we’re at 6% of the media pie at the moment and oOh! Media itself is in the early 30% mark.

Do you think you can grow that market share?

If we do our job well as a market leader the industry will grow past the 10%, clearly like any business it’s then up to us to try and keep as much share as we can.  There will be our competitors and other new entrants into the medium trying to take advantage of the growing medium.  We always have new entrants and out of home is no different to that, we don’t have the same amount of interest that say broadcast media has as an example.  Clearly, we’re seeing in online media it’s getting harder and harder for people to win big enough share particularly if they’re dependent on Facebook for growing their audiences.

What about you, Brendon, personally.  Coming up for 30 years are you sick of it yet?

It’s the best time to be in the game, I love it, there’s more innovation, more opportunity and more ways the business can move forward.  Certainly, I’m enjoying working with the team and leading the changes to this industry.  Australia is fortunate that we are doing some good work and certainly oOh! is doing some great work and there’s no doubt that we are one of the leading countries in the world for out of home.  I’d like to think that oOh! Media is in the top five companies in the world in terms of leading those advances and changes in out of home.

Great to talk to you, Brendon, thank you very much.

Thanks, Alan, talk to you soon.

That was Brendon Cook, CEO of oOh! Media.