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The Big Reveal

OOH…Here’s One Thing

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OOH…Here’s One Thing

by Jim Johnsen,
Managing Director, Johnsen, Fretty & Company

My friend Bill Board, was kind enough to invite me to write a periodic #OOH column.  Since I am a man of few words, I promise to keep my riffs short and focused on one thing.

 

The Big Reveal

I recently read the book “The Fish that Ate the Whale: The Life and Times of America’s Bananas King” by Rich Cohen.  The story focuses on Samuel Zemurray, who single-handedly outfoxed and then took down the world’s largest fruit company at the time, the United Fruit Company (now Chiquita Brands International).  Where am I going with this?

Well aside from the fact that the book is set in New Orleans and I now have a daughter who goes to Tulane so I thought it would be good to know a little more about the city, and aside from the fact that the book gives some fantastic insight on how Banana Republics got there start (According to the book, the U.S. government dropped CIA operatives into almost every Central American country at some point in the first half of the 20th century and set up a puppet regime in order to protect the interests of large american corporations), one of the central themes of the book is “one company’s trash is another’s treasure”.  Before modern transportation and refrigeration, United Fruit would throw away any banana that had turned yellow by the time it reached the port in New Orleans from Central America.  Zemurray, a penniless immigrant, idly watched the freighters unload their cargo each day as he tried to figure out what he was going to do with his life.  Nothing if not enterprising and hungry, he decided that the solution to the problem was not to throw the ripe fruit away, but rather to find a different market (have I got your attention yet?), one closer to home so that he could get the fruit in the customers’ hands before it went bad.  Since United Fruit was throwing the stuff away anyway, he convinced them to sell him the “bad” fruit for next to nothing.  He carted it off on a hand cart, sold it locally to grocers who presented it as a premium product.  He turned that little cart business into one of the biggest bananas enterprises in the world, ultimately merging with American Fruit and becoming the single largest shareholder.

Time is OOH’s enemy.  We are in a business with a perishable commodity.

What the hell does bananas have to do with Outdoor Advertising?  Other than the fact that we are all bananas (couldn’t help myself), quite a lot actually.  One of my very first meetings as a young pup in the outdoor business was with Dan Schnitzer who owned a nice outdoor business in the pacific northwest, called Sun Outdoor.  He said to me, and I paraphrase, “Young pup…we are not in the outdoor business…we are in the fruit business!”  I returned his stare with a gaze that looked like a prairie dog in the headlights.  He said “yes I know, you don’t understand do you?”  I sheepishly shook my head.  He then said, “look, the guy operating the fruit cart, at the end of the day he throws away a bunch of what he does not sell, right?  So each day that goes by in which one of my face’s goes vacant is just like that too, right?”  Of course the light bulb went off immediately.  Time is OOH’s enemy.  We are in a business with a perishable commodity.

we as an industry throw away $106MM each month or $1.3B per year.

Okay, so finally to the point.  What continues to baffle me is, like United Fruit, we continue to throw it away.  To prove my point, some fun with numbers.  If, as the OAAA says, there are roughly 400,000 traditional faces across the country (#s would get even more impressive or scary if you include transit et al), and if we guess that 5% of that inventory is behind trees, lying on the ground or facing the wrong way on a one way street, that leaves us with 380,000 faces to sell.  If on an average year, we sell 72% of it, that means 28% of 380,000, or 106,400 faces get thrown away each month!  In dollar terms, again for fun, lets assume average rate is $1,000, that means we as an industry throw away $106MM each month or $1.3B per year.  Where is Zemurray when you need him?  Isn’t there something better we can do with that inventory?  Should we consider it an industry offense to let a single face go unposted…ever?  Can’t someone come up with an alternative market to this decent product?  At bare minimum, imagine the good we could do bringing $1.3B of advertising value to a handful of charities?

Should we consider it an industry offense to let a single face go unposted…ever?

Okay, I know I just threw a hand-grenade in the room.  I welcome the debate.  Please bring it.

 

ps:  Here is Amazon’s summary of “The Fish That Ate the Whale”  I hope it motivates you to read it!

The fascinating, untold tale of Samuel Zemurray, the self-made banana mogul who went from penniless roadside banana peddler to kingmaker and capitalist revolutionary.

When Samuel Zemurray arrived in America in 1891, he was tall, gangling, and penniless. When he died in the grandest house in New Orleans sixty-nine years later, he was among the richest, most powerful men in the world. Working his way up from a roadside fruit peddler to conquering the United Fruit Company, Zemurray became a symbol of the best and worst of the United States: proof that America is the land of opportunity, but also a classic example of the corporate pirate who treats foreign nations as the backdrop for his adventures.

Zemurray lived one of the great untold stories of the last hundred years. Starting with nothing but a cart of freckled bananas, he built a sprawling empire of banana cowboys, mercenary soldiers, Honduran peasants, CIA agents, and American statesmen. From hustling on the docks of New Orleans to overthrowing Central American governments and precipitating the bloody thirty-six-year Guatemalan civil war, the Banana Man lived a monumental and sometimes dastardly life. Rich Cohen’s brilliant historical profile The Fish That Ate the Whale unveils Zemurray as a hidden power broker, driven by an indomitable will to succeed.

Jim Johnsen

 

jfco.com
Securities transacted through StillPoint Capital Member firm FINRA/SiPC

 

 

 

 

 

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10 Comments
  1. Andrea says

    As an executive who has worked directly for the largest OoH companies and sold millions of dollars of media- the business model needs to shift from “selling real estate” to providing media solutions, if 28 % of the inventory is available the easiest customer to sell is someone already doing business with you- match your unsold inventory to your clients needs, audience. If you have a compelling strategy to increase their business 9 times out of 10 they will invest. Don’t reinvent the wheel or hold out for an unrealistic rate expectation. Those ad dollars the industry is losing are currently going to competitors who provide “solutions” and who stay in front of customers-

  2. Nick Coston says

    I very much like this article is well written and correct the only thing missing is as a person who drives professionally in over 75 markets a year and checking out the boards I buy media on, There are plenty of high-quality static billboards that are blank or have expired copy on it. Likewise has plenty of digital boards where all the flips are not sold and plenty of house ads are repeating over and over. It’s an excellent point just like it was years back when I worked in the print industry if a page went and sold that’s money you never get back likewise with billboards. I’m pretty sure I have the answer to this that would help the entire industry. And no one to date has done it for out of home. They’ve done it for print and television but never our industry. You should ask me about it sometime there’s a lot of money in this. Again thanks for posting this extremely timely and provocative piece.

  3. Raymond Rodriguez says

    What to do with unsold inventory indeed. One of Capitalism’s enduring unsolved dilemmas. it plagues every sector of business with perishable and/or real estate assets, like restaurants.

    Any road-trip yields sign after sign with some version of, “Your Ad Here”. Maybe it’s time to plan media attrition rather than proliferation. Study and invest in the most productive assets and phase out the rest. Even remnant discounting is a disincentive to close deals early; making it harder to charge full pop when the market is up.

    BTW, the CIA was chartered in 1947, five years after the OSS. Previously, US spying was military and a freelance cottage business. Not to nitpick, but the guys United Fruit hired to subvert those countries were not CIA until the coups of the 1950-60’s, when the Dulles’ boys and Kermit Roosevelt Jr. went shopping for where to invest the, “particular set of skills” they evolved during WWII.

  4. Bill Board says

    the business model needs to shift from “selling real estate” to providing media solutions. Great points Andrea! thank you!

  5. Bill Board says

    Thank you for sharing your experience and thoughts Mr Nick Coston. We are all intrigued and curious to your solution to unsold #OOH space!
    “I’m pretty sure I have the answer to this that would help the entire industry.” Please do tell!

  6. Bill Board says

    An Economic and History lesson rolled up in one smart reply.
    1. “Even remnant discounting is a disincentive to close deals early; making it harder to charge full pop when the market is up”
    2. ‘US spying was military and a freelance cottage business. Not to nitpick, but the guys United Fruit hired to subvert those countries”

    Thank you Mr Rodriguez.

  7. Thomas R Giesken says

    I believe our industry would take off like a rocket much like mine has since i started dedicating 1 PSA spot out of 8 for Non Profits. It builds good will and creates friendships. And Friendships always helps with zoning and permits and sales. It is the way we should go as an industry. We don’t have a reason NOT to do it. I should write an article about this…..

  8. Nick Coston says

    Responding to Tom’s comments below keep in mind that the out of home industry already donates a ton of space for public service announcements. I have ridden markets that sometimes have over 25% PSA up because business is slow. That goes for static bulletins posters shelters and transit. Keep in mind while they don’t make any money on it he still have to pay the bill poster to post the PSA‘s. But I believe if you visit any out of home companies website as well as that of OAAA you will see how much space they really donate and also how to do it.

  9. Bill Board says

    These are standard old school operating methods which go back well before my time in the business. Most responsible OOH Owners do so. Thank you Thomas Giesken.

  10. Bill Board says

    Yes, Nick Coston. PSA is as old as the Industry. As in over 100 years. Public Service posting is an easy method to serve one’s community. The best way is to back it up with committed service to community in way of volunteering time to those non-profit organizations as well. Digital PSA is one of ‘three table stakes’ to play in the OOH Ownership game. Frankly it is nothing out of the ordinary nor considered extraordinary. Thank you for commenting.