Limited Space and High Demand —It’s Great to be in OOH
We have heard for years how Sunset Strip has hosted the best OOH in the world, particularly to movies and entertainment. Reading the story from Hollywood Reporter, (link below) reminds us of OOH’s unique supply and demand economic model. In finite inventory environments, measurement doesn’t matter, programmatic will not be a factor and creative doesn’t make the buy. Plain and simple, it’s location, location, location.
Netflix’s purchase of Regency Outdoor’s Sunset inventory of 35 billboards has critically reduced supply to create a severe shortage which fails to meet demand.
The category’s perception of must have coverage or presence in the high profile Sunset Boulevard and surrounding area, dictates the importance of OOH providers managing to maximize pricing and occupancy. Hence, the agency comments regarding higher rates and earlier commitments. Rates for prime locations now range from $75,000 to $150,000 per unit per four week period.
This should have an upward effect on the rest of the LA market’s rates and provide longer term contractual agreements as well. Finessed leveraging (sales) could even raise the tide for multiple markets.