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Why Not Us?

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.

 

Why Not Us?

A couple of hours before game time and it got me thinking…which of course got me googling.  A 30 second spot during tonight’s live coverage of the Superbowl will set you back a record $5.25MM.  In 1991, the year I first started working in the outdoor advertising industry, that same advertisement cost $850,000.  If my calculator is working right, that’s over a 600% increase and a CAGR (compound annual growth rate) of almost 7% per year.  While arguably one of the best properties in the entire analog TV world (as we refer old-fashioned TV these days), it’s still damn impressive to be able to bang out 7% increases for 28 years running, especially when you consider how low inflation has been during this period.  

Why haven’t we, in the outdoor business, been able to grow our rates at something even half of what CBS is banging out for the Superbowl?

Which got me thinking.  Why haven’t we, in the outdoor business, been able to grow our rates at something even half of what CBS is banging out for the Superbowl?  Anecdotally guys in the field tell me in major markets that rates have dropped by 30 to 50 percent from 1991.   So if, according to the OAAA, inventory has remained fairly static since 1991, and rates on the whole haven’t increased, how did we go from an approximate $1.5B revenue industry to a $8B industry during this time frame.  Some how the math doesn’t work, right? If rates haven’t increased, and inventory hasn’t increased…how did the #OOH industry increase by over 500 percent over the time frame?  Either we have been good expanding rate, or we have under reported inventory expansion…or maybe a little bit of both.  Please weigh in with your thoughts!

Cost of Super Bowl Advertising Breakdown by Year  Source: Nielsen Media Research

Jim Johnsen
Office: (203) 406-2424
jjohnsen@jfco.com
www.jfco.com

 

 

 

 

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