OFT Result , No Good News for Smaller Media Owners

Press releases 2011 – OFT publishes outdoor advertising market study

12/11 3 February 2011

The OFT has today published its market study into the outdoor advertising industry which has found that the sector is broadly competitive amongst both specialist buyers and media agencies.

As part of the study, the OFT looked at whether the payment of rebates by outdoor media owners to specialist buyers could affect incentives and worsen the deals offered to advertisers. It found that competition between buyers and between agencies ensured that the majority of these rebates pass through to advertisers.

However, the OFT found some potential for rebates to distort how campaigns are booked and increase the price that advertisers pay. To address this, it recommends that advertisers should take steps such as using media auditors to monitor campaigns to ensure agencies and specialist buyers act in the advertiser’s best interests. In addition, advertisers should consider negotiating contracts which explicitly set out how rebates are to be treated.

The study also looked at potential barriers to entry and expansion for media owners. As a result the OFT has opened an investigation into contracts entered into by each of two media owners, Clear Channel and JCDecaux, with some local authorities relating to advertising on street furniture such as bus shelters and information panels. In particular, the OFT will consider the long durations and potentially restrictive terms of these contracts.

The OFT has written to these two media owners to explain that there are reasonable grounds for suspecting that the agreements restrict competition, within the meaning of the Competition Act 1998 and/or Article 101 of the Treaty on the Functioning of the European Union. The OFT’s investigation is at a very early stage and no assumption should be made that any of the agreements infringes competition law.

Heather Clayton, OFT Senior Director of Infrastructure, said:

‘While there is evidence that competition broadly works well for larger purchasers of outdoor advertising, our study shows that advertisers could do more to ensure that they get a good deal from specialist outdoor buyers and media agencies.

‘There are some concerns around barriers to entry and expansion for media owners and the OFT has launched a competition investigation in order to assess whether certain street furniture agreements are compatible with UK and EU competition law. No assumption should be made at this stage that there has been an infringement of competition law.’

In light of the investigation under the Competition Act and its other recommendations, the OFT has provisionally decided that a market investigation reference to the Competition Commission would not be appropriate at this time. It is now consulting on this conclusion and responses should be sent by 5pm on 18 March 2011 to: Outdoor Advertising Market Study (Floor 2C), Office of Fair Trading, Fleetbank House, 2-6 Salisbury Square, London EC4Y 8JX or email: outdooradvertising@oft.gov.uk


The market study report and Q&As are available from the market study page.
See press release OFTs launches market study into outdoor advertising (May 2010).
OFT market studies are carried out under section 5 of the Enterprise Act 2002 which allows a market-wide consideration of both competition and consumer issues.
Market studies involve an analysis of a particular market with the aim of identifying and addressing any aspects of market failure from competition issues to consumer detriment and the effect of government regulations. Possible results of market studies include: enforcement action by the OFT; a reference of the market to the Competition Commission; recommendations for changes in laws and regulations; recommendations to regulators, self-regulatory bodies and others to consider changes to their rules; campaigns to promote consumer education and awareness; and a clean bill of health.
Under section 131 of the Enterprise Act the OFT may make a market investigation reference to the Competition Commission where it has reasonable grounds for suspecting that any feature, or combination of features of a market in the United Kingdom for goods or services prevents, restricts or distorts competition in connection with the supply or acquisition of any goods or services in the United Kingdom or part of the United Kingdom. The OFT’s guidance sets out four criteria, all of which must, in its view, be met before it will decide to make a reference.
The investigation of contracts between media owners and local authorities is being carried out using the OFT’s powers under the Competition Act 1998. Under section 25 of the Competition Act the OFT has powers to investigate where there are reasonable grounds for suspecting an infringement of UK or EU competition law. The OFT has sent information requests to Clear Channel and JC Decaux to assist with its investigation but no assumption should be made that any of the contracts under investigation infringes competition law.

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Advertising billboards use facial recognition ?

Advertising billboards use facial recognition to target shoppersIn Japan, sci-fi prophecy is now becoming reality, with the first digital billboards tailored to passing shoppers tried out in malls
In Steven Spielberg’s sci-fi film Minority Report, an interactive ad shouts to Tom Cruise’s character “John Anderton, you could use a Guinness!” – having identified him by scanning his iris. In Japan, sci-fi prophecy is now becoming reality, with the first digital billboards tailored to passing shoppers tried out in malls.

Produced by the electronics giant NEC, the ad signage uses facial recognition software and can identify the shopper’s gender (with 85-90% accuracy), ethnicity and approximate age. With obvious attractions for marketers, they can then be targeted with ads for appropriate products – perfumes for women, for example.

Still in the future for now are individual-specific ads as in Minority Report, but the potential is there for the software to measure the distance between features – a distinctive aspect of our face that does not change with disguises or even surgery – and then find a match on a database in less than a second. The ad panels have so far caused little concern in Japan, where there is less sensitivity to big business keeping tabs on citizens; but NEC now plans to introduce them abroad, and western consumers may be more resistant.

“We don’t expect the billboard to look back at us, but that is exactly what is happening now,” says Marc Rotenberg, the director of the Electronic Privacy Information Center (Epic), a Washington DC-based research centre that aims to protect privacy. “Companies are increasingly impatient to get to us, and once these practices are commonplace it will be hard to reverse them.”

But NEC insists there is little to fear: “As our system does not store any images – it stores only the analysed results [viewers’ age and sex] based on those images – we feel there is no privacy issue.”

Along with Blade Runner-style 3-D ads, Tokyo now also boasts a camera-equipped vending machine that suggests drinks to consumers according to their age and gender. Weather conditions and the temperature are taken into account too.

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Camelot marketer presses digital outdoor

Camelot marketer presses digital outdoor sector for accountability
LONDON – The digital out-of-home industry needs to improve accountability, increase interactivity and trade on a cost-per-acquisition basis to increase its share, according to Robert May, head of instants at national lottery operator Camelot.

Digital outdoor: Camelot executive lists challenges for the industry
Speaking at the DOOH summit in association with Media Week, May said: “The new [audience measurement system] Postar sounds great, but can the outdoor industry go one better? Can we get equality in accountability with TV?”

Despite setting a list of challenges to outdoor media owners, May explained how digital outdoor had become an important part of Camelot’s marketing strategy and led to Camelot increasing its outdoor spend by 400%.

Camelot uses digital out of home to publicise rollovers, and promote Lotto and Euromillions draws up to 7.30pm on the day the winning balls are chosen, through digital screens.

May said: “Digital out of home solved many of the problems we had with outdoor. It provided increased flexibility, allows us to pull down the virtual sheetage at the last minute, and then measure the number of incremental impacts.”

He went on: “It created a virtuous circle. We are provided with more data points, which lowers the risk of wasting media spend. And we started to see an effect which gives us faith to invest in non-traditional outdoor media, such as handing out fortune cookies or coins at train stations.”

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Digital goes X Factor

Digital posters by Nokia, McDonald’s and Virgin Trains will be showcased in front a judging panel that includes senior marketers from Procter & Gamble and Virgin Media.

The contestants will have to prove their poster’s creative, technological and logistical excellence, and then await the judges’ vote, combined with that of the audience, to know the winner.

The competition is part of a full day of presentations on digital out-of-home, with tickets free clients and media agency directors.

Nokia’s production house Grand Visual will present Nokia’s launch digital poster campaign for the N97 model while agency Elvis will showcase the Liverpool Wall execution for Virgin Trains. McDonald’s interactive Piccadilly series will be presented by its agency Leo Burnett.

“It’s time for the digital out-of-home medium to put good work on a pedestal and praise it, and shame the lazy work,” said Neil Morris, director at Grand Visual. “We need this kind of forum where outsiders, and insiders can start to understand that good work is being done, what it looks like and who is doing it.”

Noelle McElhatton, editor at Haymarket Brand Media, the event’s co-organiser, said: “When people think of excellence in outdoor, the Economist poster series of the 1990s comes to mind.

“We felt it was time for this year’s DOOH Media Summit to pose the question, has digital out-of-home matured enough to claim its own iconic posters?”

The judging panel features Michael Garvey, acting head of brand advertising at Virgin Media, Usama Al-Qassab, business leader at Procter & Gamble and Andrew Walmsley, the deputy chairman of iLevel.

This year’s event will also feature Yasmina Siadatan, winner of the 2009 BBC series of ‘The Apprentice’. She will talk about how Alan Sugar’s Amscreen has brought brands such as HMV, Lloyds Pharmacy, BP, Whitbread, Guardian Media Group and the FT into digital out-of-home.

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Awards confirm strength of Outdoor

Outdoor Planning Awards celebrate strength of the industry
The annual awards, organised in conjunction with Media Week, invited entries from a breadth of media agencies and clients and saw specialist Posterscope hit the headlines for playing a part in every top prize of the night their exacting attention to detail following a few disappointing years at the annual event.

Having reportedly sought advice about where they were going wrong in their entries the homework paid off, earning them acclaim most notably for their work with PHD on the Grand Prize winner ‘Here Today, Goo Tomorrow’, the campaign for Cadbury Creme Egg.

Lindsay Weedon, chief executive of Maxus UK, who joined the awards judging panel for the first time, notes the strength of the campaign’s creative work.

She says: “The creative was very strong visually with colours than looked fantastic in outdoor, particularly on the 96-sheets.

“They adapted the creative for different formats which meant there was bespoke creative on every site which is very unusual but it showcased the medium really well. You could tell the media and creative agencies and the specialist had worked very closely together.”

It was this kind of team work that was evident across the board and which led the judges to conclude the sector is in better shape than ever before.

Steve Hatch, managing director of Mediaedge:cia UK, praised the standard of the technology that is now being used in outdoor advertising, attributing the rapid advancement to the consolidation of specialists such as Aegis’s Posterscope and WPP’s Kinetic.

He pays special attention to the expeditious development of technology that is now being used in outdoor advertising.

He says: “The thing that shone through for me was how naturally people are incorporating technology now.
“A lot of activity that is being billed as experiential this year will be billed as mainstream in three to six months while not that long ago things that were considered experiential wouldn’t become mainstream for two or three years.”

He adds: “People are no longer thinking along the old ‘rules’ that say you can only innovate in outdoor if it’s a campaign for a film release, music client or youth brand. That’s not the case anymore.”

Hatch and Weedon stress the Posterscope clean sweep was purely accidental and not spotted by the judges until after they had completed the judging session.

Hatch believes the torch should shine with equal strength on the media agencies who submitted the awards entries.

He says: “In each case we looked at the work and the entries, which were agency-led. We thought of it as a PHD or Vizeum win, for example, not a Posterscope win. But of course they have all been well-advised by Posterscope along the way.”

For Hatch the bigger picture that remains following the awards is the shot in the arm the out of home sector is currently enjoying.

He says: “The big take out I had from this compared to other awards I have judged was the great reminder that actually there’s a lot of mileage and creativity when looking at single channels.

“We celebrate cross-channel a lot but does that question the importance of in-channel thinking? These awards prove it is not difficult to have broader levels of thinking in the medium.”

Rob Atkinson, managing director of sponsor Clear Channel Outdoor, tells Media Week this year’s planning awards – the fourth – will be remembered for showcasing high levels of innovation.

“We are seeing more innovation across all the categories and a real breaking down of barriers,” he says.

“The biggest trend is a strong collaboration between media, specialist outdoor, advertising, digital and mobile agencies and media owners and in addition to that brands are increasingly using the power of outdoor in the public social space to drive traffic online or in-store.”

Ultimately, as with any advertising medium, no amount of innovation and collaboration can make a difference if the clients are not tempted to the medium. So it is with a sense of justifiable pride in his sector that Atkinson points out the flood of new brands to enter the out of home arena of late.

Q4 2009 and Q1 this year have shown strong growth, particularly among brands represented in the awards, and in categories such as food, finance, motors, telecoms and retail, he says.

The real success of the awards is the recognition by big blue-chip businesses who continue to value the importance of the outdoor sector to their communication and advertising strategies. There seems to be growing excitement about the awards which is linked to all the growing possibilities in outdoor media.

As the advertising industry in its entirety picks itself up and dusts itself down after an impossibly hard year it seems last weeks’ outdoor planning awards sent an important message.
Out of home advertising is in rude health and thanks to the commitment of the strong poster specialists the UK’s advertising scene has to offer, some of the world’s biggest brands are now getting that message too.

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Russia Today – on a Billboard near you

From Russia with news

The arrival of RT means that state-sponsored channels from Moscow, Beijing and even Tehran are now beamed directly into our homes. Should we be worried, asks Ian Burrell

One of RT News’ provocative billboards in south London

Earlier this week John Ryley, the head of Sky News, stood up in front of an audience at the Cambridge Union Society and asked to be set free. “I neither want nor need to be subjected to the controlling hand of a regulator armed with a set of codes and sanctions,” he complained.

According to Ryley, the requirement of the broadcasting watchdog Ofcom that British broadcasters produce news which is free of political bias is no longer necessary. If not for democratic reasons, then for pure economic ones, it is in the best interests of commercial news broadcasters to be balanced, he argued. “In simple terms, it’s good business for us to be impartial.”

Lord Mandelson is convinced he knows what is happening here: Murdoch wants to “fill British airwaves with more Fox-style news”. And yet in many British homes, the unashamedly pro-Republican Fox News is already available, along with the news channels of the Islamic Republic of Iran (Press TV), the Chinese state (CCTV-9), and the television arm of the Russian state news agency RIA Novosti (RT or Russia Today). All these channels, including Fox News UK, are covered by the Ofcom regulations on due impartiality but many critics claim the rules are flouted.

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Liquidation or Salvation

Titan poised to sell UK business

LONDON – Outdoor media owner Titan Outdoor is considering a number of options for selling its UK business, with a decision expected early next week.

Titan: poised to sell UK business

It is believed there are at least two potential bids on the table. Titan is thought to be considering an offer from a venture capitalist-backed consortium, as well as a management buyout, led by UK chief executive Jon Slatkin.

Industry sources also believe Titan has been approached with an acquisition offer from a rival major outdoor media owner.

The potential sale is understood to be part of a process of looking at a number of strategic options for the UK business, as parent company Titan Worldwide seeks to restructure its global financial arrangements.

The negotiations follow the sale of Titan’s UK roadside estate to Primesight last August in a deal worth an estimated £6m, and last month’s decision to pull out of the Republic of Ireland, after reaching a mutual agreement with national rail company CIE Group to surrender the €100m outdoor media contract.

Titan Outdoor, which employs about 100 staff at its head office in London, became the UK subsidiary of privately-owned Titan Worldwide in 2006, when chairman Bill Apfelbaum led a £10.6m takeover bid of Maiden Outdoor.

Slatkin declined to comment.

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