The Reason for Outdoor Ads

The American consumer has little time to hear that commercial on the radio, view the commercial on television or read the ad in the newspaper (see “Viewing Habits of the American Public”). The one advertisement that they are guaranteed to see is Outdoor Advertising. When they are driving, they are Outdoors’ captive audience.

As described in greater detail below, Outdoor Advertising is:

* Less costly than other forms of advertising.
* Targets consumers who are more mobile than previously.
* Competitive reach as compared to other media venues.
* Creative design can create market awareness and name recognition. 

Outdoor Advertising provides your product and services a direct way to reach your audience.  For this reason, beginning in 1994 through 1996, business entrepreneurs saw an opportunity to capitalize on the upcoming demand for outdoor advertising. They knew that outdoor advertising was moving up, from a discretionary advertising buy to mainstream advertising.

Outdoor Systems was one of the largest advertising \ buying services in the country, placing clients in outdoor advertising. Since they had the business, they began to purchase outdoor advertising companies and went public. One of their first purchases was Gannett Outdoor, a large billboard company in the northeastern United States that was purchased for 672 million dollars, to be following one year later by the purchase of 3M Media for 1.2 billion. During this time the stock had a price earnings ratio (PE ratio) of 200. The highest PE ratio of technology stocks were in the 70’s. Today, Outdoor Systems is known as “Outfront Media”.

 What made this stock sell at this price, knowledge that the advertising market was shifting due to the habits of the American consumer, and the fragmentation of radio, television and print media. The consolidation in the outdoor advertising industry has been fast and furious, with companies acquiring the assets of smaller independent operators. As these acquisitions increase, the competitive pricing of the independent operators is disappearing fast. Additionally, more national clients are demanding a greater presence in outdoor advertising then ever before, creating a greater demand for limited signage.

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