Two Aspects Will Dominate Outdoor in 2019

There are two aspects that will dominate outdoor advertising in 2019 in South Africa. The one aspect is a substantial increase in the supply of digital billboards to the South African advertisers. The other aspect is an increase in regulatory confrontations between the industry and municipalities. Once again, the industry’s lack of unity is going to be under the spotlight as a result of these two aspects.

 

Increase in Digital Billboards

The advertising industry is notorious for following the trends elsewhere, especially Europe. The sharp increase in the supply of digital billboards in Europe has inevitably to be followed by local operators. The prediction is that it is going to happen this year in South Africa. The mouthwatering rates that are flying around for digital space can no longer be ignored and any operator worth his salt has to have a digital billboard. If that is coupled with the annual decrease in the costs of installing digital billboards the time if more that ripe for a substantial increase in the digital space. However, operators need to be carefully consider the following:

  • In the short term, digital billboard will erode income on static billboards;
  • The ad spend for outdoor need to increase for the digital holding to be profitable;
  • The economics of a digital billboard is dependent on the fact that advertisers will pay more for less time on a billboard, if this rate drops operators may find themselves on the short end of a stick;
  • Creatives are not currently suited for digital displays especially videos as the viewing time of 3 to 4 seconds is substantially shorter that the current 15 or 30 second video advertisement;
  • Digital advertising also creates space for smaller advertisers and should be explored to avoid a bombardment of the agencies with a digital supply which will surely drive down the price.
  • In future digital billboards will be more reliant on data to attract advertisers and the technological upscaling of your billboard is therefore important.

Leadership in the industry will be an important impetus for this expansion as it may easily turn sour and start a price war that will leave, especially smaller players vulnerable. The current fragmentation of the industry will certainly not assist role-players to traverse this new expansion.

 

Regulatory Confrontations

 

At least two important court cases will be decided this year. The case regarding the Joburg by-laws will be heard in April and regardless of the outcome it is going to have repercussions. If the by-laws are set aside, the old and equally problematic by-laws will be enforced with new vigor. If the attack is not successful the new by-laws will be enforced with vigor. Another case will decide the jurisdictional issue between municipalities and provinces. Besides that, it seems that Gauteng is going to promulgate new regulations.

However, the scion that has already raised its head is the notion by municipalities to levy a display fee for billboards. These are sometimes applicable only to private property and some on all billboards. This cannot be regarded as anything else then a tax. In some municipalities these run into the hundreds of thousands of rand per year and in some instances more than a million per year. This needs to be attacked by the industry as a collective because its eroding effect on income on billboards is going to be substantial. Again. the fragmented industry does not assist in tackling this problem. It is going to be difficult for single companies to tackle it alone as the pockets of the municipalities are deeper than individual companies.

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