The arrival of Europe’s leader in the sector will change the face of the out of home media industry in South Africa.
My view on the out of home (OOH) market has always been that it is a great medium which is not always understood by creative, and that it is historically the land of the cowboy. Well, a lot has changed and even more is about to.
During 2013, JCDecaux, one of the world’s leading OOH advertising companies, will open its doors for business in South Africa. The appearance of this global giant affirms that our market is now appealing enough for international investment. Competition will have a new meaning and while the most recent entrant might not yet fully appreciate the realities of working in our market, they will nevertheless bring promises of streamlined and seamless outdoor alternatives. Not surprisingly, local OOH providers are more than a little nervous.
According to its website, the global giant has existed for 40 years and is the only company worldwide to focus exclusively on OOH media and have a presence in all areas of the market – street furniture, billboards, transport, retail, airports and digital.
The arrival of JCDecaux in South Africa will bring fresh competition into the outdoor arena and will no doubt disrupt the cosy relationship that exists between current outdoor players. JCDecaux will have all the advantages of being a global giant in terms of thinking, creativity and innovation, yet it will have the low overheads and flexibility of a small company.
From an advertising industry perspective, we can also expect a general improvement in OOH service levels across the range of existing companies, fewer broken promises, sharper rentals and lower production quotes. Other welcomes side effects might be a more transparent industry, a robust Out of Home Media South Africa (OHMSA) and published rate cards. (While some OOH media owners claim to have rate cards, few exist in reality.)
Also, the arrival of this global giant may well open the door to global commitment deals and fixed currency pricing for multinational clients. This wasn’t an option before with the current local and regional outdoor companies.
That said, no matter how professional the company is and how competitive they are, it all comes down to site locations. It’s the same as a real estate business: location location location.
It’s our understanding that over and above the deluge of existing billboards available in Johannesburg, there are currently 3 000 applications up for review, of which JCDecaux has applied for more than 100.
It’s hard to say if these applications are genuine or an attempt by existing OOH companies to block conquest by the new entrant. What is certain is that the approval agencies will be under pressure and the approval process will be more rigorously monitored by all.
This is ultimately a good thing.
To put the new applications into perspective, if one considers that Johannesburg is currently home to 2 300km of road, there might come a time when commuters could take a Tarzan-like approach to the problem of traffic congestion and swing from board to board to get to work! On a more serious note, while the likelihood is that not all of these boards will be approved, clutter is likely to become a major concern. Lower rates will be an immediate consequence, as will the need for creative with more impact.
Logistically, there will also have to be a clean up from a procurement point of view within the legislative bodies that control the approval and application process. Opportunistic players that may have taken short cuts will without doubt be caught out and exposed. Further, the comfort currently enjoyed by OOH media owners operating in the twilight world of boards in the renewal process and illegal boards will have to change. The new player is unlikely to accept such trading norms and so we should expect more legal action and faster status resolution.
More and more advertisers are aware of the legal and reputational ramifications of advertising on illegal boards even when media owners offer to bear any costs resulting from legal battles. This behaviour has to stop; it’s just not acceptable any more.
Realistically, JCDecaux will not have entered our market with the goal of just securing 100-odd boards. They’re a leader with all the capability and resources to become a number one or at least number two in the rankings. If site acquisition is not possible or too slow I would expect one of the top five OOH companies to merge with them. Sadly, the smaller and often black-empowerment entities may well be forced to close due to economic pressures. Good sites from these closures would then be cherry-picked.
In my view, JCDecaux moving into South Africa is just the beginning. It’s the first stop for the company before spreading its wings into the rest of Africa within a year or two. They’re a large and potentially aggressive entrant with the forex and ability to back their acquisitions. The lack of cohesion and professionalism that currently exists within our market place has left the door wide open for them.
If I were an outdoor media owner, other than the current number one or two, I’d certainly be sweating. And that’s not to say that the current giants have nothing to worry about, but they are in a solid position to compete. They are professional and large enough, plus they know the South African and African trading conditions. We’re not in Europe! They’ve also got great reputations and solid business relationships.
In terms of OHMSA, it has always struggled and never really reached its potential, possibly because of the current market composition. The arrival of JCDecaux will change this and participation by all players (large and small) will no longer be just an option.
In conclusion, the arrival of this
giant is great news for media agencies and clients alike. And the timing is perfect. Africa is ripe for the picking and the new player is a
formidable ‘coloniser’ given that
they’re the largest outdoor advertising specialist in the world, market leader in Europe and number one service provider in the Asia-Pacific region. If you think of a country, they probably operate there and, as such, they cannot afford not to come into South Africa and, by extension, Africa.
Having JCDecaux in our market will be like slipping a great white shark into Emmerentia Dam. All the fish will suddenly swim a little faster and there will be fewer paddlers!
(Cue the ‘Jaws’ soundtrack and let the games begin.)
Gordon Patterson is chairman of VivaKi South Africa and group managing director of the Starcom MediaVest Group (SMG).
This story was first published in the December 2012 issue of The Media magazine.