For Clear Channel Outdoor, Digital Saves the Day

It didn’t take Ron Cooper long to figure out Clear Channel Outdoor’s (CCO) strategy as it emerges from one of the toughest ad years ever. After spending three months visiting nearly 20 local offices, the new CEO (who replaced Paul Meyer in January) for CCO Americas is ready to ramp up the company’s digital assets, a key contributor to the parent company’s growth.

Clear Channel Outdoor this year plans to add at least 120 new digital billboards to its portfolio of 472 digital boards in 33 of its largest markets. In a first for the out-of-home industry, CCO also plans to introduce later this year full-motion digital screens in bus shelters beginning in San Francisco and Washington, D.C.

CCO’s digital expansion is already under way in San Francisco, where it is erecting a high-profile digital board at the base of the Oakland side of the Bay Bridge. In Dallas, it’s adding two boards to the 11 currently in operation. Digital video screens are also being added to CCO’s inventory in airports, such as Denver and Chicago O’Hare.

Digital signs were a proven winner last year, especially in a depressed market. In 2009, spending on digital billboards grew 15 percent to $551 million, per PQ Media. The firm predicts this year spending on digital billboards, about a fourth of all digital OOH expenditures, will grow 19 percent to $657 million.

While other out-of-home companies froze digital rollouts, the additions made by CCO kept revenue for CCO Americas from dropping more than 13 percent to $1.2 billion (parent CCO saw its revenue drop 18 percent to $2.7 billion). Digital “led our company in revenue growth,” said Cooper. “The signs cost several hundred thousand each, but the high capital costs are supported by the revenue that the signs generate. It’s a different medium [from traditional static boards] with a different set of economics.” According to estimates, digital boards in high-profile locations are able to command rates up to three times higher than static boards.

Marketers such as Coca-Cola, McDonald’s and Fox Television increased their OOH presence during the recession. New advertisers such as Clearwire and Fifth Third Bank have also started using it.

Advertisers are even becoming more sophisticated in how they use the boards, blending content and marketing messages. For example, a Tampa/St. Petersburg, Fla.-area hospital posts the average waiting time in the emergency room. CCO is even trying to turn some outlets into news sources, having launched the Total Out of Home Network in Chicago, featuring real-time traffic from CC Radio (and sponsored by the Illinois Lottery).

Coupled with the industry’s new Eyes On ratings, Cooper said he believes digital boards will be key to increasing out-of-home’s share of ad budgets. A CCO analysis of data from several research firms found that although people spend 27 percent of their time out of home, the medium still only commands about 5 percent of ad budgets.

“I don’t think digital will replace traditional,” said Cooper. “But over time, digital will become a more important part of our business.”

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