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There has been a great deal of alarmist comment recently about cost

inflation in the outdoor medium, following the news that poster

advertising revenues grew by 16% last year. Even those who should know

better have just looked at the headline increases and drawn

superficially obvious, but in reality erroneous, conclusions.

Anyone trying to draw a true picture of the medium’s performance over

the past few years has to look at the underlying rate of inflation, to

use a term much in vogue among economists these days.

This means of course stripping out one-off extraordinary factors and

other variables that have altered the context of the medium, so that we

can accurately compare like with like.

In reality, cost inflation in core poster products has been relatively

low. Much of the increased revenues have derived from the growth in

six-sheets, where the number of panels has risen from 20,000 in the

early 90s to nearly 50,000.

The boost in revenues has been fuelled mainly by greater investment in

bus shelters, rail properties and the birth and development of the

point-of-sale six-sheet sector at grocery supermarkets.

Last year, in particular, the number of six sheets rose by more than

20%.

Product improvement, specifically illumination, is another element that

needs to be factored out of any cost-inflation comparisons.

Better products deliver larger audiences, which means outdoor can

legitimately charge higher prices (unlike TV where the mechanism seems

to work the other way round).

Illuminated figures

In the past 18 months the level of illuminated 48-sheets across the

medium has almost doubled, so an allowance has to be made for this

factor when estimating true outdoor inflation.

We also have to remember that the 16% figure includes ambient media,

which has probably doubled its size in the past couple of years. The

number of ambient ’sites’ is rising at an extremely high rate, which

accounts for most of the extra revenue spent on this sector of

outdoor.

Furthermore, the transport side, rail and buses, has experienced higher

demand and hence occupancy, which has helped to move total transport

revenue.

Looking purely at standard products, there has been no real rise in

costs.

I remember in 1991 selling an 800 core pack for pounds 195 per panel

over two weeks. Nowadays that same pack would be sold for little more

that pounds 220.

If inflation had been on average 2.5% during the past seven years then

in real terms the rate today should be pounds 232.

True costs

In fact once all these factors have been taken out, the true rate of

inflation for comparable products works out at less than 2% per

annum.

To take an overall perspective, advertisers have been flocking to

outdoor in the last few years because it offers tremendous impact,

coverage and share of voice.

There have been immense improvements in products, sites and audience

classification systems.

In addition outdoor is the only display medium whose audiences are

rising, at a rate of 2% a year, according to the Department of

Transport.

To be sure, prices are rising in a very modest way. But the value being

delivered has increased at a much faster rate.

Alexandra Ward is group sales director of Maiden Outdoor.