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It has been a funny old year so far for outdoor. The medium entered 2005 with boundless optimism based on optimistic revenue forecasts - and the first quarter was strong in revenue terms, with some media owners reporting year-on-year growth well above 10 per cent.

Then, in spring, a mini-downturn kicked in and growth began to slow.

True, the media sector was having a tough time across the board in the second quarter, but outdoor had begun to believe it was almost immune, so strong has it been in recent years.

Sustained economic prosperity has been good for outdoor - more so than for any of its traditional rivals. These days, we not only work harder, we play harder, spending more time out of home than ever before. Audiences have been on a sustained upward curve at a time when other mass media have been losing ground. This has translated into ad revenue growth, with only online progressing faster in recent times - so any slowdown, however slight, is met with consternation.

But, according to Stevie Spring, the chief executive of Clear Channel, we should keep the current situation in context. "We're still growing as a medium," she points out. "We're not growing as quickly as we were earlier this year, but we're still bucking the trend in the media market."

Nigel Mansell, the chief executive of Concord, tends to agree: "The medium is still moving forward. I know many people think that quarters three and four will be strong again."

Both buyers and sellers remain confident outdoor can soon reach the psychologically important goal of a 10 per cent share of display ad revenue. Last year, according to Outdoor Advertising Association figures, the medium managed a 9.3 per cent share on revenues of slightly less than £850 million. This year, revenue is expected to top £880 million.

Business as usual? Perhaps - but, surprisingly for a medium with history seemingly on its side, outdoor has been beset by niggling doubts and distractions this year: nothing major when taken in isolation, but enough to help create an undercurrent of unease.

A number of contracts have been up for repitch - and media owners tend to take their eyes off the advertising ball when they're jostling for position. Maiden beat JCDecaux to the consolidated £35 million Network Rail business, and Clear Channel scooped the largest street-furniture contract ever, the £250 million Transport for London bus-shelter business.

The pitch for the London Underground contract, on which Viacom Outdoor is the incumbent, is ongoing.

These are nice distractions if you win, obviously. As David Pugh, the managing director of Maiden Outdoor, reveals: "We have earmarked £5 million to invest in developing the Network Rail sites over the next two years. As the market leader, Maiden has been leading the revival of the billboard sector: reminding agencies and clients of the branding power of large canvases that can be creatively planned through Postar."

However, Pugh touches on two of the industry's less welcome distractions.

The first is research - there has been frustration in some quarters that sites in the transport-related sector still haven't properly been integrated into Postar, the joint industry audience research system on which outdoor's main trading currency is based.

Deadlines have come and gone and the data still isn't ready - but, luckily, the medium's planners and buyers still have (limited) reserves of patience.

There's less patience, though, on the second issue - the apparent need to remind agencies of the power of big canvases. That reminder is necessary because almost all of the medium's recent growth has been down to the rise of the six-sheet format. The growing availability of six-sheets has allowed the medium to attract new types of advertisers - the packaged goods multinationals, for instance. Many such advertisers have limited outdoor track records and have often tried to lean on their greater knowledge of other media - notably magazine ads.

It's now common to see outdoor executions that are basically single-page magazine ads writ large.

There is a feeling that this has been exacerbated by creative agencies.

The (contentious) theory is that the larger creative agencies began to cut corners during the recession - and, far from attempting to dissuade advertisers from re-purposing press executions, they actually began to encourage this as a cost- and time- saving strategy.

For many who've been worrying about this for some time, alarm bells were ringing at last October's ±±¾©Èü³µpk10 Press Awards. Steve Parker, the UK buying director of Starcom Motive, was on the judging panel. "I wasn't the only person on that jury worried that there didn't seem to be any work that would make us fall off our chairs," he reveals. "I don't think there's any simple reason for it. But it is worrying for the medium."

Indeed it is, especially if it is true that craft skills are ebbing.

Spring is irritated by such talk. It's nonsense, she insists: "The truth, as anyone who's been near a creative department will tell you, is that when creatives get a chance to use that big canvas, they bite your hand off."

She does, however, admit that the large-format sector may face structural issues. Some clients regard outdoor formats as "press ads on steroids" but the biggest problem is the "disjunction between media and creative agencies". She explains: "Sometimes, the media agency will start talking outdoor before the creative agency is on board and it will have very little time when it does become involved. It's the sort of thing that happens in a softer market - because planning and buying tends to happen later."

But if the medium's momentum is to pick up again, priority must be given to the 48- and 96-sheet markets, which, according to many sources, are bumping along the bottom at the moment. It's not just a creative issue - it's one for planners and buyers too.

And that, as it happens, brings us to arguably the greatest distraction of all in the outdoor business over recent months - the merger, completed in the second week of June, of Poster Publicity and Portland, to create the WPP-owned mega-planning and buying company Kinetic.

The new company has a stature to rival Aegis' Posterscope, which for years has been the dominant player. Now, it's game on - between them, they control just under 70 per cent of the buying market - and we could see fireworks and market volatility as a result, many observers say.

Kinetic's emergence could have a major effect on Posterscope, a company whose business model is dependent on being able to trade on ever-increasing volumes. But now it knows it will probably lose billings through structural realignment - for instance, it currently buys for MediaCom, a WPP agency. You don't need a crystal ball to work out that Kinetic will soon move to mop up that business.

So it faces challenging issues. The interesting thing for many observers is whether it has the stomach to change its business model - and whether Aegis will let it. Posterscope has been a wonderful cash cow for Aegis.

The bean-counters at plc level won't like hearing that the world has changed.

Kinetic could also call into question the whole basis of trading in outdoor, where buyers have traditionally benefited from the medium's equivalent of the agency deal in the TV airtime market - except in outdoor, it's generally agreed that less in the way of added-value bonuses makes it back to clients. In a growth market, it's easy to keep everyone happy - media owners are getting more revenue, buyers are getting bigger discounts and advertisers seem to be getting ever better value.

But if momentum stalls, for whatever reason, the books become that little bit harder to balance. More excitable observers have posited the theory that Kinetic will attempt to put pressure on Posterscope by screwing media owners to the floor on rates and passing as much of the benefits as they can on to clients - especially those whose outdoor performance is monitored by auditors. Having set a new gold standard, they would then wait for new business to roll in. There has been speculation, for instance, about just how far Kinetic might go in wooing Unilever, which has its outdoor advertising planned by Concord and bought by Helix. WPP's MindShare, remember, brought in Unilever's consolidated European media planning by promising to deliver exceptionally keen prices across all other media.

All good stuff - but life is seldom this dramatic. And whether there's lots more to be squeezed from media owners in terms of price is a moot point. As demand picks up, in fact, rates will probably harden. We'll see, obviously - and it's expected that demand will pick up across the second half of 2005. Many buyers, though, expect that it will be new formats, rather than the old mainstays at the 48- and 96-sheet end of the business, that will help the market kick on again.

And when we talk about new formats, we're talking principally about digital technologies - screens able to show moving pictures, mainly, but also methods of providing an interactive return loop. Poster sites enabled with Bluetooth technology, for instance.

But new out-of-home technologies have never really lived up to their hype. Can that really be about to change? Viacom, for instance, is trialling small video screens running up the escalators at Tottenham Court Road Tube station. It has high hopes for the format and Tim Bleakley, Viacom Outdoor's joint managing director, says digital's time has come. "It's not just about putting up any old screen in any old place. You have to deliver critical mass in terms of an audience by putting screens in places where you know the audience will spend time with them," he says.

But Glen Wilson, the client services director at Posterscope, argues that there are only so many places you can put poster sites. And there is only so much value you can add by improving their quality, for instance by lighting them. "The next level is adding digital utility to sites," he argues. "Digital in general - everything from big screens in railways stations to displays in supermarkets - is the fastest-growing sector of the market. It will be a significant driver in pushing the medium above 10 per cent."

No-one seriously doubts that it will get there; and, according to Roy Jeans, the managing director of Magna Global UK, outdoor's recipe for success remains compellingly simple. "Consolidation of the medium around the world into three main media owners has helped reassure advertisers who've not always been sure in the past that they could trust the medium," he says. "Outdoor remains a growth medium."

OUTDOOR AD MARKET SPLIT 2004 2005 Clear Channel 26% 27% JCDecaux 25% 24% Viacom Outdoor 23% 22% Maiden 14% 13% Others 12% 14% Outdoor spend (pounds m) 848 917