No windfall forecast for outdoor ads from pension reform

Since mid-February, pension funds have spent about zl. 16.8 million ($4.3 million) on outdoor ad campaigns to win Poles over to their services. At that rate, spending by these financial services firms could run zl. 70 million ($18 million) by year's end.
If that concentration keeps up throughout the year, spending on outdoor ads by the nation's new pension funds would account for about half of the 20% sector growth in revenue forecast for this year. But outdoor ad agencies, so far, are downplaying any major growth engine from pension reform.
"It isn't the particular medium for this product," said an executive with outdoor advertising company Art Marketing Services (AMS), who wished to remain anonymous.
AMS is a major player in the outdoor ad market, claiming 24% market share, based on data supplied from the Association of Outdoor Advertising. AMS is forecasting sales of zl. 90 million ($23.07 million) this year, more than double last year's results and well above the outdoor ad sector's growth expectations, according to information from AMS and other ad agencies.
Last year, outdoor advertising accounted for 8% of revenue in the nation's $1.5 billion ad market. With the overall market slated to grow to $1.9 billion and outdoor ads projected to hold their current market share, revenue could reach $150 for outdoor advertising. But for many media watchers, that appears to be a lackluster forecast.
"I think there will be nominal growth" in both revenue and expansion, said Gregory Paine, media director at McCann-Erickson.
One reason behind this, Paine said, is many advertisers are not pleased with the quality of service from outdoor companies, which may not be very transparent. Other mediums are more user friendly, he said.
Industry members said a lack of good research on billboard advertisements has made it difficult to attract new business. "It's very difficult to find the standard to give us all the answers," said the AMS executive.
A potential growth area for outdoor advertising agencies is diversification of services, types of displays and client base. Traditionally, cigarette makers, brewers, insurers and auto makers dominate the outdoor advertising market. But outdoor ad agencies say insurance and especially financial services, which include pension funds, could be spending more to get their message across outdoors. Moving outside the capital city also presents opportunity. "I think some of the regional centers have more room for growth," said Timothy Hennessy, deputy general manager of J. Walter Thompson-Parintex. While he hesitated to speak about market saturation in Warsaw, he also did not see large growth for outdoor ads here.
Last year, J. Walter Thompson's billings came to $65 million, out of which approximately 10% was in outdoor advertising. Billings increased by 30% compared to 1997, but the amount of outdoor advertising remained at 10%. That trend looks set to continue, even though J. Walter Thompson-Parintex is doing media planning for the Pioneer pension fund. "I don't think it's going to significantly increase," Hennessy said.
Television accounts for 55-60% of all advertising in Poland. Although still the nation's leading ad sector, the lion's share has dropped from 75% a few years ago, said Steven Vogt, general manager of advertising agency Twin Advertising.
But television's loss has been a gain distributed among other media including radio, print and outdoor advertisers, with no single medium consistently outpacing the rest of the pack, Vogt said. For example, at the beginning of 1998, 15% of Twin Advertising's billings were for outdoor work, an almost twofold rise from previous years when outdoor billings were not more than 8%. But for 1999, outdoor work for the company is expected to be down to 8-10% of all billings, Vogt said.
Outdoor advertising is commonly seen as a support medium or supplement to advertisers who mainly use television and whose budgets can allow it. "I think as a mainstream driver, you would not use outdoor," said Hennessy of J. Walter Thompson-Parintex.
But ad agency executives were far from negative on outdoor, especially for regional advertising and promotion of new brands.
"You can build great brand awareness by this," said Christian Rinkel, client service director at Schulz & Friends ad agency. And because of outdoor's high visibility "it's great for product launches." Currently, supply is outstripping demand, causing downward pressure on prices, said Twin Advertising's Vogt. "They've overinvested the infrastructure."
That, said others, could cause prices to drop by 20%. With relatively low entry fees already for outdoor ads, any further price drop could make the sector more attractive.
For example, to advertise on television usually requires a minimum capital outlay of $1 million. On the other hand, the price tag runs $120,000 for a targeted one-month outdoor campaign in Warsaw covering 600 billboards, Vogt said.