“Remaining relevant and engaging” – The keys to recovery in the Out of Home business
To begin, can you outline the scale of impact of the COVID-19 crisis on your business, and that of your partners, from airports to brands?
A fundamental driver of media and advertising revenue is targeting audiences in sufficient volumes. With drastic reductions in both domestic and international travel, it is no surprise that revenues have also followed the same trend as passengers. Our partner airports have seen passenger numbers decimated through the closing of state and international borders. The impacts have been severe. Our national carrier Qantas has gone into hibernation, temporarily standing down some 25,000 employees and Virgin Australia has fallen into voluntary administration. There is no hiding from the fact that the aviation sector has been temporarily struck down. It has been an interesting time working with Advertisers. During this period, we have seen some categories severely impacted such as travel and tourism, retail and luxury goods, while other categories such as grocery, alcoholic beverages and online retail have seen sales significantly increase. Despite this, we have seen advertisers pull back on advertising spends. For the categories hit hard, this is driven by the need to save cash flows, save costs, supply chain issues and limited demand for the products or services. For the categories which have seen increases, they too have opted to limit advertising for different reasons such as lack of availability of supply or disruption of freight, or that demand is so high that advertising is not currently deemed as necessary.
Like many businesses around the world, COVID-19 has forced us to navigate through unchartered waters with no map or recent experience to guide us. The health and safety of our people has been of utmost importance through this time, and as a business we continue to follow government guidelines. We have all adapted to the conditions of working remotely and all our leaders have increased communications with their teams and each other to ensure our people are connected and clear on how we are tackling the challenges in the immediate and near future. For our team in the field who work to post our classic campaigns and service our assets, particularly those which are used for public amenity such as bus shelters, we’re taking extra measures to ensure they are kept safe.
We have focused strongly on supporting clients and re-booking or shifting campaign placements based on audience targeting objectives. We’ve also launched an ongoing COVID-19 ‘Pulse Report’, which provides our clients with updates and relevant insights into audience behaviours and attitudes – information based on our unique combination of proprietary sources, including transactional data and mobile data to understand changes in volumes, travel patterns and consumer behaviour.
We have remained in close contact and are working closely with all of our property partners to navigate the challenges we are collectively facing during this period. In the initial weeks of the COVID-19 impact, our sales teams worked with hundreds of clients to reallocate bookings to assets less affected by audience numbers or to later in the year, pending a material recovery in audience numbers. I’m extremely proud of how resilient our team has been under such difficult circumstances and also very grateful for the strength of our relationships with our airport partners and with Qantas, who we represent in Lounges and Inflight entertainment. All have been faced with extremely challenging circumstances and we have strived to work collaboratively to ensure we can achieve sustainable outcomes for all parties involved.
What have been the key elements you have focused on, both internally and externally with your partners?
Communication and collaboration have been critical. In the airport space, the situation was changing daily. We were adapting to sudden drops in numbers, initially it was thought the drop looked like 50%, then within a week it was over 90% reduction in passenger numbers. Our approach has been to remain practical, realistic and compassionate – we are all suffering huge business impacts which are not just operational or significant business financial impacts, there is a huge impact on people, many of which we have worked with for many years. Being a great partner isn’t just about innovation or revenue, it is how you deal with people in good times and bad.
We have seen your communications with the consumer change, with relevant public health messaging top of mind. What has driven this and what do you see as the role of Out of Home organisations in these challenging times?
Despite the impact on audience volumes and changes in travel behaviour, Out of Home still has the power to reach audiences at scale when they are on the move.
For oOh!, an integral part of our approach is to make public spaces better and engage as deeply as possible with audiences. In these challenging times, this has never been more important. Out of Home is seen by almost all Australians, effectively a public noticeboard, connecting brands and citizens. We have launched several nation-wide initiatives using our media assets to communicate health and social distance reminders, as well as spreading messaging of kindness during the pandemic. We’ve also run several Federal Government campaigns, ensuring that all communities are aware of current restrictions and requirements.
We have continued to adapt and remain agile by using our assets to show support in public spaces in the face of 2020. This includes pre COVID-19, when Australia was suffering terribly from the bushfire crisis which devastated much of the country and communities. When high temperatures were forecast, we worked with many of our council partners to deliver messages across our assets to help those in need find shelter from the heat and hydrate.
Most recently, oOh! joined the World Out of Home Organisation (WOOHO) in the global initiative to unify the world through Out of Home and social media as we battle COVID-19 together. The campaign encourages people across the world to start #SendingLove with images that would be amplified from social media to Out of Home assets across the world.
At this stage, can you identify any lessons from the crisis for the business of airport advertising and consumer engagement?
COVID-19 has forced all businesses to review what and how they operate and their underlying business model. Advertisers and media buyers will continue to be driven by advertising accountability and ROI. Data will provide an in-depth understanding of the airport space as we look at movement data to understand the audience return to the environment, and beyond the airport space as we look at the behavioural and attitudinal insights, the return of consumer spend and the economic return.
oOh! has access to the most robust data sources that provide deeper insights into where and how to target specific audience sets. Advertisers will be using data to understand where audiences can be found across alternative Out of Home environments. In the recovery phase and beyond, the right robust data sources will be integral to attracting spend back to the airport.
How might the new world look for the business once the crisis eases and people resume travelling? How are preparing for this? Has the crisis changed your overall strategy?
I think there will be a couple of important changes, that will benefit everyone…
Commercial model – a much stronger focus on balancing risk and reward. A greater understanding and value placed on partners who invest hard and understand the key drivers of an airport media business, for example – high quality data sources, tech and content skills and capability – all of which support the environment as distinct and hold the ability to drive deeper engagement. These elements will be critical as advertisers look for effectiveness and efficiency.
The battle for the advertising dollar – data, better targeting of high value audiences within the airport and more attractive and competitive pricing will all be more influential to income than ever before. Airports and airport media need to be ready for the fight and have a strong, scalable, targeted value proposition that stands up against a stronger competitive set. It’s not a case of build it and they will come – it needs to be differentiated to drive value for customers. Mass won’t cut it – it needs smarts, engagement opportunities and to be distinctly different from other media opportunities. Partners without this capability will suffer during the recovery and in a post COVID-19 world.
We are staying close to our airport advertisers – and via data and audience numbers, will inform them of how and when we-re introduce them to the airport space. Initially, this may look like longer campaign periods to reach pre COVID-19 volumes or reduced campaign investment, propped up in other Out of Home environments. We will be adapting our model based on our proprietary data sources to ensure we can continue to deliver effective campaigns for our clients and be in the best position possible when the market eventually returns to 2019 levels.
How do you see relationships with airport partners moving ahead? Are there new contractual structures and models that would fit this new world better?
At the core of any successful relationship, there must be trust. We are incredibly fortunate that we have built an enormous amount of trust in our working relationship – which flows both ways. This has been the corner stone, which has allowed us to deliver significant growth to the airport media sector over the last 10 years. As stated previously – the underlying principle of risk and reward and the value drivers which are delivered will have to be understood and valued differently going forward. Ultimately the market will decide how this will look – but if airports do not understand the value drivers and purely look at the (particularly fixed) financials, there are some significant outcomes which should be considered. If media businesses can’t make an appropriate return, the good ones will look to exit the space and invest in other media environments where they can. The impact to the airport is that it will not be represented appropriately, and the market will value the environment less, as the better equipped media businesses will compete and win over those who have not made the appropriate investments in the value drivers (such as data, tech and content).
In addition, the knock-on effect on the advertising market is clearly significant, so while passenger numbers may return, the economic impact of COVID-19 means that even if passenger numbers return to within say, 25% of previous numbers, the world has undeniably changed. Budgets have changed, confidence levels have changed, employment levels have changed. All these factors will impact the return of revenue to the airport space. Given it is one of the lower margin sectors within Out of Home, the appetite from boards and executive teams looking for bigger returns at lower cost is real and needs to be factored into the next horizon. Airports are a significantly more expensive environment to operate in, this is due to the walk by nature of environment requiring very high quality, low pitch digital assets, the required approvals, security clearance and available times to do install, maintain and clean assets.
How do you see the role of data use evolving for you and your partners in the post-COVID-19 era? What investments are you making here?
Put simply, data is now more crucial than ever because of all the changes and uncertainty. Data is critical to understanding audiences as they navigate this changed environment and adopt different behaviours and attitudes. To date, we’ve invested significantly in our DataScience offering which launched last year and have built up a sophisticated platform that combines various exclusive data sources into a bespoke offering that has no equal in the marketplace. Remember that it’s not just about numbers, but insightful analysis too, and that’s what we provide.
Access to such robust data and analysis enables brands to reach their buyergraphic audience at the right moment in their day, with the right creative messaging. We do not just tell you where the audience is – rather, we take that and overlay it with an understanding of how they’re moving, their purchasing behaviour based on real transactions, not claimed data, their mindset and their mood in order to reach them with real impact.
The correct use of data and insights across each of our environments, including the airport space, delivers a positive experience for the consumer and therefore a positive affiliation to the environment in which they’re consuming the media.
Do you see brands pulling back from marketing investments and for how long potentially?
We have seen brands pull back in advertising spend, and it’s widely reported that marketers globally are being challenged with shrinking budgets and are under pressure. This is to be expected, so we have worked with every one of our clients to ensure they have the information they need to continue to advertise, or to shift their campaign bookings. We’re flexible and focused on delivering the best outcomes for their particular businesses. It’s a mistake to assume that everything was postponed though. Some brands have continued to advertise, backed by insights that demonstrate the audience is still Out of Home, albeit moving differently across different environments – more in suburbs than CBDs, for example.
History has taught us that it’s crucial for brands to remain present through a crisis and continue to advertise and be top of mind with their consumers. A great example of advertising through a crisis where it has proven to pay off is In the 1920s. Post was the category leader in the ready-to-eat cereal category until during the Great Depression when Post cut back in ad spend, while Kellogg’s doubled its spend. The result: Kellogg’s profits grew by 30% and the brand became the category leader. [Inc source.]
While we can’t predict how long the pandemic’s effects will last, we know that it’s increasingly important for advertisers to reach their target audience and deliver ROI on their campaigns. We also know that Out of Home is a strong driver of ROI and, when used in conjunction with other media, drives more than 25% increase in ROI performance.
Do you see content becoming even more of a differentiator in the airport space for your brand partners brands? How can you help them achieve this?
We believe that providing a great customer experience is the key to delivering engagement. We are adamant that content plays a critical role in delivering great experiences and airports have a distinct advantage of having audiences in high dwell areas, where they can entertain, inform and engage in a way not many other media environments can. This is a key reason we have invested in having this capability within our business and not an “outsourced” solution.
oOh! introduced content into Qantas Lounges in 2014, and we have continued to evolve this model over the years. We assess the ways the audience behave in each environment, how long they are in front of the advertising screens, and then depending on that engagement opportunity, we procure content which is highly relevant to the audience and ad serve throughout the content. This can be in the form of news, entertainment, stock exchange updates, weather, boarding announcements. We have a studio team, an online team, a social team and creative services team who ensure we have the right mix and services available for our clients. This expertise and experience sets us apart from other Out of Home operators in Australia.
What new opportunities do you foresee in a post-COVID-19 world for oOh!media? How well positioned are you to take advantage?
We have over 8,000 digital screens across the oOh! network, so being able to amplify brands associated with contextually relevant, interesting content wherever they work, play, socialise and shop is a great opportunity for the community, our advertising clients and our commercial partners. Our experience in content, not just for entertainment but for public messaging, promoting the arts, local community announcements and safety messaging, as part of our commitment to making public spaces better. Taking this approach benefits all involved, and we’re excited to evolve this important area of our business.
As Out of Home increases in recognition as a primary media channel and performance booster to online and TV, the importance of not just being ubiquitous, but being relevant and engaging is where we see the upside for our business.