Rapid Rate of M&A Activity Is a Positive Economic Indicator of the Overall Strength of the DPB Advertising Space
NEW YORK, NY — A new wave of M&A activity has taken hold in the digital place-based (DPB) media space with more than a half dozen deals announced in the last eight months. The question is why now, and is all of this consolidation good for the DPB advertising?
The short answer is yes: consolidation was inevitable.
Over the last four years there were many reasons for companies not to make M&A deals because there was always a looming economic crisis to dampen confidence. The market has moved past this point. A strong equity market combined with low interest rates has created an environment that’s more conducive for companies to execute M&A activities. The high rate of M&A is also a positive economic indicator of the overall strength of the DPB advertising space, and it’s a signal of confidence by the acquiring companies.
As digital place-based networks achieve greater scale, they simultaneously increase reach and improve operational efficiency. Acquiring a competitor can also be less costly than building additional screen real estate from scratch. Out-of-home advertising is one of the very few wide-moat businesses that still exists today, and this includes digital place-based networks. A “wide-moat” means that it’s difficult for a competitor to come along and duplicate a business model. Since location defines this medium, and prime locations are at a premium, it’s often easier for one established digital advertising network to buy another network’s footprint in order to increase scale.
But the biggest reason for buying a competitor is that greater network reach attracts more advertising revenue because it makes it easier for brands to plan and buy the medium on a local, regional, or national scale. Currently, advertisers are able to buy mass media such as television and traditional out-of-home with greater efficiency than DOOH/DPB advertising media. While there are a few proprietary initiatives under development that are aimed at helping media buyers and planners buy DPB media more efficiently, none to date have gained traction. Large M&A transactions will also force all the ad-based networks to rethink how they are going to reposition themselves in the overall DOOH/DPB ecosystem.
Networks Reaching Critical Mass
Merger and acquisition activity in the DPB advertising space started heating up with an announcement in January by Gilbarco Veeder-Root, a leading provider of retail petroleum technology, that they were acquiring Outcast Media, a leading digital place-based pump-top advertising network. Outcast Media’s network will be combined with Gilbarco’s gas station TV network, Applause TV, increasing the overall network’s reach to a projected 100 million monthly viewers.
In March, JCDecaux announced that it would acquire CEMUSA’s network of street furniture and transportation-based panels in five countries, including the United States, Brazil, Spain, Portugal, and Italy. The acquisition added more than 57,000 advertising panels, including digital screens, to JCDecaux’s network.
Captivate Network announced in April that it would acquire the Wall Street Journal’s Office Media Network, creating one of North America’s largest in-office professional media networks. The acquisition increased Captivate’s total number of buildings by more than 70% and increased its unique monthly reach by nearly 60%. The merged network grew to more than 12,000 digital signage screens across 1,800 office buildings and delivers more than 65 million ad impressions each month.
June was a particularly busy month for M&A announcements. Rockbridge Growth Equity announced that it would acquire Gas Station TV (GSTV), a direct competitor of Outcast Media. GSTV is one of the largest digital place-based video advertising networks in the United States, reaching more than 50 million viewers at gas pumps each month. GSTV has tripled its advertiser base since 2009 and counts numerous Fortune 500 companies in the automotive, retail, consumer packaged goods, and personal finance industries among its clients.
Also in June, Astral Out-of-Home, a leading OOH provider in Canada acquired Macdonald Outdoor’s digital billboard network, adding 21 large-format screens across Alberta. And Adspace Networks entered a joint selling agreement with National CineMedia (NCM) and Cinema Scene to create a new, larger digital place-based network in movie theater lobbies. NCM’s Lobby Entertainment Network and Cinema Scenes’ Trailervision network include more than 1,700 theaters with 3,600 digital place-based lobby video screens.
CBS Outdoor announced in July that it would acquire Van Wagner’s outdoor advertising businesses, adding approximately 1,100 large-format billboard displays, including digital screens in 11 top U.S. markets. Clear Channel Outdoor made a bid for Van Wagner as well.
Last week, Gilbarco Veeder-Root announced a strategic partnership with VeriFone Media to expand its gas station forecourt business. According to Gilbarco, the partnership will create the largest at-pump interactive digital place-based media network in the world, reaching more than 95 million on-the-go consumers each month with over 30,000 place-based digital advertising screens.
Outcast Media, Gilbarco’s forecourt media business purchased in January, and Applause TV, Gilbarco’s gas station TV network, will be merged with VeriFone’s digital media and VeriFone Digital Network (VNET) businesses with VeriFone Media managing the entire network. With the deal, VeriFone’s Digital Network now spans more than 140 media markets across United States and the United Kingdom including all of the top 50 U.S. media markets, providing one-to-one, interactive media engagement across more than 50,000 screens in taxis, gas pumps, and convenience stores around the world.
DPB Matures and Strengthens
Ultimately, the ongoing consolidation process will lead to a maturing and strengthening of the medium and increased awareness of DPB media with advertisers. Multiscreen campaign planning has become a high priority for media planners and buyers as consumers’ media consumption habits shift to a wider array of viewing platforms. Digital place-based media is increasingly included on media plans because it is complementary to traditional television with its ability to target hard-to-reach consumers in specific venues and locations. Consumers are spending more time outside the home commuting, shopping, and at entertainment venues, all of which provide new opportunities for advertisers.
Free Online Tools for Media Buyers and Planners
The DOOH Network Locator is designed to help media buyers, planner and strategists identify digital place-based advertising networks by location, venue type, demographics and reach. There are more than 160 advertising-based networks organized by country. The United States is organized by venue type as it has the broadest range of venue categories, with the greatest number of ad-based networks operating within each category.
Digital Out-of-Home (DOOH) advertising, also known as Digital Place Based (DPB) media, utilizes strategically placed, networked digital signage displays to reach on-the-go consumers while they are outside of their home with highly targeted messages. Digital place-based screens can be found in locations that include transportation hubs such as airports, railway and bus terminals; executive networks in office-building lobbies and elevators. Other venues include shopping malls, gas stations, fast-casual restaurants, fitness centers, hotels and more.