By Macharia Kamau

 

Outdoor advertising firms are earning far much less than they deserve, research shows. This is due to lack of structures to quantify the value derived from billboards and other outdoor advertising media.

Posterscope, an out-of-home advertising agency, notes that the rates charged for outdoor advertising have stagnated for close to a decade while operating costs having been on a steady rise.

Market research firm Synovate estimates that the out-of-home segment of the advertising industry rakes in Sh10 billion every year and accounts for about 20 per cent of the advertising spend by local firms. According to Synovate, local firms spent Sh48 billion to advertise in 2010.

 

Running thin

George Mugendi, managing director Posterscope Kenya, said the out-of-home segment of the advertising industry accounts for more than the Sh10 billion of the close to Sh50 billion spent on advertising.

He, however, said advertisers should be paying much more for space on the outdoor media.

Mugendi noted that due to the static rates charged by out-of-home media, their profits have been running thin every year and to make up for the marginal returns, the agencies have been increasing the number of sites they run.

The move has resulted in too many billboards to an extent that they are an eyesore – what is referred to as clutter in the advertising lingo. While additional sites might bridge the margin gap, advertising clutter might not always be good for advertisers or companies hiring the advertising sites, as too many messages end up confusing consumers rather than driving the message home. Clutter is also becoming an environmental concern.

“The rate cards for out-of-home media agencies in Kenya have not been revised for the last eight years,” Mugendi said in an interview.

“When you factor in inflation and operational costs that have been going up over the years, it is easy to conclude that the outdoor media owners are being ripped off.”

Mugendi says advertisers usually take the three traditional media of newspaper, television and radio as their primary media, while out-of-home media are only factored in instances where a company’s budget allows.

 

Value delivered

This, according to him, is despite the value delivered by out of home media when compared to the traditional print and broadcast media given that more and more people now spend their time away from home.

“Today, more people are spending much more time away from their homes. This means consumption of traditional media is going down and they are more exposed to the out of home media,” he said.

Another factor that may have played down the importance of these media has been increase in the number of players. While increased competition might be good for people buying their services, industry players have been undercutting each other in a bid to bag more clients.

On average, billboards positioned in prime areas charge advertisers Sh120,000 per month but Mugendi says this is a paltry amount.

“The daily charges on other media are four or five times more than what is charged by billboards but they barely come close to delivering value that is delivered by a billboard… the number of impressions that a billboard gets during that one month it is up do not tally with the money that advertisers pay,” he said.

 

Raw deal

It is not only the out of home media companies that are getting a raw deal as according to Mugendi, advertisers may at times not get value for their money when placing adverts in these media.

“Not all out of home media are created equal. There are instances where the companies that pay for use of billboards get little or no value. For instance, where a billboard is facing away from traffic,” he said.

Posterscope launched in Kenya recently and plans to take advantage of the haphazard nature of the outdoor advertising industry and offer advisory services to advertisers on the nature of value they would get from advertising on out of home media.

The firm also expects business from out of home media owners, who according to Mugendi need to fuse technology and innovation in their work.

The company will operate as an advertising agency but with specific focus on out of home media where it will draw up media strategies and plans for firms looking at using this category of media to advertise.

It will also do media buying for its clients. It will however not own any advertising sites.