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Executive summary

Following a long period of strong and sustained growth for the out-of-home (OOH) industry, driven primarily by the digitisation of inventory which both increased supply and demand for the OOH medium, COVID-19 lockdowns and restricted movement across Australia has heavily impacted consumption and subsequently impacted revenues and OOH companies' financial performance.

Forecasts at a glance

Total OOH market (A$ millions)

CAGR 2019-2024 based on gradual recovery trajectory

OOH Advertising     2.34%

Social distancing, lockdowns and restricted movement across Australia have had an unforeseeable impact on the reach of OOH, in turn, reducing its ability to be monetised.

One must look no further than the name of this medium to determine why its growth trajectory has been abruptly halted by COVID-19. In an advertising market increasingly focused on reach, and a society facing continued urbanisation and population growth, no one predicted an immediate future where OOH would face a decline in consumption. In May, oOh!media announced that the COVID-19 restrictions drove a 50 percent decrease in daily audience both locally and globally across all of its formats combined.3

As a result of declining consumption, it is forecast that advertising revenue will decline 44.3 percent in 2020, driven primarily by declines in revenue for the April and June quarter.

By necessity, the market has switched its focus from consolidation in ownership and growth through continued digitisation and improvements in product, to defence tactics.

Just as the market was beginning to settle after a period of mass consolidation and ownership changes, including oOh! media’s acquisition of rival Adshel, APN’s acquisition by JCDecaux, and the purchase of QMS by private equity firm Quadrant (and its success in securing a 10 year contract with the City of Sydney after a long competitive tender process), the decrease in incoming revenue has shifted the industry’s focus on investments in product to reducing the cost base and driving operational efficiencies in an effort to protect company value. In March, oOh!media went into a trading halt to raise capital to “improve the company’s financial flexibility and liquidity"4, while JCDecaux withdrew their 2019 dividend proposal in order to “both strengthen [their] liquidity and enhance [their] financial flexibility”.5

Despite significant environmental challenges as a direct result of COVID-19, the OOH industry is well positioned to bounce back, with audience targeting, programmatic trading ability and the sophistication of measurement capability all central to driving future demand.

The recent growth within OOH has been heavily reliant on digitisation of assets, which stimulated an increase in both supply and demand for this medium. Australia’s OOH providers have invested heavily in their digital OOH infrastructure, aided by the falling manufacturing costs of LED displays, which have made the economics of operating digital out-of-home (DOOH) installations steadily more favourable. Given the market is heavily digitised, this lever for growth will not be as effective in the future as it has been in the past.

Key to the reboot of the OOH industry will be advancements in audience targeting, and the medium’s subsequent ability to trade its inventory programmatically. While DOOH technology currently allows for more sophisticated targeting based on factors such as time, weather and context, a focus on business processes and sales platforms is required to fully take advantage of these new developments.

Programmatic OOH presents a strong opportunity for marketers to reach a more qualified audience in real time, and key players are best placed to develop strong programmatic offerings by capitalising on their economies of scale granted through previous consolidation within the industry.

The recovery from the impacts of the COVID19 pandemic and longer-term sustainable growth within the OOH sector will rely on the sophistication of the industry’s measurement system, MOVE (Measurement of Outdoor Visibility and Exposure). In order to effectively compete within an increasingly digital advertising landscape, the measurement methodology must evolve from reporting a demographic’s ‘Opportunity to See’ and ‘Likelihood to See’ based on static measurement figures, to offering real-time and ‘Actual’ reach results. This is especially true in a market where advertising investment will be continually scrutinised as the economy recovers from the shock caused by COVID-19.

While advertisers deferred or cancelled their investment in OOH, it’s not all doom and gloom. The industry made good use of its inventory by promoting community-focused messages and providing value to citizens throughout the pandemic.

In July, oOh!media used its assets to promote Kind July for the second year, alongside “Stay Strong Victoria” messaging across digital assets as the state faced ongoing lockdown restrictions.In September, oOh!media partnered with STATION, a Melbourne-based gallery, to exhibit artworks across Victoria, in an effort to both support citizens and the Arts sector.7

JCDecaux used its inventory to thank the essential workers who continue to tend to their assets during the ongoing pandemic, and in September, partnered with R U OK? Day by building an interactive billboard which dispensed information about how to respond when a person tells you that they are not okay.8

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