Canada’s top two outdoor media suppliers jockey monthly for the greater market share – currently 46% for Pattison and 45% for Viacom, according to the Canadian Outdoor Measurement Bureau’s January Market Data report. Quebec’s Astral Media Outdoor remains strong at 7% (42% in Montreal), which means the big three make up 98% of COMB’s inventory.

Competition is supposed to be good for business, but does a three-party system really add up to the best deals?

‘I think it’s a very healthy market in terms of competition and good competition always translates as good for the buyer,’ says Mary Falbo, president of the COMB in Toronto. ‘There’s a lot of inventory and buyers can find some pretty interesting vehicles.’

From a different perspective, David Chung, president of Toronto’s MaxxMedia and current president of the Canadian Media Directors’ Council (CMDC), says that ‘to an extent, these three companies do have the bulk of the market, almost like a bit of an oligopoly. What I worry about is that it’s not as competitive as perhaps five or six companies sharing the locations amongst themselves.’

‘From a positive perspective,’ Chung adds, ‘they have been fairly competitive and that has worked in our favour.’

The problem, however, is that while competition for market share means lower prices and better locations, the competition to get those locations has pushed leasing costs up, leaving a lower profit margin for the outdoor companies.

Glen McConnell, president of Vancouver-based Pattison Outdoor, says ‘competition is healthy for advertising agencies as well as direct clients. Up until last year there’s been a negative impact on margins throughout the industry, but we are really picking up at this point.’

Profit loss, whether due to bidding wars for locations or the slacking of the overall ad market, are ‘not necessarily good for us,’ says Doug Checkeris, managing partner at The Media Company in Toronto. ‘The problem with taking the profit out of their business is we have to be concerned about whether they are operationally as strong as they were before. I would say there is more suspicion on the quality of postering than ever. Can everything go up in a week? Will it get posted in the right time frame? If I buy 50 GRPs a day for a week, will I actually get that? Are they doing a good job of giving us what we pay for?’

Another worry is: what are the big three doing to grow their businesses and improve service for their clients?

Innovative inventory?

‘There’s been a lot of consolidation in outdoor media, but there are also smaller players finding new opportunities, and there’s been an increase in those guys,’ says Denny Grandmaison, who does outdoor media buying at Media Edge CIA in Toronto. ‘Viacom has really focused on its poster and transit shelter opportunities but has backed away from the unique options, and that’s really created a dynamic. A traditional out-of-home buy doesn’t mean you have to go to these guys, but a lot of extended opportunities are coming from these people that don’t have big inventories.’

Almost all of the ‘alternative’ outdoor media options now available are from small companies like Woodbridge, Ont.’s Motomedia (billboards on trucks), Montreal’s Digital Advertising Networks (video billboards in malls), Toronto’s NewAd Media and Montreal’s Zoom (bathroom ads) and Toronto’s Roar (in-bar locations).

All of the major outdoor companies maintain that these kinds of opportunities do not impact their business, and may be leading to incremental spend on the out-of-home medium as a whole.

Vancouver, certainly, has seen some innovation in terms of locations. This spring, Viacom-Decaux, a partnership of Viacom Outdoor and Paris-based JC Decaux will unveil a complete set of ad-friendly street furniture. They’re promising an array of new designs for items like newspaper boxes, garbage cans, bike racks and benches to inaugurate a 20-year contract awarded by the city late last year. This follows another innovative project which saw Viacom erect a $1.5 million pedestrian/cyclist overpass in New Westminster in exchange for 20 years’ worth of advertising on the structure.

The construction was an option of last resort in a city that regulates outdoor advertising heavily. It was also the only way for Viacom to enter a market traditionally owned by locally-based Pattison, which still maintains 70% of the Vancouver marketplace, according to McConnell.

These moves were also part of a plan by Viacom to focus on bus shelters and street furniture advertising as part of its core business. Currently, Viacom holds 75% of Canada’s transit shelter advertising. Construction projects have allowed the company to increase its inventory from zero to 250 billboard faces in the Greater Vancouver Area in the last five years. Viacom is slated to build a second bridge in Port Coquitlam this spring, and a third in New Westminster later this year.

‘Certainly operational excellence was a big part of the rewarding of the street furniture contract for Vancouver,’ says Checkeris of Viacom-Decaux’s win over Pattison for the contract last fall. ‘My understanding was that part of the bidding was operational, and being able to do what they say they will.’

Yet Viacom ran into problems in December with its transit shelter contract in Toronto, when it was discovered that city transportation officials could not provide an inventory of how many shelters Viacom had erected, what they were earning, and whether or not the city was getting the amount of free advertising the contract provided. A review committee has since appointed a city official to oversee the execution of the contract, and Viacom VP Blaire Murdoch comments only that city officials now have a full inventory of all of the shelters.

Astral Media in Quebec has already unveiled new street kiosks – street-level advertising columns with public service announcements and city maps on one side and an advertising panel on the other. Kiosks are now in Montreal, Quebec City, Sherbrooke, the airports in Montreal and Quebec City and, since December, the University of Laval. The company has also erected 45-foot-high column advertising spaces along Montreal’s major thoroughfares.

Meanwhile, Pattison Outdoor has little to unveil but a slightly larger inventory than last year.

Innovative pricing

More disconcerting for media buyers is the recent proposal by the big three to dispense with the traditional built-in agency discounts and move to a single rate card. The three companies approached the CMDC with the proposal late last year.

‘We had issues in terms of moving from a grocery cart to the single rate card so we provided them with that opinion and I think they understand where we are coming from,’ says CMDC head Chung. ‘We’ve had a series of meetings with them and it’s now up to the individual companies to determine whether they will move to a single rate base.’

Neither COMB, Pattison, nor Viacom officials were prepared to comment on the proposal. Astral president René Desmarais said, ‘What we’re doing is negotiating net rates, and if agencies want to see the grossed-up price, we can do that. As the Outdoor Media Association of Canada (OMAC), we’re looking for ways to improve our business, and this is one of the items we want to have in common.’

Bob Reaume, VP of media and research with the Association of Canadian Advertisers (ACA), says that he’s ‘not necessarily opposed to that move. This idea that agencies get a 15% discount is a remnant from an archaic system now anyway.’

‘However, we would hope that this proposal is not in any way going to somehow raise rates for the outdoor media product. Another caution we would raise is that some agency and client systems are not quite set up for this. Many of the other media still have this gross/net 15% differential rate embedded in their systems.’

Indeed, very few companies are still compensated strictly on a commission basis – but that still doesn’t make the motives of the O-O-H companies clear.

‘Frankly, I have no idea why they want to do it,’ says Bruce Claassen, president of Genesis Media in Toronto and head of the Media Policy Committee for the Institute of Communications and Advertising. ‘We said fine, but we don’t want this to mean a 15% rate increase. And we want to make sure that the onus is on the outdoor guys to make sure the clients are aware that this is a net rate.’

In the meantime, Pattison’s McConnell projects a profitable year for his company. ‘We’re continuing to build and will continue to maintain market share. That’s our commitment.’