Fragmentation followed by consolidation. That’s what industry watchers say is in store for Canada’s out-of-home industry.

The past 18 months has been characterized by a period of incredible fragmentation – particularly in the transit category – as numerous new U.S. and European players have burst onto the scene.

But media experts say this is just a precursor to the consolidation and globalization that’s been at work in the outdoor industry across the U.S. and around the world for the past few years.

Two-thirds of the outdoor business around the world now resides with three major companies: Infinity Broadcasting Corporation (owner of Mediacom parent Outdoor Systems and TDI); Clear Channel Communications (owner of Eller Media and Ad Shel); and JC Decaux of France.

In the U.S. market, 62% of outdoor advertising revenue is controlled by the top nine companies, some of which have migrated north of the border.

Doug Checkeris, managing partner of MBS/The Media Company, does not see the entry of new U.S. companies to the Canadian market as a bad thing.

Checkeris says he believes they will be innovative and work hard to increase their business and make each contract profitable.

‘These guys are clearly going to be investing in the Canadian advertising industry – hiring reps and other people. I think they’ll commit the funds and the people.’

In addition, Checkeris believes that any time there is more competition for ad dollars, there is greater value for negotiators.

Fragmentation in Canada began in early 1998 but the issue was thrust to the forefront last month when the country’s largest transit authority, the Toronto Transit Commission, signed a five-year, $75-million deal with Transportation Displays Inc. (TDI) of New York.

Since then, Mississauga, Ont. has announced it is recommending its bus and transit shelter business go to Gateway Outdoor Advertising of New Jersey and Ad Shel of London, England, respectively.

There is some controversy surrounding these contracts as there were other bids, including those from incumbents Urban Outdoor Trans Ad (seven years) and Mediacom (18 years), that were higher. City council will not be voting on the recommendation until later this month.

These are the first contracts for TDI, Gateway and Ad Shel in Canada, although TDI and Ad Shel already have sister companies here.

One of the first to arrive was Obie Media, the Vancouver-based subsidiary of an Oregon-based parent, which has been gobbling up transit contracts in Western Canada and Ontario since its arrival in mid-1998.