Thinking outside the box: James Warburton and Mike Watkins on the future of APN Outdoor and billboards
After a performance that could be compared to stalling in 2017, StopPress sits down with APN Outdoor chief executive James Warburton, and general manager for New Zealand Mike Watkins, to hear how APN Outdoor is tracking financially, approaching the digital rollout and where they see the industry heading in the future.
It’s been two months since James Warburton officially took over the chief executive role at APN Outdoor and sitting down with him to talk about why he entered the industry and where he’d like to take it, he sounds excited about the future.
This is despite having taken the lead on a company that "really stalled" in 2017, a result he's had to admit to this year.
"2017 was a difficult year for the company. There was the failed merger with oOh!media, which stalled the company. In the media market ... when you stall, you fall behind," Warburton told the Sydney Morning Herald in February.
It was May last year the merger between APN Outdoor and oOh!media was called off after announcing it in 2016.
The rationale for the merger had been to create "a service offering across key out-of-home formats, including roadside billboards, transit, rail, airports, retail, offices and other bespoke venue environments, and will enable the merged group to benefit from the digital and classic out-of-home capabilities of both businesses across the enlarged portfolio," according to the announcement.
If it had gone ahead, the resulting billboard advertising group would have had a market capitalisation of $1.6 billion according to Business Insider Australia, however, the Australian Competition and Consumer Commission believes such a merger would likely result in a substantial lessening of competition in out-of-home advertising services.
But Warburton says while the merger failed, the company remains ambitious. He calls New Zealand a highlight for its 2017 operation performance and the company's FY17 Financial Results revenue was up four percent to $342.9 million, while its underlying EBITDA also up four percent to $90.3 million.
Going forward, it will be investing ~$2 million during FY18 in innovation and new systems to support an audience and customer-led go-to-market strategy.
Comparatively, oOh!media continued double-digit growth in revenue, up 13.1 percent, with digital revenue as a percentage of total revenue increased to 59.8 percent for the year ended 31 December 2017.
Responding to APN Outdoor's small growth compared to that of other companies, Warburton told The Sydney Morning Herald: "While we were behind in 2017, in our view no one has bolted too far out of sight, and we will catch them. We have an ambition to surpass them and the industry over the longer term."
New leader, new direction
Warburton no doubt shares his views with the rest of the rest of the management team, which most recently saw the appointment of Philip Knox as chief financial officer earlier this month.
Now, Warburton is looking to appoint a chief innovation and strategy officer and says while there’s a lot of people in the industry who have been around for a long time, which is great, it wants to look for a heavy hitter with new ideas and fresh talent.
Warburton himself was not all that new to the media industry when he stepped in as chief executive, bringing 16 years’ experience in chief executive roles including Ten Network Holdings, Universal McCann and most recently V8 cSupercars Australia. He was also a director of Eye Corp, Ten Network’s out-of-home media business.
Talking about his return, Warburton says he has a real passion for the media industry and although out-of-home is a new area category for him, he sees it as a place of opportunity, strong growth, strong audience measurement.
Looking back on his career when he started in media planning and buying, he never anticipated he would one day be on the media owner side.
Back then, there was no email or computers on desks. Instead, there were centralised data centres where he would input schedules and what not, however, he says it was a progressive time.
“FM radio was launching, there was talk of digital, all those things happening with the computer.”
And having watched media move through the phases, he says what he loves about the industry is its ability to adapt. He gives the example of TV and how everyone talks about the impending death of the 30-second TVC—“never underestimate big businesses to reinvent themselves”.
“The ability of businesses to transform and adapt to where we are today is extraordinary.”
That enthusiasm is reflected in the way general manager for New Zealand Mike Watkins talks about his new chief executive, saying he brought enthusiasm and growth.
“The company has been so successful for so long, that to James’ point it was a little static in terms of why do we need to change when we are doing so well,” says Watkins.
Warburton demonstrates this point when explaining how he approached his new role.
“I know Mike has probably been frustrated at the lack of focus and ability for him to really diversify the business here and to think about other verticals, other opportunities and so on,” he says.
“We’ve had some great discussions and I've said, ‘pull everything out that you’ve been passionate about and let’s sit down and work out a plan in terms of what our approach is to the market'. A huge focus forward in data and technology.”
Thinking outside the box
Included in that focus is APN Outdoor’s digital billboard conversion, with 20 to 25 new digital screens to be commissioned FY2018. It comes after its digital revenue was up 13 percent in its FY17 Financial results.
Looking at out-of-home in general, the latest report by the Outdoor Media Association of New Zealand (OMANZ) shows out-of-home revenue grew 18 percent in 2017 to reach $121 million.
And comparing out-of-home to figures from Standard Media Index (SMI), the industry saw the biggest growth of all in 2017 in terms of agency spend in New Zealand. It was up 18.4 percent, reaching over $136 million. The next highest growth was seen by digital, which was up 7.1 percent.
SMI managing director for Australia and New Zealand Jane Ractliffe says out-of-home’s momentum comes off the back of innovation in the industry. She says as long as outdoor companies continue to digitise their inventory, the category will continue to grow.
However, Warburton does say the digital roll out is getting towards the end of its cycle, as the great wave has already seen everyone transform their inventory. Evidence of it can be seen in APN Outdoor's own roll out, with last year seeing the addition of 125 digital billboards across Australia and New Zealand compared to this year’s planned 20 to 25.
Warburton says now it’s built the key sites and while there’s a fair bit more runway in New Zealand it’s at the point where there’s enough in certain pockets.
Most recently, APN Outdoor unveiled plans to transform three of its high-profile Auckland billboards, including those on Parnell Bridge and Khyber Pass.
At the time of the announcement, Watkins said the three incumbent digital billboards were exciting additions to its national network, and would look to take full advantage of creativity and technological savvy integrations such as RSS feeds and recognition software that will become available to them.
The next challenge is for advertisers to take advantage of it and Warburton says he’s like to see the industry promote the benefits of outdoor more cohesively.
“Our view is that we as an industry should take responsibility for that, we should really be showcasing the capability of digital versus having a nicer, classic image projected.”
And while there are clients who have already stepped up creatively, APN Outdoor still sees room to go beyond digital billboards that react to weather and temperature changes as they’ve now been done multiple times before.
In the local market, he and Watkins look at the ‘Fight For Territory’ campaign for Steinlager and Guinness via DDB as an example of the potential. Rolled out alongside the 2017 Lion’s Tour, the campaign took advantage of the digital sites in Auckland Airport, fitting them with digital cameras and microprocessors that recognised the colour of the clothing worn by those in close proximity. If a Lions fan dressed in red was standing in front of the site, it would turn red while an All Blacks fan wearing black could trigger the site to turn black.
And with some sites triggering the colour of all the sites to change, it became a competition for each of the team's fans to fight for territory.
Over 2.5 million people passed through the airport during the tournament, making for 96,000 turnovers by the time the whistle blew. And this year, the campaign saw DDB walk across the Axis Awards stage to collect two golds for it.
Talking about the success of the campaign, Warburton and Watkins credit the passion the clients had for the project and willingness to try the technology.
“That was a creative opportunity to do something great that can demonstrate what can be done,” says Watkins. “Let’s use technology to create interaction between consumers and sites.”
In his native market, Warburton looks at a campaign for Lexus, via M&C Saatchi in Sydney. The billboards identified the brand, model and colour of passing vehicles to trigger a personal and playful message to drivers via the digital display.
Including messages such as “Hey white Audi driver, it’s time to Crossover. This is the New Lexus NX,” there were more than 80 different configurations encouraging drivers to switch to the Lexus.
To do that, each billboard featured a series of cameras on high rotation to capture all passing traffic. The images were then sent to the APN Outdoor Classifier, a device matching them to its large database of vehicle makes, models and colours.
Those digital additions, or bolt ons as they're called, are one of the areas APN Outdoor will be looking into more in the future as they open up the creative potential of its digital sites.
“You just have to think outside the square and not taking the easy route,” says Watkins.
“There’s so much you can add on with bolt on technologies to deliver engaging and interesting pieces of content.”
Despite that creative potential of digital sites, there still remains value in static sites—in fact, it remains stable in the face of digital.
It was always thought static would drop off once digital took off and there was a slight decline, but it’s come back and stabilised. In fact, “demand is strong” says Warburton and according to the company’s FY17 financial results, classic revenue is stable.
He explains there are clients who want to be up 24/7 and have a 100 percent share of the voice while there are some regions that simply aren’t suited to a digital site.
Taking another look into the future, APN Outdoor also has its sights set on continuing to work on measurement systems, as they are important to both the company and wider out-of-home industry.
The pair sees a good start being made with the launch of the Calibre measurement system last year, that provides three key measurement outputs: reach and frequency, behavioural and demographic audience insights, and a customised planning dashboard that allows planners to identify optimal sites for their campaigns.
It’s one of a number of systems implemented by out-of-home companies across the industry, with each being treated as a competitive advantage and used by suppliers as a selling point to potential advertisers.
However, what APN Outdoor hopes to provide is an industry standard by inviting other providers to sign onto the system.
“With outdoor in New Zealand being one of the few media without a rigorous measurement system, we wanted to change that and deliver a robust system that agencies and clients could reply on,” Watkins told NZ Marketing magazine recently.
Showing this, Calibre has both an agency and media partner interface and is now also being used by GoMedia and Media5.
When talking about the measurement of out-of-home compared to other media, Watkins says it’s one of the most measurable media because it’s on 24/7, 365 days a year, has a number of records—such as traffic counters—to call on and see who has been in the vicinity of a billboard.
“Outside of digital, outdoor would be the most measurable media you could have,” says Watkins. “You’ve got TV with 600 set-top boxes which creates a tarp which everyone holds as the holy grail – that’s 600 people for the information of four million people. Radio is surveys where they spike promotions to get people to listen and newspapers are based on publication and then the readership number which they multiply by five.”
With such pride in what out-of-home has to offer, it's no surprise Warburton says this year will be all about transformation, innovation and acquisition.
“It’s a focus of the company being incredibly aggressive and really going after a number of targets and also diversifying.”
Watkins adds with Warburton at the helm, there’s a good base and it won’t be sitting on its laurels. And as a sign of what's to come, it introduced a new logo this month, and with it a message that it's "a bold new voice from a familiar name".