Just six months after winning and re-signing major out-of-home contracts with Melbourne’s Yarra Trams and Telstra, JCDecaux Australia CEO Steve O’Connor has told Mediaweek: “We are in a good place and doing well, but we have a lot of work to do.”
The Yarra Trams win was the most notable, taking the business from Adshel and APN Outdoor who split the advertising opportunities.
However, the renewed Telstra contract is significant too – JCDecaux will install 1,800 new Telstra payphones with digital advertising screens over the next two years, representing the first major payphone redesign refresh since 1987.
On the Yarra Trams win, O’Connor updated Mediaweek: “It was a very significant win for us and what it enables us to do is replicate what we have done in Sydney and Brisbane and we will now have the premier street furniture offering in the three biggest markets in Australia.
Steve O’Connor
“We now have the key street furniture contracts in those key markets. It makes our offer consistent and premium across the three markets.”
Part of JCDecaux’s pitch for the Yarra Trams business was to have a much bigger Melbourne digital deployment, said O’Connor. “Our intention is to have 400 screens in Melbourne on the Yarra Trams network in the next 18 months. We have started rolling them out this week.
“We also have the Telstra contract which we announced toward the end of 2017. That is a national contract covering the five key cities. Our intention is to come up with a great digital network off the back of the payphone product which we will be providing to Telstra.”
JCDecaux’s idea is to make Melbourne a city as vibrant as some of the global greats when it comes to digital advertising opportunities. “We have the street furniture contracts in both New York and London. Our aspiration for Melbourne is to make that the most digitised city in the world behind New York and London with regard to third party digital signage.”
All that will mean a significant investment from JCDecaux. “The Yarra Trams contract runs for seven years and time is of the essence. Given the fact it was an expensive contract we need to get in there quickly to capitalise on the substantial investment we are making. We are spending a lot of money putting the screens in.”
The Melbourne signage all needs to get regulatory approval, which O’Connor thinks will come given some of the features associated with the rollout. “We can offer an emergency messaging service and Melbourne City Council could take over the signage if there was an emergency taking place and communicate relevant messaging. Some of the advantages we can provide through digital signage beyond digital advertising are now going to be realised by this investment.”
As to any potential market rationalisation via merger or acquisition, O’Connor told Mediaweek all options are on the table. “Our primary focus at the moment is growing organically through new contract wins like Yarra Trams, Telstra and other relevant ones over the next year and there will be a few of those.
“For example the Brisbane City Council bus shelter contract and eventually Sydney Trains will come up again. They will be things we will target.
“Merger and acquisition opportunities are always there to be considered, but at present they are not a priority. But you never say never.”
As to sector growth and maintaining recent momentum, O’Connor, who is also chair of the Outdoor Media Association, said things continue to go well. “The sector’s first quarter results were strong with high single-digit growth. And we expect to see that growth continue for some time to come. It needs to because we are all investing substantial amounts in the sector, which means we need to drive revenue growth strongly.
“In terms of JCDecaux growth, given that we picked up the new contracts and we are also in investment mode digitising many key locations, our growth is very strong and outstripping the industry average, considerably so.”
Jean-François Decaux, a joint CEO of the global enterprise, visited Australia in November last year to coincide with the recent contract wins.
When we asked how big a role JCDecaux Australia plays globally within the group, O’Connor said: “We are an important part of the group. JCDecaux operates in 75 countries and we have some very big business in certain jurisdictions. Australia is by no means one of the biggest, but our industry as a whole is at the forefront of the development of out-of-home through digitisation and using data. JCDecaux Australia in terms of its group profile has amplified the opportunity and the learnings we can get out of this market.”