Sydney was gripped by Metro rail fever yesterday and oOh!media was front and centre.
The out-of-home company hosted a half-year results presentation yesterday morning. But that didn’t stop oOh!media chief executive Cathy O’Connor and chief financial officer Chris Roberts from taking a train ride early in the day.
Mediaweek reported last year how oOh!media won the Sydney Metro competitive tender, securing a long-term contract to enhance the commuter experience in Sydney’s CBD.
Speaking to Mediaweek after the Metro experience, and the results presentation, O’Connor said: “What a beautiful [ad] environment that is. We are about 40% through the build of our new assets there. That’s now available to advertisers. There is lots of innovation around creative, 3D anamorphic, data-led targeting and dynamic creative that is possible in digital.”
All stations have active assets on the new line except for three stations – Crows Nest, North Sydney and Gadigal. The rest are showing off brand-new screens with different-sized formats.
oOh!media’s Cathy O’Connor and Chris Roberts at a Metro station on launch day
O’Connor said ahead of the opening of the new line, oOh!media had been taking clients and agencies on tours of some of the stations for several weeks leading up to launch day.
“The pent-up demand has been there. We have been able to convert that to bookings from Friday of last week.” That was the day the Metro launch date was confirmed.
How the year is getting better
With the strongest quarter of the calendar year ahead, O’Connor explained: “We are seeing a strengthening in the second half. We had a return to growth in August after a pretty flat three months. We have seen robust pacing from September onwards.
“The new assets are yet to play into that pacing which is another positive for us.
“We have only seen one other media company report yet – Seven West Media – and their guidance -4 in September and -5 in October. That is the first data point that shows the relative two realities – one for out of home and the other for established media.”
See also: oOh!media results: Record sector agency share, but revenue and profit slips in tough market
Good times ahead with December quarter
“It’s the strongest and the biggest,” said O’Connor about the three months ending December 31, 2024. “Increasingly the months of October and November are growing in prominence because of things like Black Friday, Halloween. There are a number of retail events ahead of Christmas that have built the prominence of that quarter.
“It’s an important quarter for us and we are looking for a strong end to the [calendar] year.”
oOh!media screen live on the Metro on Monday
Clients holding back dollars taking big risk
As to the possibility that some advertisers might hold back spend to the December quarter, O’Connor said that would be taking a big risk.
“The laws of supply and demand will sort that out pretty quickly. We are already giving some messages to market, as are other OOH companies, that premium large format avails are becoming tight from September onwards.
“There is nothing worse than missing out on a marquee property when you have a product launch or your competitors have the good assets.”
Making oOh!media more profitable
O’Connor: “We have addressed the issues we needed to and we are now trading strongly into the back end of 2024.
“The exit of the Vicinity contract had an impact from January. There was a change to the revenue mix of non-media revenue and it impacted growth YOY.”
O’Connor admitted she was disappointed with how FY2024 ended for the business. “I would put it down to not getting the success and conversion we would normally expect in what was quite a short term market.
“The sales team are now in market in a more agile and responsive way which is starting to bear fruit as discussed. Sales teams go through peaks and troughs from time to time. We have made some systems improvements to pricing, giving more autonomy into the hands of the frontline sales team. We probably needed to move more swiftly than we had been at times. That has all been course corrected.”
The arrival of Metro rail ad dollars will have a big impact on transit performance on the oOh!media books. “When you think about Metro trains it is a CBD contract in Sydney. We have been underweight in assets in the Sydney CBD. This is an important growth initiative for us. It really helps with our small format offerings.”
oOh!media’s Cathy O’Connor Metro report card
Contracts on offer
Recent wins for oOh!media include Metro Rail and the Woollahra contract, both won last year. “They are now coming online and will impact about $30m which we detailed back in February. We anticipate there is another $38m of new contracts which are not yet announced.
“There is also one last legacy contract from the Adshel days which is Auckland and the tender process is live now. We have submitted our response in that process and are awaiting the outcome.”
O’Connor said the business has had around an 80% success rate in securing new contracts. “There is another $60m-$80m of new opportunities anticipated to land. They are always developing. That might be greenfield contracts or competitor’s contracts coming up.”