Watch This Space

31 March 2009 Clive Punter

Despite the downturn, advances in technology are opening up new channels for advertising. Clive Punter, CEO of CBS Outdoor, tells Jamie Oliver about how the company is sending out a positive message of progress.

"No one saw this recession coming," says Clive Punter, CEO of CBS Outdoor International, "even the banks, staffed by supposedly bright people. We have been caught out by its speed and severity. In the middle of last year, once we started to notice the economic shift, we looked back at previous downturns for guidance. In the past, the advertising industry is usually hit before the consumer. But looking on the bright side, it usually recovers early. This is because companies look to promote their products or services as the economy improves. However, the reality is that, at the moment, clients are cutting back and holding on to their cash."

CBS Outdoor is the outdoor advertising division of media conglomerate CBS Corporation. It operates in 14 countries, including Argentina, Brazil, Chile, China, France, Ireland, Italy, the Netherlands, Spain, the UK and Uruguay. Punter became CEO in March 2007 after previously heading up the company's Asia division.

The firm provides advertising space for city bus fleets, mass transit authorities and multinational bus companies, totalling more than 100,000 vehicles worldwide. Its innovations include LED bus sides, illuminated panels, environmentally friendly recyclable billboards and 3D mouldings.

The company recently expanded into China where it sells advertising on 5,700 buses in Beijing. CBS Outdoor’s digital capacity comes to around 1,000 sites worldwide. These generate $30m in revenue, equating to 1.5% of CBS Corporation's overall revenue. The firm sees digital as the future for advertising and estimates it will contribute 5% to overall revenues in three years and 10% in five years.

However, the current state of the market may prove less than accommodating for such projections. According to figures from the World Advertising Research Center (WARC), UK spending on outdoor and transport advertising will fall by 3.9% in 2008 and by 4.6% in 2009. This is compared to a 3% decline in total UK ad spend at current prices in 2008 and a 4.3% fall in 2009. The research organisation points out that the growth of internet advertising is boosting the overall figure for ad spend and masking the decline in some of the larger media, such as newspapers.

Over the past ten years, in terms of the percentage share of total ad spend, TV advertising has increased by 8%, according to WARC research. Internet advertising has seen an increase of 7%. These rises have come at the expense of advertising in print, which has seen a declining market share from 49% to 34%.

Relative to other traditional media, WARC says UK outdoor spend is doing quite well; it was the second-best performing traditional advertising medium in the UK during 2008, with revenues of £227m, according to figures from the Outdoor Advertising Association, and is forecast to be the best in 2009. Globally, the outdoor advertising market is estimated to be $25bn, with CBS Outdoor claiming a 10% market share.

A clear signal

For Punter, his role of CEO comes under even greater scrutiny in difficult times, but he is up for the challenge. "As CEO, I’ve got to be completely honest and open with my people about what’s going on in terms of their jobs," he says. "It’s my responsibility to manage expectations and be realistic about our position and the knock-on effects of the economic crisis."

"We have digital advertising on buses in London that is controlled by GPS. That means the ads change depending on what area of London the bus is travelling in."

Part of that honesty is his view on the downturn. "We’re overweight at the moment, having eaten too much for too long, and we’re in heart-attack territory and need to go to the gym. The smart companies recognise consumer’s changing habits and the knock-on effects of the downturn. For example, Cadbury’s is doing well as they’re an affordable treat. Rather than carry on regardless you need to be flexible to survive," he says.

CBS Outdoor recognised that staying flexible meant making adjustments in terms of staff numbers in mid-2008. "We were dignified and managed the situation. We were upfront with people, especially those we had to let go, and we worked to help them through the process," he adds.

Punter says his job as CEO is to be a communicator and be visible. "In difficult times the tendency is to concentrate on the operational aspect of running a business but sticking to our strategy is vital," he adds.

The worsening advertising market could not have come at a worse time for CBS Outdoor, having just invested £72m in digital advertising technology for transport systems. But Punter is sanguine, choosing to keep his focus on the long term.

"The number of channels open to potential advertisers has risen exponentially," he says. "Look at how many newspapers and magazines are moving to have an online presence. This means an increase in advertising potential."

Punter also spots another digital trend. "The behaviour of consumers has changed as a result of technology," he says. "We worked out people in London and Beijing spend something like eight days each year commuting. While people used to read the paper or a book, they are increasingly using that time to go online, email people, phone people. It’s become active time. And that’s where we come in, advertising to people in that ‘third space’ between home and work. Handheld devices are now an interface between the internet and outdoor advertising."

Digital advertising space gives CBS the ability to recognise, through their unique mobile phone signal, individual consumers. "We have digital advertising on buses in London that is controlled by GPS. That means the ads change depending on what area of London the bus is travelling in. That means more targeted and effective advertising," Punter says.

Beyond the UK, Punter reckons South America is in the ascendancy. "The internal wealth of the region is rising and it is starting to become truly globalised," he says. "They have a great attitude, and that is carried over into business life."

As a former head of the Asian aspect of the business, Punter has a long history of visiting China and he concludes our meeting with some advice for CEOs travelling east. "The most important person sits furthest from the door. And when you get to the airport or go to meetings, always get picked up and dropped off in a black car. If a car is black, the person in it is considered more important."