Since the advent of the printing press through radio and television and now the internet and the digital revolution, technology has driven changes in the way companies advertise their wares.  Historians tell us the earliest forms of advertising found in ancient Egypt included papyrus banners and stone carvings, all located outside the home. The printing press began the process of shifting advertising locations from exclusively out of the home to more and more advertising in the home.
The industrial revolution drove the citizenry from farms to factories in increasing numbers and with that shift came a change in how people spent their days.  No longer did the majority toil and live in the same location. Commuting to and from a place of work became the norm.  Today some estimates state the average citizen spends 70% of the day outside the home. Billboards outside the home have been around for more than a century but the explosive growth in LED screen technology bodes well for companies operating in the out of home (OOH) space, targeting consumers where they spend most of their days.
Since the turn of the century outdoor ads have grown from staid billboards to brightly lit, attractive panel displays to fully digital interactive LED panels complete with sound and the ability to be modified quickly. There are even digital display ad panels that emit odors.  Existing “intelligent” panels capable of monitoring and displaying real-time information such as weather, sports scores, and traffic are expected to become even more intelligent in the not too distant future. 
For many advertisers the major advantage of current digital outdoor advertising technology is not the assorted and attractive “bells and whistles”, but the ability for rapid modification.  Price points, inventory levels, and product enhancements no longer require a new board. Data Analytics capability is increasing and with it the ability of companies to link their advertising to consumer preferences based on store visits, locations within stores, and social media trends.
As the cost of LED panels continues to drop the number of LED Digital screens around the world will continue to grow. Once restricted to iconic urban locations in New York, Tokyo, London, and Melbourne, the coming together of lower costs and improving technology will see more and more digital screens popping up in more and more places.
Four outdoor advertising companies have listed on the ASX in the past two years.  The following table lists the four by market cap with share price and balance sheet information.

With the exception of the smallest of the four companies – XTD Limited (XTD) – these stocks have rewarded shareholders well in their short time on the ASX.  The share price of the largest, APN Outdoor Group Limited (APO) is up 100% and is already paying a dividend with a current yield of 3.5%, fully franked.  Ooh Media Limited (OML)’s share price has risen 152% and pays a dividend with a current yield of 1.52%.  QMS Media Limited (QMS) investors have seen their shares increase 65% and enjoy fully franked dividend payments with a current yield of 1.29%. 
The outlier here is tiny XTD Limited (XTD) with only 5% share price appreciation since it came on the ASX and no dividends as yet.  XTD is also somewhat of an outlier with its niche business model. While the top three companies have diversified locations, from retail spaces to roadways to transit stations and general consumer gathering places, XTD focuses exclusively on a single niche – metro train platforms.  The company calls its system the Cross Track XTD, with the name aptly describing its location – on walls directly across from the platform where commuters await the arrival of Metra trains. While not immediately obvious, common sense suggests a key advantage to this system.  Digital billboards and most digital displays at other locations need to attract people on the move.  A prominent roadway digital billboard has but a few seconds to attract the attention of potential consumers.  On a Metra platform the consumers are captive with nowhere to go while waiting for the train. 
The Cross Track Screens are large format with high definition sound.  The company currently operates 32 digital LED screens at three different Metra stations in Melbourne under a seven year contract.  XTD has another seven year contract with Queensland Rail to install and operate the system in four stations in Brisbane. 
The displays monitor approaching trains and stop broadcasting when a train arrives.  Displays are suitable for use with Television advertising as well as unique content.  In essence, XTD supplies the system while partner companies supply the content.  APN Outdoor has its own track system in use in Sydney and an agreement was reached with XTD to supply the content for XTD’s Melbourne locations. 
In reality XTD is more of a technology company than an advertising company, as evidenced by the development of the Embark mobile application through XTD’s innovation operation called Contact Light. Contact Light was launched in October of 2015 to create mobile applications for transit use.  Embark allows users to find best routing for transit travel as well as providing multiple sources of entertainment along the way. 
ON 7 September the company announced an agreement with a New Delhi based outdoor advertising company (TDI International) for a trial of the XTD Cross Track System within the New Delhi Metra transit network. XTD has plans to use the success of the Australian system to expand to major international cities.
APN Outdoor claims to have 36,000 “high impact” sites in “attention grabbing” locations.  The company operates in both Australia and New Zealand with digital billboards, static roadside billboards, and transit locations including rail, airport, and tram.  All together the company website states the company operates 50,000 digital panels.
Despite its size and reach there is room for growth as the company controls about 30% of the Australia/New Zealand market and has numerous static sites to be converted to digital in key locations. 
The company’s first Full Year Results were announced in February of this year, showing a 20% revenue rise and a remarkable 435% profit increase, swinging from a loss of 12 million to a profit of 41 million. However, the Half Year 2016 Results that showed increases in both revenue and profit came with a profit downgrade for the full year, revising prior guidance for earnings before interest taxes, depreciation, and amortisation (EBITDA) between $84 and $88 million down to between $79 and 84 million. 
The stock price took a hit but year over year the company’s price performance remains comparable to that of Ooh Media, its largest competitor.  Here is the price movement chart.

The business model of the two companies is similar in most ways but OML has a presence in two targeted locations APN does not serve – retail and “fixed” places.  The company operates in retail centers across Australia, controlling about 86% of the Out of Home Advertising in that market.
In addition, the company’s Ooh!Place division operates in locations where consumers remain for longer periods of time, including cafes and sports and health related venues. 
As you can see from the price movement chart, the OML share price also took a hit based on APO’s downward guidance. A few days later the company announced its own Half Year Results, maintaining previous guidance and reporting increases in both revenue and profit.
Like APO Outdoor and Ooh Media, QMS Media Limited (QMS) operates in Australia and New Zealand with diversified offerings, but fewer than its bigger rivals.  QMS operates static and digital billboards and has a presence in retail locations, but it also focuses on “street furniture” – benches and the like for public use along streets – and operates its own printing operation for the preparation and production of outdoor media signage. 
The company reported its first Full Year Financials with revenues increasing from $4 million for part of FY 2015 to $111 million for FY 2016 and profit swinging from a loss of $4.9 million to a profit of $13 million. AMS may be small but they are growing, having made three key acquisitions during the year.
Despite those acquisitions QMS has a strong balance sheet with more cash on hand than debt as of the most recent quarter. When researching any of these outdoor advertising stocks declining revenues in an economic downturn or a recession is a frequent concern voiced by analysts and market experts.  The costs of leasing, operating, and maintaining outdoor advertising sites are fixed, minimizing a company’s ability to cut costs.  
In the wake of the GFC the financial pages were full of articles summarizing numerous studies indicating companies that maintain or increase advertising in recessionary times gain market share over time.  The US was hit the hardest early in the GFC and some estimates of lost advertising revenue approach $40 billion dollars. However, separating out the advertising categories can paint a different picture.  Print advertising has been in decline for some time.
In addition, Out of Home advertising includes both digital and static offerings.  The following graph from the Australian Outdoor Media Association (OMA) tracks revenue growth for the category as a whole from 2002 to 2012. 

Note the dip following the GFC.  Surely things in the US must have been far worse.  The following chart from marketing firm Adcentricity refined OOH and reported only digital revenue up to 2011 with estimated growth for 2012 and 2013.  Here is the surprising chart.

Taken at face value, the figures indicate digital outdoor advertising actually went up slightly following the GFC. Statistics can be misleading at times, but common sense suggests Out of Home advertising has a bright future. Today advertisers are faced with the problem of spending heavily to produce ads that can be fast forwarded on the Television and skipped on the Internet or simply turned off. Out of Home ads can’t be turned off.  They are always there.

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