Media M&A firm looks ahead and suggests what will work, and won't

January 21, 2009 by Dave Haynes

Peachtree Media Advisors, a NY-based investment bank focused on the OOH and interactive marketing sectors, has done a round-up of mergers and acquisition activity in the past year and, more interestingly, taken a look ahead to 2009 – advising on what will work and what is pretty much a non-starter.

In 2008, general consumer digital networks were out of favor and investors sought out niche opportunities in highly targeted channels with endemic advertising bases, writes John Doyle, the firm’s founder and managing director. In addition, investors looked for networks that were close to the point of purchase that could influence purchasing decisions. This makes sense because pitching digital OOH as a competing branding vehicle to television is a tough sell to advertisers, but direct access to an advertiser’s target market or close proximity to the point of purchase are more compelling pitches. 

Doyle suggests there is still investor money out there, something I have also heard, but whoever is looking needs to really have their ducks in a row.

Expect more venture capital to trickle into the digital out?of?home sector, but access to capital will not come easy. There will absolutely not be any “build it and they will come” networks financed in 2009. Institutional investors will not only want to see proof of concept (revenue), but will want to see recurring revenue streams from entrenched advertisers before investing. 

Digital networks targeting specific demographic groups or lifestyle activities, such as grocery stores, specialty doctor’s offices, bars, golf, ski and health spas or gyms with endemic advertising bases will attract capital first. In 2009, national advertising for OOH companies will be scarce. Therefore, OOH companies will have to focus on targeted or enthusiast channels that have a core group of advertisers that sell products for that activity. General consumer brands will likely decrease their already minimal marketing spend in alternative OOH and on digital networks, while allocating the majority of their ad spend to traditional OOH or billboards. 

I’m working with a number of clients who have existing lines of business and well-established relationships with advertisers and brands. Despite some uncertainties, they are rolling out because they’ve won some confidence of their financial backers and, importantly, are not solely depending on digital screen revenues to keep the lights on and the HVAC running.

As noted, it’s a tough environment for putting screens out there and just hoping the locations capture the imaginations of advertisers. It will take really good, savvy sales people.

The other interesting advice I picked up in the report is the tone of marketing, particularly with respect to chasing somewhat recession-proof professions like teach, medicine, government and legal. Focus less on branding and more on generating leads, ie getting them into the shops and offices to do some business. 

UPDATE – Gerba puts on his Doogie Howser MBA hat and does a good job of picking this apart some more on his company’s blog.

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