OBN shutting down LED board business

July 16, 2010 by Dave Haynes

Sad to relay news that Canada’s Outdoor Broadcast Network (aka OBN) is shutting down its national LED board network, having decided there isn’t enough money yet in the still emerging DOOH marketplace to warrant the reinvestment capital needed for upgraded displays.

The company, started and run by my old Elevator News Network colleagues Peter Irwin and Brian Boyce, has trimmed staff and will focus just on its big multi-media board and static positions at Toronto at Toronto’s Yonge Dundas Square.

Reports Marketing magazine:

Citing a gloomy advertising outlook, digital outdoor specialist OBN is getting out of the digital billboard network business, has laid off staff and is looking for buyers for its inventory.

The restructuring was announced in a short release Monday afternoon: “After 8 years of running a successful digital out of home business OBN has made the decision to exit the business of owning digital billboards and managing a national network.”

“We had a lot of our network that needed to be reinvested in,” OBN president Peter Irwin told Marketing. “And with the current climate, and tough advertising market, our investors and ourselves looked at this and said ‘are we prepared to invest to go forward?'” It was tough, but the answer had to be no, he said. “Fundamentally they weren’t prepared to fund us going forward… We had to stem the loses.”

Since launching in 2002, Outdoor Broadcast Network had grown to 36 screens in 14 markets, delivering marketing messages to about 12 million people a week.

Irwin said they are talking with affiliates to see who might be interested in taking ownership of their screens.

OBN will remain in business but with just four full-time staff, focused mainly on its Dundas Square Media tower and offering consulting services.

Irwin said shrinking budgets in an increasingly competitive field made the decision inevitable.

“If I look forward right now, it is miserable,” he said of the advertising outlook. After the market collapse in late 2008, last year saw “good steady business growth” even into the start of 2010, he said. But the second and third quarter have revealed a “real restraint in terms of spending [and] a high degree of uncertainty.”

With other media, marketers tend to reduce their budgets by a percentage, but with out of home they’re inclined to just cut it completely, especially with digital out of home, he said. At the same time, new entrants have joined the market, making the fight for ad budgets even tougher.

“The digital out of home market [in Canada] is maybe $50 million in revenue,” he said. Even if it were to grow by 10%, resulting in an additional $5 million in revenue, new companies are joining the game, vying for a piece of that still small pie.

OBN has a variety of boards, but most of the stock is not large, billboard-sized and shaped LED displays. My understanding is the OOH companies who have been putting those up are doing well with them, but the CAPEX on those puppies is far more easily handled by those much larger companies.

OBN had a pretty good footprint and seasoned sales people, so entrepreneurs looking at DOOH as a fast road to riches – and there continue to be many of them – should view OBN’s circumstances as a truly cautionary tale. DOOH is NOT an easy business, at all.