Signal 18.04: Large format driving out of home. Consumer confidence perception or reality? WNBA ready for prime time.

A big week in media with people moves, so I've focused on a few things that may have not been noticed this week in the out of home space, consumer confidence and the incredible and awesome rocketship that is the WNBA.

ONE: OML Trading Update shows out of home is becoming more reliant on large format

What’s new: OOh Media (disclaimer: I own a small amount of shares in OML) released a trading update this week announcing Q1 revenue was up 1% on the prior year. The most interesting part was that this flat result is being heavily dragged by street furniture and retail, which were collectively down 33%. These two formats account for the majority of OML's revenue, which implies that the business is becoming reliant on large format revenue growth to drive topline.

Why it matters: This matters for three reasons. One is that large format supply is relatively fixed in terms of sites. So growing revenue relies on charging more per exposure and/or adding more rotations to the digtised sites (which dilutes the advertiser value). Secondly, large format sites are not owned by the out of home companies in general, and higher advertiser demand for these sites (plus higher yield) will likely result in the actual site owners wanting a higher clip. Thirdly, street furniture and retail are considered to be more profitable formats for out of home businesses than large format/airports. OML has been vocal to market that it's been taking share from other media (TV has been one it claims to be taking share from) but the reality is most of this money if it's coming from TV will be going into large format sites. And the TV to large format switch loses some validity if you switch from a 30 second ad on TV/video into a 1 in 8 (or more) rotation on a large format digitised site.

Marketer implication?: There's two here. One is that retail and small format right now must offer some good value. A reduction in demand of 33% will create downward price pressure and this makes these two formats much better value. In addition, small format and street furniture has excellent local context and when used smartly can be a very effective way of reaching the hard to reach. The second one is large format demand growth will continue pushing these prices up, especially if the slowdown in retail/street continues and large format has to carry more of the revenue and profit load.

TWO: Consumer confidence is stuck, people believe they're worse off now and will be in the future

What’s new: Consumer confidence as measured by Roy Morgan has not moved in 2024 to date and is still hanging around historically low levels (27 points below the average over the past 4 decades). The tax cuts announced early this year didn't move the needle (despite all households receiving a tax cut) and a pause in interest rate increases as well as a cooling of inflation and wage growth increases are not doing anything to improve the perception that we are in bad times with more to come.

Why it matters: The current levels (around 80-83 as a score) are being driven primarily through a perception people right now are "worse off" than 12 months ago (which economic data doesn't necessarily support) as well as a perception that the next 12 months and beyond will be more 'bad times' than 'good times' for the economy. Interestingly the score is about even on whether at the individual level on whether the person will be better or worse off in the next 12 months. The challenge for marketers is the lack of future optimism and whether this throttles future spending intent, or whether we will continue to see a bearish view from households but continued steady spending.

Marketer implication?: The perception of value is more important than it has historically been, especially when there's caution at the household level around the future. It sounds boring but one of the best things a business can do at the moment is tightly manage costs and seek to pass on as much of those savings to the consumer, including marketing.

THREE: The WNBA season launches with record ratings

What’s new: Caitlin Clark's debut WNBA game this week average 2.1m viewers across Disney+/ESPN in what was a record for the WNBA. What's more, there has been significant chat online around frustrations of viewers who couldn't watch some of the pre-season debuts of the likes of Clark, Angel Reese and Cameron Brink. The WNBA, which was coming off a 16% attendance bump in 2023, is heading into a 2025 renegotiation on broadcast rights, with momentum that makes it one of the fastest growing leagues in the world.

Why it matters: The moment for WNBA now is similar to what pushed the NBA into a new league in 1979. Back in 79 Magic Johnson and Larry Bird (two highly touted college rivals) joined the NBA and started a two decade transformation where the NBA went from a niche sport on tape delay to the home of the biggest athletes in the world. Michael Jordan followed Magic and Bird, and the league had a deep bench of high talent, high charisma stars such as Charles Barkley, Shaq, Patrick Ewing and Isiah Thomas. Then came Kobe, Lebron, then Steph, Jokic, Giannis, Luka and now Anthony Edwards. The WNBA had a similar moment in the 2000's with the emergence of Diana Taurisi, Lauren Jackson and Sue Bird, but the timing feels right now for the WNBA to join women's tennis as a mainstream, marketable, commercially viable proposition.

Marketer implication?: Australia has an oversupply of world leading women athletes in both individual and team sports. The Matildas are a great example with strong commercial support, but there are a lot of equally talented women's sporting leagues and clubs with minimal support from marketers and corporate Australia. This presents an opportunity to get in on a greenfields, low clutter environment with high upside.