What you need to know:

• QMS has carved up the City of Sydney street furniture network into 30 different vertical ‘packs’.
• It’s pulling in Visa transaction data, plus GPS and other location and people data from multiple sources in a bid to create a full funnel approach to digital out of home.
• Marketers can target cinema-goers near cinemas, for example, grocery buyers near supermarkets and finance professionals in business districts, as well as traditional brand building via runs of panels.
• City of Sydney GM Jemma Enright and Chief Customer Officer Mark Fairhurst said the set-up means buyers will have to change their traditional approach, but think the results will bear fruit.
• The two are eyeing a greater share of OOH ad dollars – and are targeting broader digital and TV budget pots.
• Completion of the network – amid plague and floods – may make the business more attractive to potential suitors, following Quadrant’s acquisition of QMS three years ago.

Vertical integration

QMS is making a major play for full funnel marketing dollars as it packages up the City of Sydney contract into targeted verticals.

The firm is touting ‘packs’ of screens in locales designed to target specific segments such as cinema-goers, grocery buyers (FMCG) and finance – with some 30 categories in all. These are underpinned by sources including Visa transaction data, mobility data, Nielsen/RDA geospatial data, GPS and points of interest inputs as well as out of home (OOH) industry MOVE audience data.

That means advertisers can go narrow to drive sales and use broader panel buys to build brand, said QMS City of Sydney GM Jemma Enright. She and Chief Customer Officer Mark Fairhurst told Mi3 that approach should attract a greater share of ad budgets, but will require a change in buyer behaviour – from buying street furniture as part of a regional or national play to a standalone geography.

“It’s 26 square kilometres at the heart of the biggest market in Australia, therefore the packaging needs to be different,” said Fairhurst. “But we also need to maintain the principles that made street furniture successful in the first place, which is broadcast capability, easy to plan and buy and with some digital flexibility built in. So it's innovation for the sector, but certainly does change the way we're asking the market to think about planning for street furniture.”

The two said demand from early advertisers validates the approach.

“There is no further availability in Q3 [to the end of September], and Q4 is tightening up,” said Enright, with brands now looking to next year’s “marquee events” such as World Pride, kicking off mid-February.

Enright aims to tie up 25-35 per cent of overall City revenues in annual commitments from brands, with discount rates of circa 10-40 per cent depending on spend. QMS aims to use the Sydney “halo effect” to “significantly increase” market share across its broader OOH network, per Fairhurst. The annual commitment discounts are currently applied on an individual advertiser basis, not across buying groups.

Programmatic pitch

Given the City of Sydney network is 90 per cent digital, Fairhurst and Enright also see major potential for programmatic growth and shorter-term buys.

Programmatic digital out of home, or pDOOH, is tipped by media buyers to be the fastest growing digital category locally over the next 12 months. But that’s off a low base and while keen to attract new types of advertiser, QMS will take bookings however advertisers want to buy.

“We’ve carved out really good inventory for programmatic with great coverage across the CBD and we’ve expanded the programmatic opportunity five-fold on what was there previously – because we have so much more digital inventory in the network,” said Enright.

QMS is eyeing opportunity to scoop-up broader digital budget pots as well as TV dollars. “As omni-channel media planning becomes more common, we expect new money to come to the sector” from those areas, Fairhurst suggested. He's hoping that traditional out of home advertisers will “hold back 10-15 per cent of budgets to enhance them with programmatic at key moments”.

But Fairhurst underlined that the current pDOOH market is small. “We’re sitting at 3-4 per cent [of revenue via programmatic]. From what I hear, our competitors are sitting around the same level. Some of the media agencies are forecasting larger percentages for 2023, but it’s not something you can really target. You just have to make the capability available and grow with the market.”

Furniture sale?

Neither Enright nor Fairhurst would be drawn on the value of the City of Sydney contract, variously reported as worth somewhere between $300m to $500m over ten years.

But the completion of the rollout, undertaken through Covid and the worst weather on record – per Fairhurst, "we were going to rebrand as Noah's Arc Media at one point" – will strengthen any price tag attached to QMS by private equity owner Quadrant, should it aim to cash out.

Pre-Covid, and pre-City of Sydney, the company’s enterprise value was pegged at $571m per the deal completed in October 2019, though that included the sports division, subsequently carved out with a 50 per cent share last year sold to US private equity firm Bruin Sports Capital. Terms of that transaction were undisclosed, though a figure of US$100m has been floated.

There's long-running industry speculation that integrated media companies such as Nine – which pre-Fairfax acquisition mulled a deal for oOh Media – could be among potential suitors, though senior executives at the network have privately dismissed serious interest.

Fairhurst, however, suggested further media industry consolidation may be on the cards.

“I think it's the general trend that we're seeing across media … What I can say is that we're a fast-growing, digital-first out of home company, and that probably lends itself to any number of media players.”

Whether a trade sale, a re-list or other avenue, private equity firms tend to operate within specific timeframes to turn a profit and move on.

“We’re not in a position to know [which avenue Quadrant will take],” said Fairhurst. “From our perspective, all those options are pretty exciting. From where we sit, those things tend to unlock the next phase of growth.”