Guardian UK
The Office of Fair Trading is to scrutinise the £800m-plus UK outdoor advertising industry to examine the dominance of the few players in the sector and the role played by commissions.
The OFT said that it intends launch a study, which is expected to be completed in December, that will look at the "high concentration" of specialist buyers, outdoor media owners and the "payment of commission and "how these affect the incentives of those buyers".
The OFT said it would also look at contracts between outdoor media owners and local authorities because some agreements may contain clauses that stop deals being done with rivals, or directly with advertisers, which may ultimately be "detrimental" to taxpayers.
"This study will consider whether there are any distortions of competition or barriers to entry at different levels within the sector," said the OFT.
The outdoor advertising industry is estimated to be worth £833m this year, yet the number of companies effectively controlling the sector is small and the commission system is described by one senior media executive as "murky". Commissions are likely to account for about £167m of the total amount spent by advertisers this year.
Four big players own the majority of the outdoor advertising sites across the UK: Clear Channel, JCDecaux, Primesight and CBS Outdoor.
In terms of specialist buyers, those who actually buy the campaigns booked by media agencies on behalf of advertisers, the market is effectively dominated by two companies: Aegis-owned Posterscope, which in 2008 did a deal with the then third largest player IPM, controls close to 60%; and Kinetic, which is owned by Sir Martin Sorrell's WPP, controls about 40%.
Of every pound spent on an ad campaign, about 15% commission goes back to media agencies, which in practice often end up pushing the money back to their clients behind the campaign, and 5% goes to specialist buyers.
"It has traditionally been a fiddly medium that is difficult to deploy, more labour intensive than say buying TV, which is why there has been the 5% extra to specialists," said one industry source.
The market study is thought to have been kicked off at least in part due to recent consolidation, such as when JCDecaux, the world's second largest outdoor advertising company, bought rival Titan Outdoor back in January.
"The cost of all forms of advertising is reflected in the price consumers pay for goods and services," said Heather Clayton, senior director of infrastructure at the OFT. "This market study into outdoor advertising will take a look at whether the market works well in terms of offering firms and local authorities deals that are fair, competitive and transparent."
The OFT said that it intends launch a study, which is expected to be completed in December, that will look at the "high concentration" of specialist buyers, outdoor media owners and the "payment of commission and "how these affect the incentives of those buyers".
The OFT said it would also look at contracts between outdoor media owners and local authorities because some agreements may contain clauses that stop deals being done with rivals, or directly with advertisers, which may ultimately be "detrimental" to taxpayers.
"This study will consider whether there are any distortions of competition or barriers to entry at different levels within the sector," said the OFT.
The outdoor advertising industry is estimated to be worth £833m this year, yet the number of companies effectively controlling the sector is small and the commission system is described by one senior media executive as "murky". Commissions are likely to account for about £167m of the total amount spent by advertisers this year.
Four big players own the majority of the outdoor advertising sites across the UK: Clear Channel, JCDecaux, Primesight and CBS Outdoor.
In terms of specialist buyers, those who actually buy the campaigns booked by media agencies on behalf of advertisers, the market is effectively dominated by two companies: Aegis-owned Posterscope, which in 2008 did a deal with the then third largest player IPM, controls close to 60%; and Kinetic, which is owned by Sir Martin Sorrell's WPP, controls about 40%.
Of every pound spent on an ad campaign, about 15% commission goes back to media agencies, which in practice often end up pushing the money back to their clients behind the campaign, and 5% goes to specialist buyers.
"It has traditionally been a fiddly medium that is difficult to deploy, more labour intensive than say buying TV, which is why there has been the 5% extra to specialists," said one industry source.
The market study is thought to have been kicked off at least in part due to recent consolidation, such as when JCDecaux, the world's second largest outdoor advertising company, bought rival Titan Outdoor back in January.
"The cost of all forms of advertising is reflected in the price consumers pay for goods and services," said Heather Clayton, senior director of infrastructure at the OFT. "This market study into outdoor advertising will take a look at whether the market works well in terms of offering firms and local authorities deals that are fair, competitive and transparent."
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