Outdoor and out-of-home advertising revenue for OUTFRONT Media Inc., Lamar Advertising Co. and Clear Channel Outdoor Holdings Inc. averaged year-over-year growth of 3.7% for the third quarter and 1.8% for the first nine months of the year. Local ad revenue remained relatively stronger than national. The companies also saw strong gains in their digital outdoor segments.
The industry revenue data reported in December by the Outdoor Advertising Association of America showed that total out-of-home industry ad revenue grew 3.8% and 3.7% year over year in the third quarter and first nine months of 2018, respectively. According to OAAA President and CEO Nancy Fletcher, all four primary formats — billboards, street furniture, transit and place-based advertising — remained strong during the quarter. Fletcher said digital out-of-home advertising made up 28% of total revenues.
OUTFRONT led the trio, reporting year-over-year organic revenue growth of 4.6% for its U.S. media segment in the third quarter. During the Nov. 5 earnings call, the company said growth during the quarter was driven by the billboard category, which increased 6.4%.
Local ad revenue increased 8% and 5% year over year during the third quarter and first nine months of 2018, respectively. Ad revenue from national advertisers increased 0.4% during the quarter.
Ad revenues from the company's digital ad display properties increased 28% during the quarter and now represents 17.6% of OUTFRONT's total revenue, up from 14.6% in third quarter 2017. Chairman and CEO Jeremy Male said revenue per average billboard per month, or total yield, increased 8.5% with improvements in both digital and static. Male said that only 2% of the company's total billboard portfolio has been converted into digital.
The company expects total revenues in the fourth quarter to accelerate further into early double-digit percentages driven by strength in billboards, transit and resurgence in local and national ad revenues.
Clear Channel Outdoor was a close second, reporting third-quarter year-over-year revenue growth of 3.3% for its Americas segment. Adjusting for foreign exchange movements, revenues increased 4.2% during the period driven by growth in revenue from digital and static display properties. Locally placed advertising and improvement in airport business gained strength during the quarter.
On the company's third-quarter 2018 earnings call, management said fourth-quarter revenues for its Americas segment are expected to grow 6.6% year over year based on the pacing data available at the time of the call.
Lamar Advertising grew its net revenue 3.1% year over year, when including revenue from acquisitions in the year-ago quarter, driven by an uptick in political ad revenue that added 0.5 percentage point to the growth. On the Nov. 8 earnings call, the company said that as of the time of the call, it had booked $11 million in political ad revenue, up from $7.5 million in the 2014 midterm elections.
Lamar said that during the quarter, it saw growth in financials and education — both up 11% — and a 5% rise in retail, while auto ad revenue declined 7%. Markets in the West and Northeast regions remained strong. National and local contributed equally to the company's third-quarter pro forma revenue growth.
The company's same-board ad revenue from digital billboards increased 7.2% year over year in the quarter. As of the end of the third quarter, Lamar had installed 129 new digital billboards year-to-date of an expected rollout of about 175 units total in 2018.
Economics of Advertising is a regular feature from Kagan, a group within S&P Global Market Intelligence's TMT offering, providing exclusive research and commentary.