Call us at 317-546-6038
Travel Advertising Billboard On City Downtown

The Results of COVID-19 on Out-of-Home Advertising Revenue

COVID-19 has left its mark on virtually every industry, and advertising has not been spared. While no advertising sector was left unscathed during this global pandemic, out-of-home advertising was initially among the most impacted. 

The Stark Capital Solutions team experienced a rather unique view of just how impactful the pandemic has been, as we work with businesses of all sizes across the United States. 

What did our varying client base teach us over the past 10 months? 

Here’s a look into our journey. 

Initial Reaction:  Fear Sets In 

As news spread about COVID-19 and we began to see its effects, naturally, panic struck. 

Americans were told to hunker down and stay inside unless absolutely necessary. While individuals adjusted to their new lifestyle, the OOH industry feared the worst. With fewer motorists on the roads, would billboards have to be pulled from many advertiser’s budgets? 

No one knew what the future would bring, including big-name advertisers and the multi-million-dollar corporations they represented. As hotels, restaurants and the event industry closed, advertisers had no choice but to pull back their spending. 

We were thankful that many of our billboard borrowers did not lose many advertising contracts, however many weren’t so lucky. Those who were lucky enough not to lose many clients still stressed over the lack of new contracts, and the uncertainty of receiving timely payments on existing accounts. 

The Reality of It All 

After the initial shock, a few things became clearer. 

  • Big brands and their marketing agencies backed away swiftly and remained nearly silent for months.
  • Transit outdoor advertising got hit, and we mean hard! A lack of travelers created a lack of return-on-investment for advertisers.
  • The biggest cities with the top markets were down as much as 50%. Why were the larger markets tanking more than the others? Two things: 1) the sheer cost of advertising in those environments made them a target for budget cuts,  and 2) they became COVID “hotspots” because of their large population.

Fast-forward to the last quarter of 2020. 

While the pandemic remained, Americans began shifting back to a lifestyle more similar to the one they led prior to COVID-19. Businesses added safety measures so employees could return to work and responsible gatherings were permitted. 

As people began to leave their homes, the OOH markets both big and small began to see advertising levels normalize again. 

Looking Back 

What did all of this teach us about the OOH landscape? 

The biggest markets took the largest hits from this pandemic. As we mentioned, the large markets and transit outdoor advertising were down approximately 50%. That is a huge loss, especially given that many of the assets in these markets have minimum rent guarantees to the property owners. 

As the country continues to recover, their revenue has rebounded to approximately 20% or pre-COVID levels. And while this is great news, you might be surprised to learn how the smaller markets faired. 

We found that while small and medium sized markets also suffered from COVID-19, their revenue dipped less, and came back faster.  At this time, it’s our experience that most of these markets have broken even or are only down approximately 10 percent from pre-COVID levels!  In some instances, we have even seen some clients experiencing higher monthly revenue compared to pre-covid months. 

In the end, most everyone weathered through the tumultuous months, and continues to work toward the future. 

We certainly had stressful, overwhelming moments with our clients in 2020. Yet through it all, not a single payment has been missed by any of our borrowers and we could not be more thankful!

As you begin to look toward the future of your business, let us know how Stark Capital Solutions can help!