Demand for digital billboards and displays will facilitate a modest recovery in revenue.
Los Angeles, CA (PRWEB) October 06, 2012
After six years of steady growth, the light went out on the Billboard and Sign Manufacturing industry in 2008 and 2009. According to IBISWorld industry analyst Austen Sherman, “Billboard and outdoor display advertisers curtailed spending on the industry's services as total advertising expenditures dried up amid falling corporate profit.” Other customers, including fast food restaurants and retail stores, also spent less on displays and signage as revenue fell. In the five years to 2012, industry revenue is expected to decline at an average of 1.9% annually to $12.8 billion.
Industry revenue peaked in 2007 at $14.1 billion and declined from 2008 to 2010, including a 10.4% dip in 2009. “The declines largely occurred when the industry's key buying industries dramatically slowed purchases,” says Sherman. As demand slowed and profit fell, operators in the Billboard and Sign Manufacturing industry cut costs aggressively. Some firms even closed their doors due to the poor operating environment. IBISWorld estimates that several hundred billboard and sign manufacturers closed in 2009 alone. In the five years to 2012, the number of firms operating in the industry declined at an annualized rate of 1.7% to 5,736. Surviving companies adapted to the difficult times by slashing head counts, aggressively managing input costs, lowering prices or offering more high-margin digital products. As a result, industry profit margin has fallen during the past five years.
Market share concentration in the Billboard and Sign Manufacturing industry is low, with the four largest firms estimated to generate less than 9.0% of industry revenue in 2012. The cost of transporting heavy, bulky billboards, signage and advertising displays long distances prevents most industry operators from developing a national presence in the market. In general, this means that firms in the industry are locally or regionally based and must depend heavily on relationships with local customers. Consequently, intense local competition keeps most industry operators small. Furthermore, most work in this industry is labor intensive. This prevents companies from realizing significant savings from consolidating many manufacturing locations into one large location and instead contributes to keeping employee head count low at most companies.
The future looks brighter than the immediate past as consumer spending and confidence improve. Advertising budgets and the corporate profit that drives them have already started to recover, and outdoor advertising expenditure has started to rise. As a result, industry revenue is expected to increase 5.3% in 2012, building on growth in 2011. Revenue will grow as clients dedicate an increased amount of corporate profit toward advertising, corporate rebranding and new signage. This increase in total marketing expenditure is expected to cause industry revenue to increase in the five years to 2017. Additionally, advertisers will continue demanding more digital billboards and digital displays, a trend that began in the early 2000s that offers higher margins. Companies with robust digital product offerings will lead the industry's recovery as buyers remain entranced by digital products' clarity and ability to target specific demographics.
For more information, visit IBISWorld’s Billboard & Sign Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures billboards, scoreboards, retail store signage, and transit station advertising displays. Products may include non-electric signs, digital billboards, video screens and neon signs. The industry does not include outdoor kiosks, phone booth advertising, bus or taxi advertising and other street furniture. It also does not include any advertising or displays made from printing paper or paperboard.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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