Why can digitization drive outdoor advertising growth?

  • Zenith expects digital outdoor advertising to grow at an average annual rate of 13% in 2021–2030, compared with just 2% for traditional outdoor advertising. Digital screens cycle through multiple advertisements at the same location, increasing the inventory available for sale; premium digital locations can also command price premiums.
  • Bernstein estimates that around 15% of UK outdoor advertising locations generated 67% of outdoor advertising revenue in 2025, showing that premium digital locations contribute a far greater share of revenue than their share of locations. The extent to which digital advertising replaces traditional outdoor advertising is difficult to determine.
  • Programmatic trading automates the booking, buying and selling of advertising inventory, reducing execution costs and making it easier for small and medium-sized advertisers to enter; advertisers can also include outdoor advertising alongside television and digital display advertising in the same marketing plan.

Is outdoor advertising taking television budgets?

  • Outdoor advertising has broadly maintained its share of advertising spending during the expansion of digital media. Bernstein expects this share to remain at least broadly stable over the next few years, but long-term data have yet to show a clear, sustained shift of television budgets to outdoor advertising.
  • When European advertising markets have been weak, outdoor advertising has recently at times proved more resilient than television; this offers clues for observing changes in market share, but the firm believes it is too early to judge whether a structural shift is taking place.
  • Market structure affects pricing. Bernstein estimates that Ströer and JCDecaux account for nearly 60% and about 25%, respectively, of the German outdoor advertising market; greater concentration helps maintain pricing discipline.

Why does revenue growth not necessarily deliver high returns?

  • Rent is usually the largest cost item for outdoor advertising operators, and European operators typically spend 6%–8% of sales on capital expenditure each year. Digitization improves media quality but does not necessarily increase capital efficiency, and returns on capital employed in the industry remain relatively modest.
  • Operating rights for premium locations must be won through tenders. When contracts are renewed, increased competition or higher charges imposed by property owners can transfer some of the excess returns that would otherwise accrue to operators to the owners.
  • The rollout of digital screens also depends on contracts and local regulatory permits. Limits on new locations can increase the scarcity value of existing premium sites, but they also constrain digital expansion; for example, the digitization of street furniture in Paris has long faced considerable restrictions.

What are the opportunities and constraints for the two major operators?

  • Ströer has an extensive urban and rural network in Germany, helping it meet advertisers’ need for nationwide coverage. Bernstein believes that local market concentration and limited competition in tenders in some smaller cities help its pricing and control rent pressures.
  • JCDecaux operates in approximately 80 countries, and its premium international locations are a strength, but popular contracts also attract more competition. Bernstein’s contract tracker shows that contract activity by euro value slowed in 2025–2026 compared with 2024–2025; renewals, meanwhile, often secure revenue with only limited additional investment.
  • The tracking model estimates revenue from announced contracts, assuming a contribution of 30% in the first year and the remaining 70% in the second; it does not account for contract losses, and ramp-up times also vary by contract.
  • Bernstein considers industry valuations reasonable in a low-growth environment and maintains its Market Perform ratings on JCDecaux and Ströer.