In 2009, Stroer derived 83.7 per cent of its revenues from its operations in Germany where it holds half of the outdoor market. However, competition is set to get tougher following a joint venture between JCDecaux and Wall, combining 22 per cent market share. Stroer will have to fight off this competition if it wishes to keep its grasp on key German cities contracts, a number of which will come up for renewal over the next two years.
German OOH market experienced tremendous pressure on prices during the recession, a situation difficult to remedy swiftly. Stroer weathered the storm relatively well with a nearly flat growth rate, whilst the overall market declined by 8 per cent. German OOH is currently navigating a stabilisation phase, but recovery is not expected until 2011. Stroer will be able to boost revenue growth through emerging markets and digital formats.
The acquisition of News Outdoor's Polish business allows Stroer to become market leader locally. On the Turkish market, Stroer-Kentvizyon already controls the OOH landscape. Stroer will raise its stake in the joint-venture from 50 to 90 per cent.
Remaining funds are to be invested in digital innovation and in raising organic growth rate. DOOH will be a key growth area in the next few years in Germany, albeit in terms of revenues, still from a very low base (€25m of advertising sales in 2009 according to ZAW/FAW). DOOH grew by 5 per cent during the advertising recession of 2009. So far, Stroer has led the digital market in Germany via its Infoscreen network. However, JCDecaux' growing presence, with Wall, as well as a new serious contender on the DOOH front - Deutsche Telekom - are raising the bar for Stroer.