), which competes with companies like Disney (
), News Corp. (
), Time Warner (
) and Viacom (
), owes about 11% of its value to outdoor advertising as per our
estimates. Outdoor advertising is also known as out-of-home (OOH)
advertising and includes advertisement via billboards (including
digital) as well as advertisements on bus stops, metro stations,
buses or cabs.
Our price estimate for CBS stands at $26.34
, a premium of about 5-10% to market price.
A major portion of outdoor advertising revenues comes from
billboards and static displays, with local advertising being a key
feature. Automobile companies, financial services (mortgage
lending, financiers, credit card companies) often utilize these
displays to advertise local deals. For CBS,
revenues from outdoor advertising
suffered a significant drop in 2009, falling from about $2.2
billion in 2008 to $1.7 billion in 2009. The revenues recovered a
bit in 2010 and we expect the growth to continue.
Although companies continue to shift their ad spending focus to
the internet, outdoor advertising still represents an important
niche. Consequently, the market should continue to grow in the
Good Returns On Investment
For local advertising, OOH (out-of-home) advertising offers a
stronger visual impact on a more cost effective basis than
newspapers or magazines. OOH is highly customizable, thanks to
digital billboards, and offers high relevancy because it targets a
specific location. We also believe that OOH advertising has a high
retention value because of continuous exposure. According to one
study, out-of-home advertising offers higher ROI (returns on
investment) than TV or print advertising. The study puts the figure
at $2.80 earned in sales for every $1 spent on out-of-home
Despite the emergence of new advertising platforms, this form of
marketing remains effective. Some research firms anticipate that
this form of advertising could grow at rates of 2.9% to 7.3% in
2011. We currently project annual revenue growth for CBS'
out-of-home advertising business to be around 4% going forward.
See our complete analysis of CBS stock here