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A sign of things to come?


Claudia Penteado and Andrew Hampp

Commercial Alert
October 1, 2007


São Paulo made history by banning ads on billboards, neon signs and electronic panels, and now Rio de Janeiro is considering a similar measure. Brasília, Goiânia, Belo Horizonte, Vitória, Porto Alegre and Curitiba are among Brazilian cities discussing ways to reduce visual pollution, and local newspapers report that the mayor of Argentina’s capital, Buenos Aires, has been inquiring about the possibility.

Outdoor giant JCDecaux has been garnering street-furniture contracts in markets such as Paris by cleaning up billboards in exchange for bicycles, and made headlines with a similar offer in Moscow. In the U.S., Vermont, Maine, Hawaii and Alaska all have long-standing policies forbidding outdoor ads, and legislators in Austin, Texas, and San Francisco have explored similar bans.

Expanding platform
The backlash comes despite (or maybe because of) the growth of outdoor advertising—it’s expected to hit $30 billion by 2010—and the advent of more sophisticated and interactive applications such as Bluetooth.

“Advertising is so pervasive in the outdoor environment, so our perspective is things that push back, restrict or restrain outdoor advertising are good,” said Robert Weissman, managing director of Commercial Alert, which supports outdoor ad bans. “They make the public landscape more enjoyable, less cluttered and essentially more public in nature. They enable more civic interaction and civic claims to space rather than commercial points.”

The closest thing to a case study is Brazil, where a year after South America’s biggest city—São Paulo—passed the outdoor-ad ban, Rio de Janeiro Councilman Paul Cerri is backing a similar proposal.

Local ad-industry and outdoor-advertising groups are girding for legislation similar to São Paulo’s “Clean City” law, passed by the city council in September 2006 by a margin of 45 votes to 1. (The only dissenter, Councilman Dalton Silvano, is an adman.) The law went into effect in São Paulo, a city of 11 million people, Jan. 1.

Gains, losses
In Rio, as in São Paulo, the majority of billboard sites have been illegal, making outdoor advertising difficult to regulate as ads sprouted all over. Rio has about 126 outdoor-advertising companies employing some 1,250 people. Speculation about a ban on outdoor advertising is rife in Rio’s newspapers, some of which would stand to gain from a shift in ad dollars to different media.

São Paulo represents about 36% of ad spending in Brazil, and Rio accounts for another 14%. The banned billboard category is still small, accounting for less than 1% of national ad spending, but had been growing faster than other media.

“We support debate,” said Clovis Speroni, president of the Rio chapter of the Brazilian Association of Advertising Agencies. “Let’s sit down and discuss the subject. We have to punish informality but keep serious companies working. More unemployment in Rio could cause more violence. And in some cases, billboards help illuminate the streets and keep violence out of the streets.”

The mayor of São Paulo, Gilberto Kassab, surprised the outdoor industry and the Brazilian advertising market with his “Clean City” law. Some outdoor-advertising companies have closed, jobs have been lost and ad dollars reallocated. Marco Munoz, commercial director of Clear Channel—which bought two billboard companies in São Paulo in 2000—said business has fallen 90% in the city since the law went into effect. (Clear Channel’s Brazilian president, Emilio Medina, said the falloff has been 50% in the country as a whole.)

Numbers down
Nationally, spending on outdoor advertising has dropped about 15% this year, according to Intermeios, an ad-spending monitor compiled for leading trade publication Meio & Mensagem.

“People get lost in the city,” Mr. Medina said. “Hospitals can’t hang signs outside so people can see it from far away! Of course there were absurd panels, but with some control, things could have become more organized. Tourists don’t find out about theater plays or shopping malls that are promoting big shows. There is no indication of anything anymore. Cinemas can’t indicate films they are showing. And has the city become really cleaner? No, the city remains dirty.”

Raul Nogueira Filho, president of Central de Outdoor, an outdoor-advertising group with about 1,350 member companies, estimates that 12 Brazilian outdoor companies have closed since the ban. “Companies that were 50 years old had to shut down,” Mr. Nogueira said. “It’s absurd, and we stopped evolving. We were already working on digital billboards or billboards with mobile-marketing possibilities. Now it’s all gone.”

‘Irregular advertising’
Street furniture is still permitted, but the city’s contract has just expired, which could give Mr. Kassab a crusade in São Paulo. The city is expected to open bidding in the next month for a 20-year contract for about 14,000 sites including bus shelters, public toilets and newsstands. In the meantime, the city is slapping “irregular advertising” signs on existing street furniture, apparently because the contract has expired, and imposing $5,000 fines.

Clear Channel already holds a 20-year contract, signed in 1999, for street furniture in Rio. Global rival JCDecaux has a São Paulo office, but its Brazilian stronghold is in the northern city of Salvador de Bahia, where the Paris-based outdoor company won a 20-year contract in 2000 to sell more than 5,000 sites including bus shelters, newsstands, tree protectors, weather clocks and public toilets.

Those in the U.S. industry don’t believe a similar ban could happen here. “There are very well-defined laws in the United States on capitalism and on small business about what a government can and can’t do in terms of taking property and business,” said Stephen Freitas, chief marketing officer of the Outdoor Advertising Association of America. “I don’t think it’s applicable.”

Dollars elsewhere
If so, the industry will have dodged a bullet. In São Paulo, marketers blocked from outdoor ads are spending more in other media such as radio and print, including the city’s first free newspapers, Metro and Destac, which coincidentally launched at the beginning of the year, said Ivan Marques, president of F/Nazca Saatchi & Saatchi. Ads also are more prevalent inside subway stations and trains and within the city’s immensely popular shopping malls. “The law was hard, and most of society supported it,” Mr. Marques said. “[But] we cannot agree with the way things happened. There was no debate whatsoever.”

A middle ground is being explored by Antonio Carlos Aquino de Oliveira, president of Fenapex, the Brazilia Federation of External (Outdoor) Media Cos. He’s been traveling the country preaching the example of Salvador, Brazil’s third-largest city, which allows billboards but not at the top of buildings or historical centers. “The process of organizing cities is continuous and irreversible. But São Paulo is not an example to anyone,” he said.

As for Mayor Kassab, the ban has boosted his popularity, although polls show that, like the mayor himself, the “Clean City” program has both supporters and detractors. One paulista, or São Paulo resident, said she hopes the big clock sponsored by Banco Itau on busy Av. Paulista will survive. It’s what the locals look at when they’re stuck in traffic.



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