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French connection

JCDecaux brings European-style street kiosks to U.S. malls

By Edmund Mander

One of the hottest-selling items in selected malls this year is something shoppers are not buying: advertising.

Following revenue-sharing deals signed between JCDecaux, a French manufacturer of sleek ad-bearing street structures, and leading developers that include Simon Property Group, Urban Retail Properties and Taubman Centers, opportunities on an unprecedented scale are opening up for advertisers who can now reach some of their most promising customers at the mall.

At press time the company had signed deals to put its advertising "furniture'' — designed by the likes of Sir Norman Foster, restorer of Berlin's Reichstag, and Jean Michel Wilmotte, who expanded the Louvre Museum — into 160 malls, and by this summer expects to have contracted to add another 70.

Shoppers walking the halls of an upscale mall not only have money but are in a mood to spend it, observed Bill Wardell, senior vice president of marketing and sales for JCDecaux, which since the early 1960s has put kiosks, public rest rooms, bus stops and other ad-carrying structures on the streets of cities around the world.

"We offer the advertiser a wonderful opportunity to intercept this amazing audience,'' he said. "When you look at other venues, it's hard to find something that would compete.''

Installing the equipment will take about two years, with the average 1.2 million-square-foot mall getting about 60 structures, according to Wardell. Under a 15-year contract, the malls will keep 40% of the ad revenues, an arrangement typical of those forged with municipal authorities across the globe.

JCDecaux has taken its street furniture to cities in 33 countries around the world, from Sydney to Saigon, Paris to San Francisco, and Stockholm to Buenos Aires, forging partnerships that offer municipalities another source of revenue.

"The only thing the mayor has to do is nod his head,'' Wardell said, explaining that while his company shoulders the considerable expense of installing the hardware and handles the soliciting and posting of advertising, all municipal or mall partners need do is collect their share of the revenue.

However, U.S. cities pose a unique problem for JCDecaux that it has not encountered in other countries: Only about a half dozen of them — including San Francisco, New York and Boston — offer the downtown population density to make the advertising worthwhile, according to Wardell; in others, like Los Angeles, Atlanta and Dallas, the populations are too dispersed.

Fortunately, however, malls have more than made up for the shortage of viable municipalities. JCDecaux aims to enter the top 20 U.S. markets, as well as various key midtier markets, and also is looking to install its fixtures in malls outside the United States.

"They [mall developers] have generated in the United States truly an amazing marketplace,'' Wardell said, explaining how shopping centers have provided his company an avenue for growth in the country.

At the same time, the company offers the shopping center industry a timely opportunity, as consolidation, competition and Wall Street put pressure on developers to squeeze more money out of their malls, Wardell observed.

"They've had to work harder and harder as years have gone by to increase their earnings,'' he said.

"They've had to start looking for nontraditional revenue streams.''

Advertising, all of it backlit, will appear inside and outside malls on highly designed kiosks, pillars, freestanding structures and on the back of mall directories; some of it also will come via high-tech plasma screens. The company divides its mall ads into groups — or "networks'' — of about 10 signs each, with each network having an even number of prime locations throughout the mall.

Advertisers buy advertising in a minimum of one network for a period of two weeks or more. At a premium property like Simon's Forum Shops in Las Vegas, or Urban Retail's Copley Place in Boston, advertisers pay $750 for each unit, or "face'', requiring an expenditure of $7,500 for the minimum network of 10 faces for two weeks. The price drops to $500 per face at all but the top-line malls. Therefore, at the more common lower rate, a mall with six networks can expect to earn $12,000 every two weeks, representing 40% of the total $30,000 ad signage revenues.

Many advertisers rent two or more clusters, and at press time JCDecaux was in negotiation with an unidentified anchor chain to rent the entire ad space inventory of a number of malls, in a blanket campaign similar to those that have seen companies take over entire subway trains and buses. However, such exclusive deals, which are especially useful for launching new products, might be harder to cut as more companies clamor to advertise in the finite number of spaces available at malls, Wardell said.

But a solution to this demand is not simply to install more faces. It is imperative not to clutter a mall with too much furniture or bombard customers with excessive advertising, Wardell stressed.

"We've been very careful about that,'' he said, explaining that the company works closely with mall managers to ensure the optimum location and number of ad units. "As a rule of thumb we try to keep 100 feet between structures.''

Fears about clutter and overexposure partly explain why it has taken malls this long to exploit their advertising potential, explained Cindy Bohde, senior vice president of marketing at Urban Retail Properties. But JCDecaux's approach has laid those concerns to rest, she said. Indeed, the amalgamation of some existing, informational signage with JCDecaux's advertising furnishings has diminished the amount of clutter.

They use "beautiful fixtures, finishes that we would be proud to have in our properties,'' she said. "They understood the value of the shopping center as a venue for advertising.''

"With JCDecaux we found the right partner,'' agreed Drew Sheinman, senior vice president for marketing, business and development at Simon.

The installation of advertising is in line with efforts by Simon and other developers to expand the mall's role, turning it into a place where manufacturers can communicate with a large segment of the public.

"This is the first step in the direction of creating the mall as a medium,'' Sheinman said.

Right now maintaining and changing the advertising is a labor-intensive business for JCDecaux, admitted Wardell. But that could change rapidly in coming years, as the company uses more and more flat plasma screens, instead of signs, with the company's entire mall inventory controlled electronically from a central location.

But even without those advances, with the high cost of installation and maintenance, the mall is as near to a perfect venue as any JCDecaux has encountered so far, according to Wardell. "The reach of this medium is extraordinary.''