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Should you buy APN Outdoor Group Ltd at this share price?

The world of advertising has changed dramatically over the last few decades. The advertising dollars used to be dominated by Fairfax Media Limited (ASX: FXJ) and News Corp (ASX: NWS).

Seven West Media Ltd (ASX: SWM), Nine Entertainment Co Holdings Ltd (ASX: NEC) and Ten Network Holdings Limited (ASX: TEN) came along and took a large portion of the advertising dollars as well.

Now it seems like Google (with YouTube) and Facebook are unstoppable. However, I think there’s going to be at least one more change.

APN Outdoor Group Ltd (ASX: APO) is one of the biggest outdoor advertisers in Australia with its large number of advertising boards.

Those boards are nearly all non-digital and have been since they were first installed. But, if they are all turned into digital screens then that markedly increases the potential revenue from each one.

The total advertising spend across Australia is increasing, but spending on TV advertising and physical newspapers is decreasing. This gives the other advertising formats a great platform to keep increasing revenue.

APN Outdoor can increase its potential total revenue and receive a growing share of the advertising market if it can play its cards right.

The good thing about advertising is that it doesn’t rely on one business or any particular section of the public.

APN Outdoor can attract advertising dollars from overseas businesses who are marketing their product or service, APN isn’t reliant on just Australian businesses spending their dollars.

It’s currently trading at $5.46, 34% lower than its all-time high last August. I think this is a reasonable price for a growing business. I’m not expecting APN to smash the market’s returns, but I think there is a good chance it can outperform the market over the long-term.

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Motley Fool contributor Tristan Harrison has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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