OUTDOOR CALLING

Outdoor: looking forward to winds of change

Like most of the industries, the OOH industry too has been reeling under slowdown impact. Industry leaders like Nabendu Bhattacharyya, Mukesh Gupta, Sanjay Pareek, Gour Gupta, Sunder Hemrajani, M Kumar share their views on the year gone by and what to expect in the year 2010.

Key trends in 2009

Nabendu Bhattacharyya, Founder, Milestone Brandcom:
“2009 for the OOH industry started with the recession, like all other media industries. Outdoor was the worst hit as advertisers were looking at ROI based planning and outdoor couldn’t provide a common currency as it’s still not available. It was the worst year for the media owners as they procured properties be it through tenders or private properties and new acquisitions, keeping mind boom in the economy and in the industry. They were the ones who had to stay with the acquisitions at huge losses.

Indian corporate houses, PE investors, and international media owners, who had entered the fray, had to do a U-turn. There were many tender defaults, and losses were visible in the industry. However, I feel that the industry grew marginally in the last quarter of 2009. A stable Government helped the economy on the road to recovery and this positive sentiment had a rebound effect on the OOH industry. Moreover, the telecom, financial and media and entertainment industries continued to invest in OOH.”

Mukesh Gupta, General Secretary, DOAA and MD, Graphisads:
“The OOH industry has seen growth trends in the year 2009. What is heartening is that the growth trends have been consistent despite the recessionary trends that dominated the economy in general. The reasons for this are not hard to find. The end of 2008 gave mixed signals about the prospects in 2009. As the year opened up, the hopes were revived.

The advertisers have been looking for most cost effective ways to reach out to the masses. Traditional media costs were felt too high. Hence, more number of advertisers looked at outdoor as an effective option to reach out. That was sort of a compulsion for them. For us, it was a blessing in disguise. The important thing is that the upward trend has been consistent throughout the year for the OOH industry.”

Sanjay Pareek, President, Percept Out Of Home:
“The main trends in the media were innovations, use of ambient media and shorter campaign periods. The other trend was the Government trying to regulate outdoor assets. Overall, the year has been lukewarm for the industry, though the volume (number) of business might not have suffered much, but in value terms, the business has taken a dip.”

Gour Gupta, COO, Platinum India:
“The slowdown mainly affected us on the outdoor part of the business. The other verticals gained from it as budgets were diverted towards activation and retail. In fact, we could see it coming and hence, we concentrated on focussing on our key clients and the effort was towards growing the business organically.”

Sunder Hemrajani, Managing Director, Times Innovative Media Ltd:
“The economic downturn has hampered the growth rate of the OOH industry, and Times OOH, being one of the key players, was not isolated. But the sector is still poised to do better than the others. The downturn called for re-strategising and re-organising and the focus is on category development and targeting new segments, cost optimisation, productivity enhancement and increased customer engagement through customer-centric innovation and value creation, etc.”

Size of the OOH industry & key drivers

Nabendu Bhattacharyya: “In my mind, the organised outdoor industry would be around Rs 1,900 crore. The key drivers are – consumer lifestyle change, Increased commuting time out of home, decreased in-home time, increased fragmentation in other media, other mediums being expensive in comparison to the OOH medium, various options to reach consumers while they are on the go, less spillovers, visual medium, larger-than-life canvas builds quick awareness, localised communications possibilities, technology applications, cost efficient and impactful, and, last but not least, now it offers a common currency. The Indian Outdoor Survey (IOS) by MRUC for Mumbai and Pune has added credibility to this medium’s growth.”

Mukesh Gupta: “The OOH industry in India is worth roughly about Rs 2,000 crore. When one considers the print and electronic media, this may look small. But, the advantage that OOH media enjoys is in its effectiveness. The reach that OOH media gives is quite comparable to other conventional media, at a fraction of the cost. A lot of advertisers, whether they are small or big, have begun to count on outdoor advertising. One important reason for the popularity of the outdoor media is the increase in the number of sites. Innovation has also been key to the growth. Use of technology has also given this medium a tremendous advantage. In fact, the industry has been growing at a healthy average of 15 per cent and more, thanks to the new media that are emerging.”

Gour Gupta: “There is no official source that tracks outdoor spends, but we would estimate it should be around Rs 1,400 crore this year. “

Sanjay Pareek: “The size of the OOH industry should be about Rs 1,300-1,500 crore. I don’t think the drivers in this business change every year. The industry stakeholders are the drivers. That apart, there is standardisation of outdoor policy across the country; clients putting more trust in the outdoor agencies; creatives that are thought through separately for outdoor media, which are different from the TV and print ads. Agencies should think out of home rather than just outdoors. Measurements for ROI need to be brought in outdoor to help media planners use outdoor in their media plans. The key external drivers are innovation and technology.

M Kumar, GM Jagran Engage:
“Our guesstimate about the size of the industry is around Rs 1,800-1,900 crore, excluding retail. Its share is 7 per cent of the overall advertising pie.”

Impact of the economic slowdown

Nabendu Bhattacharyya: As mentioned earlier, inventory acquisitions at higher cost, more supply than demand, new players and investors getting into the fray keeping in mind the higher returns – these have impacted the industry.”

Mukesh Gupta: “When the economic slowdown began in the second half of 2008, there were some signs of adverse impact on outdoor. But that was only temporary. It was more due to the negative sentiments that were prevalent. As already explained, outdoor media because of its value for money advertising has been able to produce results for advertisers and thus, the slowdown has not really had any significant effect on outdoor for a long time.”

Sanjay Pareek: “The prices of assets have come down, and though the media used in volume by clients have remained the same, the value of the campaigns has reduced. Secondly, the durations of campaign have also reduced, and finally, long term commitment of assets by clients has reduced.”

Consolidation in the OOH space

Nabendu Bhattacharyya: “I do not see consolidation taking place in the next five years’ time, as the recent meltdown has shaken the outdoor industry the world over. Hence, all media owners across the world must have withdrawn their expansion plans for few years at least, as they are now more interested to consolidate their own position at home. As for India, we would see a few corporates entering this space, however, the process has slowed down due to the impact of the meltdown, and I guess the economy is on a slow path to recovery.

Mukesh Gupta: “As far as we are concerned, consolidation is already happening in outdoor media and it is good for the industry. Entry of big media players into the outdoor arena has opened up many possibilities. Small players will of course be there to get highly localised coverage. Already, a lot of players have come together to bid jointly.
Consolidation enables the industry to leverage scale for its benefits. Every player has his own strong and weak areas. In times like these, it’s better to focus on your strengths and consolidate on the gains you make. You cannot be ‘king’ in every area of activity. Focus on strengths and leave out frivolous issues.”

Sanjay Pareek: “Consolidation is a must if we want the industry to grow and get organised. However, what the time horizon will be is difficult to predict.”

The road ahead in 2010

Mukesh Gupta: “OOH is the media of the future. As we see it, there is tremendous scope for outdoor media to reach great heights, because we feel the civic authorities and Government have not yet fully realised the potential of outdoor media, which can help in implementation of BOT projects. Already, some projects have set successful trends for outdoor media to prosper courtesy BOT projects. For example, the Delhi Noida Direct (DND) Flyway has been earning handsome revenue for the promoters by way of handsome compensation through outdoor advertising besides toll collection.
The fact is that despite the fluctuations in inflation levels the industry is convinced that outdoor media is any day economical and definitely cost effective. Hence, there will be continuous patronage from all advertisers, especially sectors like telecom (cellular and broadband service providers), finance (banks, mutual funds, insurance companies), FMCG companies, etc.”

Nabendu Bhattacharyya: “2010 will bring exponential growth in the OOH sector as there are new telecom players entering the fray such as Uninor, S Tel, MTS, Datacom, and Etisalat. We can expect to see fierce competition amongst the telecom players as the economy is in the recovery mode. Moreover, the financial sector is becoming active again. Overall, consumer sentiment is on a positive swing. Moreover, media and entertainment will continue to fight for top TVRs, while media owners will consolidate their positions in terms of viable acquisitions rather than gamble. There will be move to get together to form a nationwide association in line with the American Outdoor Association and create guidelines for the industry. These apart, the Indian Outdoor Survey is expected to cover nine more cities and offer a pan-India planning software to all media planners and advertisers. I feel this will be the catalyst to industry growth. Keeping the above factors in mind, I think the industry will grow by over 20 per cent.”

Sanjay Pareek: “There will be more competition, growth of ambient media, 360-degree planning in out-of-home, and hopefully, a better year than 2009 and better regulations and quality of outdoor assets.”

Some major developments in the OOH sector:
Milestone Brandcom wins Axis Mutual Fund business
DOAA addresses outdoor issues; puts in place policy guidelines for the industry
Nabendu Bhattacharyya sets up own OOH venture
Mudra launches OOH joint venture with Clear Channel
Crayons Advertising forays into OOH business with new division
Posterscope India completes first year in India by conducting 350th campaign
TAG Media in strategic marketing pact with Future TV
HT Media selects Primesite as its OOH partner
OOH players look to tapping the Bandra Worli Sea Link innovatively
Navia gets the OOH mandate for TTML GSM launch in Mumbai; ac size Rs 15 cr
Need for self regulation in OOH re-iterated
Graphisads bags OOH rights for Srinagar Airport
Mudra amid launches: announces second OOH agency StreetSmart
Industry welcomes Indian Outdoor Survey, but waits to see if it becomes a currency
IOS 2009: Outdoor fourth highest reached medium in Mumbai; Pune next for IOS
BSNL empanels Crayons, Planet, Prabhatam & Concept for Rs 100 cr outdoor ad biz
MRUC & Hansa set to release Indian Outdoor Survey 2009 for Mumbai on Jun 15
Slowdown woes: Cost corrections hurting the OOH industry
OOH Media and The Nielsen Company jointly present the residential research
Tag Media comes out with its audience research
Elucido Media Networks eyes the Mumbai OOH space; to enter the city by year-end