Chairman & MD | 19 Dec 2006
You cannot expect to make money or better the industry by just planting outdoor media formats arbitrarily. The building of world class outdoor formats must go hand-in-hand with the cityscape and must form part of the city. Further, to do all of this requires huge investments, which we are more than willing to do.
Adille J Sumariwalla was appointed as Chairman and Managing Director of Clear Channel Communications India when he merged the operations of Clear Channel and Mid-Day Outdoors in 2004. He had a long stint of 15 years with Tata Engineering, where he served in various capacities. He was also CEO with The Asian Age; Vice-President with the Sai Service Group of Companies; and Director of Mid-Day Multimedia Ltd.
Sumariwalla holds a Master’s degree in Commerce (Management) from University of Mumbai and an Executive MBA from the Asian Institute of Management, Manila.
What’s more, Sumariwalla was an international athlete having represented India at the Olympic Games. He is also the recipient of India’s highest honour for sportspersons, the Arjuna Award.
In conversation with exchange4media’s Pallavi Goorha, the multi-faceted Sumariwalla speaks about the outdoor industry in India and minces no words on what all is wrong with the industry in India today. He also has some helpful suggestions to help the industry grow.
Q. When and what made Clear Channel enter the Indian outdoor scene?
Clear Channel entered India in 1998 through the acquisition route – they had acquired More Group Worldwide. More Group at that time was already present in India as a JV between O&M and Aaren Outdoor. It was probably the first time an international outdoor company was entering the Indian outdoor space. Those were early days and the team was still trying to figure out the finer nuances of how the Indian outdoor market worked. In 2004, there was a merger of operations with Mid-Day and the induction of a new management team headed by me. Since then we have turned the company around and are steadily moving ahead.
Q. You have been in this space for two years now, what are changes that you have noticed in the Indian outdoor scene over the years?
Yes, there have been changes in the outdoor segment, people have got little bit more professional. However, what is still lacking is the total absence of laws and governing bodies. Till these changes happen, it will be difficult for consolidation to take place, thereby bringing about a change for the betterment for the industry. You cannot expect to make money or better the industry by just planting outdoor media formats arbitrarily. The building of world class outdoor formats must go hand-in-hand with the cityscape and must form part of the city. Further, to do all of this requires huge investments, which we are more than willing to do. On the flipside, the contracts / tenders then obviously must be of a longer duration, mainly for two reasons: the first being to give the investor adequate time to recover his investments and the second being to give the market enough time to mature and accept the driving up of the values.
Q. What kind of innovations in terms of outdoor formats did you bring into this sector?
There are so many innovations like polygraphic inking, digital electro-luminiscence, bluecasting, hypertag, and then there is perception technology. We are committed to investing in capital-intensive items like top quality LED that do not exist today. The LEDs that we see up are third class LED. I am talking about an LED, which cost Rs 2 crore, is of the same quality that we put up all over the world. I can bring that to India today, but the same has to be supported by a business model and an advertiser should be ready to pay for it. So, as market evolves we will start bringing those items. We have given some great technologies to the airport authorities for the Indian airports, which we are bidding for. We have shown them various technologies that we are using in airports all over the world. We believe airports is a high SEC and high segment. We could demand higher value from the clients since we are delivering their messages using high end technology.
Q. How would you compare the Indian outdoor advertising industry with the global market?
The outdoor market is growing very fast, year-on-year growth is 15-17 per cent. The outdoor market is growing faster than the average of the total media industry. If you remember, in 1997-98 we used to paint the billboards on GI sheets and we had artists just for that. The GI sheets use to get spoilt during rainy season and mostly stolen by poor people, who used the sheets to build their homes. If I put up a GPRS system on a bus shelter, I am not sure when it could be stolen. It is very easy to say use innovation, but we need to be practical. We have great designs for bus shelters internationally, but it is not logical to repeat the same designs that we have in China or London in India. One needs to consider the weather, the mind set, cost and culture.
While we bring in international experience, we still have to mix and match to do what is good for India. I know there are foreign companies who will come and put up fancy looking shelters, but that’s not India. It has to have the character of the city. Clear Channel doesn’t pick up bus shelters from other countries, mass produce it and put it here. Hence, it takes us longer to come into a city than our competitors, but we assure you that our international product reflects both the culture and character of the city.
Q. Recently several players have entered the outdoor market in the country, including international players. How do you look at the competition?
We are at an infancy stage. Just look around in Asia – Singapore, China, Hong Kong – they are so ahead of us. They are governed by strict regulations and have long contracts to operate. The outdoor advertising abroad is planned. Of course, I am seeing a change in the Indian market, but I wish the change could be enforced faster. I am ready to spend time and money to educate the people on international best practices and I am sure my global competitors will do the same.
Q. What are the challenges that you are facing here?
The biggest challenge we face is that the outdoor sector is totally unorganised and fragmented. The UK market was exactly the same 15 years ago, however, today there are just about 3-5 big players. At present, there are probably over 100 suppliers in Mumbai putting up hoardings anywhere and everywhere.
Lack of government agencies’ understanding of international best practices and their not being able to regulate the market for the benefit of all is also a huge challenge. This is restricting investment by global outdoor companies to invest in India. Moreover, there is also a huge dearth of talent in the outdoor advertising space. Sadly, in India, outdoor is bought as a commodity because of lack of independent research. What are we delivering, to whom we are delivering, who’s our target audience? These need to be kept in mind.
Feeble attempts to do research are being blocked by interested parties who are making big bucks today. The industry is currently doing a shoddy and arbitrary job in calculating ROI. One must show the client the ROI and why is it worth investing in a particular billboard – this is the only way the market as a whole will progress.
Q. Who are your major clients?
In the asset management division there is no client using the outdoor medium in any market, which we haven’t serviced. We have a wide range of inventory such as bus shelters, billboards, bridges, unipoles, the Delhi Metro, public utilities, gantries, cantilevers, etc, to be able to service all segments of the industry to enable them to reach their primary target audience.
We also have an agency part of business where we provide full service – right from the stage of planning, buying, implementing, monitoring and reporting for our clients such as Yahoo, Citi Finance, Globus, Tata Indicom, and Indigo Airline, etc.
Both these divisions run independently as profit centres from separate locations even in the same city.
Q. What are the technological advances that the medium is witnessing?
Let’s start with a very simple example. Earlier we used 5-10 small lights to illuminate billboards. Today we use just one light to light up a 20x8 feet billboard, resulting in lowering the consumption of electricity and improving the billboard aesthetically. We concentrate on small things such as quality of print, texture of print, quality of flex. Little issues like these serve the customer better both in term of better quality and lower costs.
Another issue that we are trying to wrestle with is non-standard formats. Abroad, billboards are booked for 15 days and rotated because of standard formats. Here people want billboards for three to even 12 months and get locked in with rates. I believe that rates should depend on market dynamics, and, therefore, it is detrimental to the outdoor industry to book premium sites for long periods of time with a single client.
Q. What are your future plans?
We want to create a premium company with premium offerings, providing total solution to our clients with innovations and use of technology to benefit of all stakeholders. I believe everybody should benefit and when that happens the base becomes stronger. A robust base enhances the rate of growth.
We also plan to be one of the leading players in India to consolidate the outdoor market. We are committed to investing in India. We also believe that one will have to invest at least $100 million if one is serious about the Indian out-of-home market.
Q. How would you compare OOH ad spend vis-à-vis total ad spends done by brands/companies?
As per industry estimates, outdoor contributes about 7 per cent of the total ad spend. Print is about 48 per cent, TV about 42 per cent, and the balance 3 per cent is contributed by radio, TV and cinema advertising.