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Abhijit Sengupta

CEO | 31 May 2011

After the modest or rather the dampening couple of years, the most exciting part has been the way the industry bounced back so quickly. The industry is in the consolidation phase again, so obviously we won’t see too much of investments in newer mediums or technologies. But the good thing is the way outdoor is being planned these days. Most campaigns focus on building optimum reach, which has resulted in outdoor becoming front of mind for any campaign.

Abhijit Sengupta, CEO, OAP India, started his career with Selvel Kolkata at a time when there was no media planning agency for outdoor advertising in the country. From there on, he traversed O&M’s outdoor wing, and also did a successful stint at Trikaya Grey. In 1999, he moved to Mumbai to join Primesite when it was going through bad patches. He was one of the key persons who were an integral element that helped revive Primesite to its present glory.

With an experience of more than 20 years in the profession, Sengupta has been the founder member of successful outdoor agencies like Primesite, MOMS and OAP. He started OAP in 2002, and under his successful leadership, it has now become one of the most professional organisations in the country in this arena.

Touchpoint is an off-shoot division of OAP, which was put together in the year 2005 under Sengupta’s chairmanship. His vision is to make OAP the leading outdoor media specialist and Touchpoint the leading environment design specialist in the country through intensive R&D, training, professional expertise and strategic acquisition.

In conversation with exchange4media’s Tasneem Limbdiwala, Sengupta speaks at length about the concerns of the outdoor advertising industry regarding the current service tax structure, the journey of OAP so far and more…

Q. What are the major concerns of the outdoor advertising industry regarding the current service tax structure?

For outdoor advertising agencies providing outdoor planning and buying solutions to its clients, agency commission is anywhere between 2.5 per cent and 6 per cent. Commission structure has been constantly under pressure and margins are becoming inadequate to cover the agency expenses as well. In this background, in the latest Budget, the Finance Minister has changed the incidence of Tax Payment from collection basis to Accrual Basis. Which means, till June 30, 2011, agencies would be collecting their dues along with service tax thereon, and pay the tax to the department. With effect from July 1, 2011, agencies will have to make the payment of service tax on or before the 5th of subsequent month for all the invoices raised in the previous month, irrespective of collection. In case agencies fail to collect their dues from the customer or if they become bad debts, there is no relief for the same. It’s a real threat to agencies who are over aggressive on pricing and also for those not managing their process and documentation well. Additional requirement of cash flow and working capital after a point might not be viable for the investors.

Q. At a recent meeting under the auspices of the Indian Outdoor Advertising Association (IOAA), KPMG has been appointed to suggest a plan of action. Could you throw more light on it?

Representative from KPMG appraised the amendments in the Service Tax Rules. Also, they appraised the impact of these changes and possibly what could be done to lower impact of these changes. Which includes:
• Agency should have all contractual obligations listed explicitly in the Purchase Order issued to Media Owners.

• Similarly, with the customer also they should have all the deliverables listed in the contract. For example, if it is a service obligation of an agency to provide the proof of display to the customer along with the monitoring report, then it should be mentioned in the contract and it could become a part of service that agency would provide to the client and that doesn’t get over with mere display of the advertisement on the billboards.

• IOAA, which is the newly formed Media Owners’ Association as well as the body that will represent outdoor advertising agencies, has to have a consensus about what are industry standards and practices based on which they could represent to the department and or the Finance Ministry.

Q. With the AAAI sending its representation to the Finance Minister, can we expect to see any new exception or a solution to the service tax issue?

With AAAI representation which was drafted by Ernst & Young:
• CENVAT rules were amended and input credit was allowed on accrual basis, which was unchanged earlier.

• Change in service terms or rates would result in credit note and the service tax on that component could be reversed.

• The implementation of the changed Point of Taxation Rules got deferred till July 1, 2011, which was to come in effect from April 1, 2011.

Q. In what other ways is AAAI addressing this issue?

I am not aware of any other ways in which AAAI is addressing the issue.

Q. What steps is the outdoor advertising industry taking to tackle the service tax issue and the anomalies arising out of it?

Based on KPMG’s recommendations and our understanding of the nuances of the business, IOAA, the media owners association in conjunction with the outdoor agencies, are formulating a standard operating procedure and terms of engagements by all parties right up to the advertiser. This would become the cornerstone to define the service to be rendered and also tackle issues of process and documentation.

Q. Now, coming to Outdoor Advertising Professionals (OAP), what was the vision of OAP at conceptualisation and how has the journey been so far?

When I mooted this idea of forming an outdoor agency and approached Mr Noomi Mehta (Chairman and MD, SelvelOne, and Chairman, IOAA), he asked a simple question, “Why another agency?”. I told him that I did not think the current set of agencies had the required skill set to exhibit “science, transparency and process” into the mad world of outdoor advertising.

My plan proposed the same with a certain level of expertise and a set of dedicated professionals leading the company. But even with decades of experience he was skeptical. However, once I showed him the strategic plan I had prepared, he was convinced. And that’s how he coined the name Outdoor Advertising Professionals. The plan was simple, commit to the clients what we can deliver and work towards creating product and services that exceed clients’ expectations. It meant a huge amount of investments in R&D and training. A lot of innovative methodologies and tools were developed, like Pro’Locator based on GIS maps and ward level data, or Pro’ Integra, an ERP, or Pro’Vizualiser, a simulation software to test outdoor creative in the confines. They were firsts in the industry then and were probably far too ahead of time. We are re-working on it and will bring them back at a more relevant time. Many others, like our lead sponsorship in IOS (Indian Outdoor Survey), have been successful and are yielding results now. These efforts from time to time have established our commitment to making outdoor advertising business transparent, process driven and result oriented.

The vision of OAP is to be in the leadership position in products and services and deliver quality. We have succeeded and will keep moving in the same direction. Apart from media planning skills and systems, we have had many successes like being given Great Place to Work by GPW Institute of the US, SME2 by CRISIL, ISO 9001:2008 certified by TUV Austria, one of the leading ISO audit firms, successfully creating visual illusions in outdoor.

Q. Who are your competitors and what is your USP compared to them?

Who is not? We are losing count of the number of outdoor agencies coming up. And every agency is a competition, since every campaign is a pitch. At OAP, we stand for quality and not quantity, same goes with our clients. We love to work with those clients who value our offerings with the rounded media approach, planning skills, transparency, and creative skills, rather than how least is the agency commission. Therefore, size of the business is not too important, the recognition for our effort is.

Q. What are the latest technological trends seen in the outdoor industry?

Before the downturn there were lots that came up, mostly in the interactive and digital space. Many have died because of feasibility issue. The main issue with digital is the content. The agencies in India are not tuned up to create the content that would work on this medium in an uncontrolled outdoor environment. Everyone is talking about interactive. But we are yet to explore that in our country. We have done it in bits and pieces. That’s because for interactive solutions to really work in out of home, we need to have collaborations between multiple hardwares and softwares, and this integration is not happening because of lack of budgets, availability and especially time to work upon. But I think this will really pick up soon, like in the Western countries, and we will get to see some exciting stuff. But willingness and effort has to be shown by all concerned. Then there are efforts to use technology in monitoring, tracking and coding of sites. Once implemented, these would help in upping the credibility of the industry.

Q. What is it about the outdoor advertising industry in recent times that has you most excited?

After the modest or rather the dampening couple of years, the most exciting part has been the way the industry bounced back so quickly. The industry is in the consolidation phase again, so obviously we won’t see too much of investments in newer mediums or technologies. But the good thing is the way outdoor is being planned these days. Most campaigns focus on building optimum reach, which has resulted in outdoor becoming front of mind for any campaign.

After the stuttering start of the IOS, with Mumbai and Pune, it’s coming back with full vigour. Once completed, that will add a new chapter and new dimension to the way outdoor media is planned and bought. Service Tax has been a dampener for sure, but as an optimist I see it as a boon in disguise, where the industry partners will come together to create a creditable and long lasting process.

Q. Please brief us on your current client portfolio? Which are the new clients that you have bagged so far in 2011?

Our portfolio is a balanced one with presence in all categories. With the addition of MTS, the telecom sector is also covered.

Recent wins:
Anchor
South Africa Tourism
Spicejet Airline
MTS - for West and South
MTS - Media buying for North and East
Future Generali (Existing)
Zuska (brand from Zodhita)
Wyeth
UTV
Tata Motors
Wipro
Jindal Steel

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