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2014 could be a springboard for OOH sector

2014 could be a springboard for OOH sector

Author | Abhinn Shreshtha | Wednesday, Dec 31,2014 7:53 AM

2014 could be a springboard for OOH sector

The outdoor advertising sector has usually been used to getting the short end of the stick as far as getting advertising budgets is concerned. Over the years, the OOH advertising spends have seen growths of as low as 2 per cent. 2013 was a somewhat better year for the sector. The outdoor industry formed 6.2% of the total advertising spends in 2013, according to the Pitch-Madison Media Advertising Outlook (PMMAO). This Year Next Year, a study by Group M, too says that 2013 saw the OOH industry grow by about 6%. Expectations, both from analysts as well as OOH players themselves, was much more positive for 2014 considering it was an election year. In fact, PMMAO predicted a growth rate of 8.2 per cent, while Group M’s studies pegged the growth rate at 8.8-9 per cent for 2014.

The overwhelming majority have answered with a strong positive reply. Advertising budgets allocated to outdoor advertising increased while interest from sectors like real estate, automobile and consumer products like smartphones further contributed to the growth. Key infrastructure properties were also seen in a number of cities which created more opportunities for outdoor inventory and ambient marketing.

The lavish amounts spent by the e-commerce industry towards the tail-end of the season was an added bonus. For example, sources say that Snapdeal spent close to Rs 6 crore on its OOH campaign to promote its Diwali Bumper Sale. Google and its GOSF partners also loosened the purse strings while Flipkart’s Big Billion Day was another major event that saw massive advertising on outdoor properties. The early half of the season was of course highlighted by the Lok Sabha elections. Sources estimate that the Congress spent nearly Rs 100 crore on its outdoor campaign and it is safe to assume that the BJP was not far behind.

“2014 has seen a lot of action and much more positive developments than in previous years. My belief is that overall positive expectations that were prevalent in the country contributed significantly to overall business growth in general and this has helped in the OOH industry also benefitting from the same,” said Kaushik Chakravorty, Co-founder & Director of Street Talk.

Sanjeev Gupta, MD of Global Advertisers also said that the positive sentiment seen at the beginning of the year has largely been justified. “Several steps are being taken to attract investment, simplify approval mechanisms and bring in greater transparency and create better infrastructure. Industry expects the government to do more but it is unfair to pass any judgments till at least two years have passed,” he said.

Despite these positives, there is another side of the story. The first quarter of the year was sluggish as lack of clarity on the political front caused many corporates to hold of advertising allocations till a stable government had formed.

“Business, as compared to 2013, has indeed been a challenge majorly because of the changes in the political scenario in the country. In the absence of a stable government both at the center as well as the state level, media spends were affected in several ways with some reducing the investments while others postponing the same. Nevertheless, year 2014 has been a true milestone year in terms of all the developments we have made,” said Olivier Heroguelle, MD of JCDecaux. Other OOH agencies complained that with the political parties hogging most of the inventory during the Lok Sabha and subsequent state elections, corporate spending decreased with some key launches also getting postponed.

One of the biggest news of 2014 was the acquisition of Milestone Brandcom by the Dentsu Aegis Network. The need for consolidation in a largely fragmented industry has been voiced by OOH players for a long time and this high-profile acquisition perhaps gave a taste of what is to come in future years.

“The OOH sector had a good start to the year and with the positive sentiment in the market, it is no surprise that most OOH agencies expected a boost in ad spends by brands. What remains to be seen is whether this will continue in 2015 and how do OOH players make use of this perceived change in the business cycle to create a more robust outdoor advertising ecosystem, which is even more attractive to advertisers,” said Haresh Nayak, Regional Director, Posterscope Asia Pacific & MD, Posterscope Group India.

Hiyav Bajaj, MD of TDI also agrees that 2014 was a far better year for the OOH sector than 2013 in terms of business, revenue and client activity. He points that one of the key things was seeing brands coming out with outdoor specific campaigns which lead to increase in occupancy levels. “We also saw e-commerce integration with transit media where both OOH and online advertising were used to create 360 degree branding campaigns,” he said.

Over the last couple of years, as metros have tended to run out of space in terms of inventory, Tier II and Tier III cities have emerged as a strong revenue contributor to the OOH sector and this trend was seen in 2014 too. One important observation was that telecom players, which have traditionally been big spenders on OOH, have shifted their focus away to smaller towns and cities.

Overall, it seems to have been one of the best years for the OOH space in recent memory. Buoyed by political stability, the promise of economic upliftment, some big ticket events and launches towards the end of the year, it seems that the OOH sector might be looking at a record growth rate for 2014. To temper down some of the optimism though, certain issues still plague the industry, primary being the lack of common metrics, which has still not seen a resolution though a number of individual OOH agencies have been working on their own metric systems for clients. Nevertheless, the OOH advertising sector now has a great springboard to do even better in 2015.

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