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OOH industry looking for consolidation in rates

OOH industry looking for consolidation in rates

Author | Priyanka Nair | Wednesday, Jun 05,2013 8:12 PM

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OOH industry looking for consolidation in rates

Gaining brands’ lack of trust has been an issue plaguing the outdoor advertising industry. One of the key reasons for this is that the industry does not have a flat, fixed rate list.

Advertising rates of outdoor media formats are based on a myriad of factors, which are not only not limited to the number of units, but also largely depend on the size of the medium, duration of the campaign, number of markets purchased, time of year, market population, location, traffic, demand, and other market conditions.

Each market has specific demographics such as population, ethnicity and affluence that affect the average billboard cost and rate for outdoor media showings. For instance, billboards in Mumbai carry much higher billboard rental rates than same sized billboards in Hyderabad, primarily due to the difference in population and audience size, that is, the number of consumers who will have an opportunity to see the billboard.

Within a given market, each media format carries a different value depending on its impressions, which is used to calculate billboard prices. An impression is a commercial rating that many agencies use to measure the number of people who will actually see the advertisement. Every agency has different sets of parameters to determine the campaign result. Factors such as size, distance from the road, and illumination affect a billboard’s impact on the consumer, share industry experts.

Billboard rates may also vary based on market population, pedestrian or mall traffic, and ridership of transit media. Demand also plays an important role in billboard cost. LED media formats and high-traffic transit stations in the heart of cities have a long list of advertisers waiting to display their message. The proximity of certain advertising to airports, shopping centres and other attractions also increase demand and price. Further, other events and timing make outdoor inventory more expensive and can impact rates, such as large sporting events or beach adjacent inventory in the summer months.

Given these complexities, Indian brand owners often face a tough time deciding on a media plan. In the current situation, one needs to negotiate hard to get the right price as it is seen that media owners tend to keep a lot of buffer. This also impacts media budgets significantly. Currently, the process of media buying is largely relationship-driven. Consolidation is what many players are looking at to bring systems in place, but this process hasn’t taken off significantly. Meanwhile, brands are looking at a number of alternate ways to use their money wisely on outdoor landscapes.

Fixing long-term deals
Long-term outdoor campaigns at a fixed spot have not only created landmarks for brands, but also help them save money. Amul, Tata Housing and HCL are some brands that have been using this strategy and created outdoor impressions at prime locations throughout the country.

Taking the innovative route
Today, brands are looking at breaking through the clutter by investing in innovations in outdoor. Creative planning and in-depth media location studies have helped brands use their budgets effectively. Brands are looking at collaborating with agencies or directly with outdoor media owners to roll out one-stop innovative displays.

Going forward, it will be interesting to see what strategies marketers come up with to stretch their budgets for outdoor campaigns without additional burden. On the other hand, industry stakeholders such as media owners and agencies should seriously start to look at introducing a transparent methodology of pricing in order to gain brands’ trust in the long-term.
 

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