The peak season for the Indian outdoor advertising industry, which starts around September and goes on till February-March, is beginning to feel the heat of the global economic meltdown. As a result, the industry is facing a 70-80 per cent cut in terms of the media spends from sectors like housing/ real estate and financial. The overall growth rate of the OOH industry is expected to see a drop of around 30-40 per cent from what it was earlier projected.
Owing to the economic slowdown, the Indian Outdoor Advertising Association (IOAA) has also decided to take corrective measures as they plan to kick off a public service campaign that would prove the efficacy of the medium.
exchange4media spoke to the Indian out-of-home ad fraternity to gauge the implications and way ahead.
Industry to witness the 2006 growth rate
Indrajit Sen, Country Head and CEO, Stroer OOH Media India, pointed out, “Even after considering new media like the upcoming large number of BSQs in Delhi and Mumbai, new airports, transit contracts, and FOBs in various cities, one needs to remember that this year has seen a loss of billboard business in Chennai and Tamil Nadu, which has not been replaced by any new alternate media. Overall, the industry is likely to see a cut of about 30-40 per cent from the projected forecast for this year, and so we might witness the growth level of 2006.”
Sanjeev Hajela, President, Primesite, observed, “Overall, there is a sense of caution in the OOH industry, and as a result we are not witnessing the kind of campaigns and the projects that would otherwise normally take off. As a result, there seems to be a decrease of approximately 30 per cent in ad spends.”
Anil Kannambille, Co-founder, Accord Advertising Pvt Ltd, however, felt that it was the metros and not the Tier I, II and III cities that had seen a dip. He said, “Overall, there has been a 15 per cent cut in the booking space across all OOH formats in India, of which the major losers are the media owners who own properties in cities like Mumbai, Chennai, Bangalore and Delhi.”
A check at the entry level
Soumitra Bhattacharya, CEO, Laqshya OOH Media, noted, “The first thing we would want to do is improve productivity, and then we would look at rationalising cost. We are studying the situation and would act accordingly on both the work-force and ad-rates.”
Haresh Nayak, General Manager. Posterscope India, is expecting a dip in the overall appointments that are done in the Indian OOH industry. He said, “Overall, I see a dip of around 15-20 per cent in the junior level appointments, but the industry shall see this as an opportunity to recruit higher level officials.”
Speaking on how Postercope Worldwide is eyeing India, he said, “Posterscope Worldwide has asked its global offices to cut down on expenses like recruiting new people, travel, etc. However, we in India are not experiencing any such cuts, mainly because we are in the growing stage, and thus, we are allowed to follow whatever that had been planned in advance. But yes, we shall keep a check on junior level appointments.”
A lesson for the bidders
According to Sriram Iyer, CEO, Street Culture, “Owing to the economic slowdown and a reduction of around 40 per cent in the ad spends by the clients, the industry players need to re-access their balance sheet. Also, we might see corrective measures by players who were recently seen bidding out of proportion. Consequently, now even the most prominent sites of Mumbai are like blank slates.”
Kalpesh Vora, Director, Creation Publicity Pvt Ltd felt that there would be a 50 per cent drop in future bids, mainly because in the recent past companies had bid in an irrational manner, and thus had misguided the industry players.
IOAA plans for a corrective measure
Stroer’s Indrajit Sen, who is also Vice Chairman, IOAA, said, “ IOAA is taking a proactive step to kick off a public service campaign along with arrangements to measure the effectiveness of the campaign. These results would be highlighted to clients and agencies to prove the efficacy of the medium.”
Speaking on IOAA’s behalf, he added, “This would also be the time to invest in the future by getting our backend systems in place – the research data, better than before as the downturns are always followed by upswings.”
There is a definite re-check on the ad budgets, appointments and bidding rates, and with most people adopting a ‘wait and watch’ policy, the coming weeks will reveal how much more cuts in ad spends and budgets can be expected.
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