1 Year of Modi Govt: Out-Of-Home sector yet to see 'good days'
The optimism that was rampant during the early days of the Narendra Modi government coming to power has yet to translate into anything concrete for the outdoor industry, say OOH experts we spoke to
Published - May 19, 2015 8:37 AM Updated: May 19, 2015 8:37 AM
Around this period, an year back, there was a wave of enthusiasm in the outdoor sector. A new government was coming to power and, with it, a promise of economic growth, which would further lead to increased ad spending by corporate. 12 months later, the outdoor advertising industry is still waiting for the optimism to translate into something tangible.
“A visible effect (on business) is still to be seen. The government spending on OOH has not increased and while everyone (corporate) is positive, there has been no impact so far,” says Rajiv Saxena, MD of Blue Ocean Media.
On the policy front, the OOH sector has never expected much from the central government. However, the increase in service tax to 14 per cent was disappointing to a lot of agencies. Speaking back then, Nabendu Bhattacharyya, CEO and MD of Milestone Brandcom had called the Union Budget a “set back”. “The 12.36 per cent tax was itself high. No marketer is going to increase spend just because service tax has increased, so for the advertising industry this increase is going to have a big impact,” he had said.
Union Budget 2015: OOH sector unhappy with service tax hike
This was a sentiment that was expressed by quite a few others, especially so because even back then, agency heads and media owners had pointed out that the growth in business was not proportional to the spirit of bonhomie in India Inc.
“The central government has very little to do with the main problems facing the OOH industry since outdoor is more of a municipal matter. On the client side, there has been marginal improvement but our share of pie is not increasing. It might have increased a bit but not proportional to the investments that have been made,” said Noomi Mehta, MD of Selvel.
And even though India Inc. might have not lived up to the promise of increased ad spend, government spending on promoting various initiatives has been a positive. But among the sectors, apart from e-commerce, which has contributed the most to outdoor spends in the past one year, there has hardly been any noteworthy spending by other traditional sectors. Even the IPL and ICC Cricket World Cup, two major sporting events in the calendar year were a mixed bag this time around. However, some, like Saxena, expect spending by traditional advertisers like Real Estate to pick up in the closing stages of the year.
“Apart from the investment by government, spends by corporate India have hardly increased. E-commerce is the only sector that has helped revenue grow this year,” opined Mandeep Malhotra, former President of DDB MudraMax. When asked what has been the reason for this, he said that it could be just the tendency to wait for better scenario to spend. “I am very confident that we will see an upswing. The hardcore businessman needs to start investing,” he added.
On the other hand, Atul Shrivastava, COO of Laqshya Group felt the OOH Industry has definitely performed much better in the last one year despite a couple of lean months. He called it a positive period from a business point of view. “There is no specific policy benefit to the industry, but Inflation rate has come down compared to previous years. There is positivity in business largely because of a stable government at the Centre. However, the government seems to be working on two extreme ends right now—upliftment of the downtrodden and attracting foreign investments. Focus on the core business sector of India is yet to come and which may take some more time,” he said.
These thoughts were echoed by Bhattacharyya, “The entire sentiment has changed for good, be it for Indian corporates or international investors. OOH spends have surely increased. The first quarter, upto April, looked especially positive. We are extremely happy for a full majority government and it is just first year which has put foundation stone for a stronger economy in the next four years,” he said.
Kaushik Chakravorty, Co-founder & Director of Street Talk was of the opinion that though “high decibel displays of positivity” has been seen from the leadership level, the effect of the cautious and yet euphoric optimism has cascaded to a large and divergent segments of society including business.
“OOH has seen some very positive traction amongst the advertisers and advertising fraternity. That said, I do also think that we all are on a long haul flight and while immediate positivity is high, continuity and sustenance shall come from tangible results that these new ventures will have to show in real terms, sooner than later,” he added.
For the OOH sector it seems to have been a year that promised a lot but delivered very little. Also, the increase in service tax was further seen as a negative impact event for the industry. One can only hope that with the government now in power for a year and clarity on important initiatives like GST bill and Land Acquisition Bill imminent, the next year will be much better.
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