Economic slowdown hits OOH industry; spends drop 10-15%

Industry experts say that while the OOH industry has picked up pace during the festive season, spends on OOH have decreased over the past months

e4m by Anjali Thakur
Updated: Oct 24, 2019 9:30 AM

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If you are driving on the expressways of Delhi and Mumbai, the hoardings on both sides of the road are hard to ignore. However, recently, the number of vacant outdoor sites seems to be increasing by the day. It’s an indication that the economic slowdown has had its effect on the OOH industry.

According to Indrajit Sen, an independent consultant, the spends on OOH have decreased by 10-15 per cent in the past months, and the overall occupancy has dropped by 25-30% per cent. “There are many campaigns which have been postponed or shelved. Besides, brand owners have also shortened the duration of existing campaigns", he said.

Thanks to festivities, the OOH industry has picked its pace a little. But the biggest spenders are the likes of Amazon and Flipkart’ who remain unaffected by the apparent slowdown which has hit the OOH industry.

In the past, the biggest spenders in the OOH segment have been real-estate players, automobile brands, OTT platforms, mobile handsets, airlines and broadcasters, but many of these sectors have been hit by the economic slowdown.

 “We have witnessed it, but because of the festive season, it is looking a little better. Before the arrival of the festivities, things were not how it was last year. There is an evident difference, we have observed,” said Haresh Nayak, Group MD of Posterscope, South Asia, India.

"The ban on OOH signages has indeed spread like wildfire across the country. While this is still very much in action in Bengaluru, this is apparent across other cities as well. This is largely due to the fact that the government wants to regulate this medium which has been largely running on its own, and in many sections,  by people having their own site/location without any legalities attached to it. This had to happen a long time ago but with the new rules and regulations coming in, the scenario is changing a lot and in many ways, I guess it is better for the industry in the coming months,” said VV Rajan, Co-founder, CMO, Urbaniq.

Explaining  why there has been a shift in spending on the medium during the last quarter, Rajan said, “As per the Pitch Madison Advertising Outlook Report 2019, they have revised their forecast owing to a drop in the TV Adex during the first quarter of the year. And according to the original report that was released earlier this year during February 2019 Adex, it was forecasted to grow by 16.4% to touch ₹70,888 crores but the numbers seem to have come down to 13.4% to approximately ₹69,000 crores.”

He added, “A lot of this has to do with the macroeconomic slowdown leading to a fall in the domestic consumption. For example, we have seen that the auto industry has spent lower on this medium, unlike last year which is attributed to the fact the there has been lower demand in the last couple of months. The auto industry overall is the No.2 spender on the overall advertising pie.  This will obviously have an impact on the OOH media as well. At the same time the rise of OTT has had a major role to play in this medium.”

However, according to experts, in the long term, this medium is more impactful than other mediums (TV, radio and Print) which require active participation; ambient media will continue to be effective. Other traditional media will continue to lose market share due to the changing media habits of the younger generation. “DOOH is transforming the medium so instead of more “faces” or locations, you will see fewer but more impactful options. This will be a “win” overall for advertisers,” Rajan opined.

Talking about if the industry will pick up its pace in the future, Sen said, “Outdoor will bounce back simply because of its cost efficiencies. To support an economy growth post slowdown, advertisers will have to look at outdoor because it continues to be cost-effective.”

“Yes, business is indeed affected by monies shifting to other media due to this but eventually it will come back once rules are set in place,” Rajan added.  

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