Happy days back? OOH looks at a good AMJ after 2 years

As per industry estimates, the sector is expected to register a 12-15% growth as compared to the pre-pandemic levels

e4m by Sonam Saini
Published: May 17, 2022 8:45 AM  | 6 min read

After a pandemic-hit two years, the Out-of-Home (OOH) industry is having a bumper April-May-June (AMJ) quarter as summer brands, movie promotions, over-the-top (OTT) services, and automobiles have boosted spending on advertisements in the medium. OOH is also attracting new categories for marketing and promotions. 

Jayesh Yagnik, CEO of MOMS Outdoor Media Solutions, pointed out that when the first lockdown was announced a few years ago it was the last month of the financial year, and the first quarter of 2020-21 started with practically nothing. "There was very little progress made throughout the year, but by the end of the year, it appeared that things were returning to normal with vaccination in place, but then the second wave hit, and things went from bad to worse. On the contrary, the first quarter of this year is looking absolutely fantastic, and the industry as a whole is regaining ground."

Almost 70% of OOH spends came in the second half of 2021, according to the Pitch Madison Advertising report 2022. In 2019, OOH spends in Q1 stood at Rs 862 crore as compared to Rs 753 crore in 2020 and Rs 450 crore in 2021. There was a drop of 48% in 2021 Q1 as compared to the same period in 2019. While Q2 saw a 70% drop in spending compared to 2019, Q4 was a bumper quarter when the spends more than doubled over 2020 and surpassed 2019. Nearly 41% of the annual spends came in Q4.

As for Amarjeet Hudda, COO, Laqshya Solutions, last year was definitely a period of recovery for the OOH industry. “The first quarter of the last two years were washed out as the pandemic altered the mobility entirely during that time period. Q1 of FY 2022-23 is already looking stronger than Q1 of the last two years. Laqshya Solutions is going to be reaching pre-Covid levels in Q1 itself, and we want to ensure that we stay there as we move into Q2 and beyond.”

According to Hudda, a significant amount of OOH's share comes from the categories like Automobile, Mobile Handsets, Real Estate, Consumer Durables, IPL Teams, Tech Companies (SaaS) and start-ups. Combined, these categories account for approximately 60-70% of all out-of-home advertising spending in India. “OTT was one category which reduced its spending drastically on OOH during the pandemic time. This category is now again back on spending on OOH heavily,” said Hudda. 

The Pitch Madison report stated that the top five sectors that contribute to over 70% of total OOH AdEx are – Real Estate (which leads the pack with a share of 22%), followed by Retail, FMCG, BFSI and Consumer Services. Compared to 2019, every category saw a de-growth. However, all categories registered an increase over 2020, except telecom, which registered a drop of 8%.

If we look at the AMJ period over the last two years, all of the major brands either stopped advertising or cut their budgets in 2020, affecting not only the OOH industry but also TV, print, and other media. While some industries recovered in 2021, the business was hit by the second wave. It's also worth noting that due to mobility restrictions, heavy spenders on OOH, such as summer brands, have been unable to advertise in the last two years.

“In this particular quarter, we traditionally have summer brands getting active such as ACs, air coolers and cold beverages. All of them were deprived of OOH for the past two years. We have had a good amount of spends from all these categories, which were waiting to spend this year. Apart from these, we have seen a good amount of traction from real estate and retail this season,” said Yagnik.   

“We have had a good number of new categories who have used this medium well and innovatively as a hyperlocal medium. New age start-ups, fintech, cosmetics, food/grocery apps, OTT platforms and BFSI are few of the categories that have made smart use of OOH.”

As per PMAR, OOH is expected to grow by 36% in 2022, taking the total outdoor advertising market close to Rs 3,000 crore, but settling at a share of just 3%. Despite growing by more than Rs 750 crore (36%), OOH AdEx is still expected to be lower than its pre-Covid levels by Rs 550 crore.

Talking about Q1 growth, Yagnik shared that starting from nil the growth sounds big as practically the whole of the first quarter of FY 2020-21 was nil, but if compared with last year we are still talking about the duration of the second wave. “One thing I must say is that this year is looking very promising not only for us as MOMS OUTDOOR but also for the OOH industry, and we shall be able to forget our bad past this year.”

Meanwhile, Hudda estimates the industry will register a 12-15% growth as compared to the pre-Covid levels in Q1. “The Indian OOH advertising market is expected to exhibit strong growth during FY 2022-2023. In addition to recovering the loss during Covid, the industry will also register a 12-15% growth as compared to the pre-pandemic levels.”

For Imtiyaz Vilatra, Country Head, Posterscope India, "The year 2022 has truly been a year of transition. In 2021, the OOH business bounced back and it was marked as the year of recovery with acceleration in the digital OOH media. This definitely helped the OOH advertising sector. We are expecting to see growth over the pre-pandemic levels this year. Last quarter, we did witness growth in brand spends on the billboards and this truly is good news for everyone."

"We can expect a growth of 12-15% over the pre-pandemic levels as confidence in the medium is gaining momentum for brands/ marketers/ advertisers. I strongly believe that OOH ad strategies must focus on mood-boosting ads that reflect the joy of finally leaving home."

However, some industry experts are of the opinion that while the inventory is currently full, pricing is still under pressure.

According to Karan Taurani, SVP, Elara Capital, Q1 is looking much better, and a YoY rebound is expected, but he believes OOH recovery will take time. "Inventory fill-up may occur as a result of new movie releases and OTTs launching new web series and shows, but pricing remains a challenge, as it is still close to 30% lower than pre-pandemic levels."

A shift to digital, more time spent on smartphones, and a lack of proper measurement systems for OOH media, according to Taurni, can slow down the recovery. "Many of these consumer-led companies will be cutting ad spends in the future due to huge cost pressures. This could impact ad spends across media, and whenever there is a budget cut, it first impacts the small media."

"I don't see a full recovery of OOH in CY 2022 or FY 23, and it may be pushed beyond FY 24," he added.

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