OOH sector faces the brunt of demonetization drive

The outdoor advertising sector has seen the profitable Q4 festive period thrown into disarray due to the government’s demonetization drive

e4m by Abhinn Shreshtha
Updated: Nov 28, 2016 8:08 AM
OOH sector faces the brunt of demonetization drive

Even as the nation comes to terms with the government’s dramatic decision to demonetise Indian currency notes of Rs 500 and Rs 1000 valuation, one sector that is facing the brunt of this move is the outdoor advertising sector. The impact has been even more pronounced due to the timing of the government’s move, which comes during the November-December period, which is when the outdoor sec tor traditionally sees a boom in business. We approached a number of outdoor agencies to understand the effect on business. All the agency heads we spoke with agreed that business has taken a hit due to demonetisation with brands preferring to cancel or postpone promotional plans, even if these were long-term campaigns.

“There has definitely been a slowdown in the last 10 days though I won’t call it a panic. I think this is a temporary phase. The economy will stabilise by February or March but it is unfortunate that this happened during this (festive) period. There is momentum in the economy so things will turn better once market stabilises. For example, take a look at the auto sector; they have been doing really well for the last 9 months, but they might feel the pinch in November,” said Suresh Balakrishna, CEO, Kinetic South Asia & Middle East.

Rajneesh Bahl, Founder and Director of Grey Parrot Integrated, explained that the reason business has been impacted is because there is no cash in the market which is making brands wary about spending. “The consumer is not buying so companies have realized they will not achieve their sales targets for Q4 so they have stopped their campaigns. Real Estate and FMCG have gone completely silent. Financial Services are spending but just about one fourth of what they would normally spend. But people are still optimistic that this is a good thing that has happened. I think the current situation will continue till the first two weeks of January and then we will see a turnaround again,” he told us.

According to Atul Shrivastav, Group CEO of Laqshya Media, the agency has only seen 10-20 per cent of expected campaigns materializing as clients continue to hesitate to spend money. “This will wait till the end of December or January till money matters stabilize. The situation should continue till end of March but we will see some improvement by December,” he said. However, he also mentioned that in the long run, demonetization will be beneficial for the OOH industry. “We are very sure about this,” he added.

Sanjeev Gupta, MD of Global Advertisers, informed us that only 30 per cent of sales actually occurred for the agency in October with nearly 25 campaigns getting cancelled. “The priority right now is to control losses that are taking place. We will be floating new schemes to try and attract customers and keep occupancy full. Slowly things are coming back to normal but the situation should continue till March. This was a very bold step by the Prime Minister but the planning could have been a little better,” he said. 

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