OOH sure to bounce back despite COVID-19 setback: Experts
With the coronavirus pandemic throwing a spanner into the works of OOH, experts discuss the future of the industry in terms of growth
The Out-of-home industry saw a good year in 2019; however, the scene is set to change. Coronavirus is at the forefront of everyone’s minds at the moment. While India is under lockdown and the stay-at-home advisory for the Out of home industry is proving to be a major challenge for the sector. Experts suggest that post the lockdown, the industry will witness a sluggish growth and the pandemic has struck the business as a catastrophe.
According to recently released FICCI EY report 'The era of consumer A.R.T. – Acquisition Retention and Transaction’, the OOH industry grew at 5% and reached Rs 39.1 billion in 2019. The OOH growth in 2019 was powered by airport advertising, metro station naming rights, and the Indian Railways’ push to drive non-fare revenue growth, says the report.
The traditional OOH comprised 54% of revenues, while digital OOH (DOOH) grew on the back of screen volumes and increased interest from advertisers and contributed 2% of total revenues. Transit media continued to grow as more inventories became available and naming rights continued to be of interest to brands, reaching 39% of total revenues.
The report cites that DOOH contributed 2% of total OOH revenues (Rs 1 billion) and is forecast to grow at a CAGR of over 33% to reach Rs 2 billion by 2022.
While the industry has been hit by the novel Coronavirus, we asked industry experts what are the predictions for the coming fiscal? Charanjeet Arora and Rachana Lokhande, Co-CEO’s of Kinetic India co-answered the responses to make it blend as a single voice being communicated. They said that as a matter of fact, Kinetic India follows the cycle of January to December and are already in their fiscal year. “But we believe that instead of jumping to any conclusions or making predictions right now, organizations should channelize their focus towards their people’s well-being; ensuring that everyone is safe. We are a reckonable agency and are passionate about our work. With the kind of support extended by our clients, we will be back on track, once things get back to normal.”
Whereas Aman Nanda, Chief Strategy Officer, Times OOH told us that due to the COVID-19 pandemic followed by the global economic slowdown has dispensed a considerable toll on the media industry at large. Since most of the transit networks are shut and consumers are quarantined inside homes, we are witnessing major curtail in ad spends due to campaign postponement, cancelations or pausing of campaigns during this period which has resulted in a severe impact on the business.”
Atul Shrivastava, Group CEO, Laqshya Media Group is of the opinion that the fiscal is starting on a gloomy note due to COVID-19, but people in India are committed to fight it and win over. Lockout is likely to be withdrawn from 15th Apr.’20 and gradually things will limp back to normalcy with caution. “There is a huge consumption of every product in India and there will be eagerness amongst the brands to become the first choice for every consumer. This is likely to fuel the demand for the advertising and the market will see annual budgets getting spent in 11 months period. If we are able to contain the menace even by 80% if not 100% by 15th Apr., the market is likely to remain unaffected at large and growth predictions will also be achieved to a large extent.”
Due to the pandemic, is the ad industry expecting a sudden drop? Srivastava stated that the ad world is already pivoting and adapting a few measures as a result of the outbreak. “Overall Brands spending could take at least a temporary hit, but TV, Social Media, Gaming, DTH, and OTT, in particular, could actually benefit from people staying home, tuning in to news and streaming programming. There will be an impact on the experience industry, particularly around large scale events with a global audience.”
He added that consumer-packaged goods or manufacturing-related companies might decrease ad spending if there are inventory issues due to constraints on the supply chain. The fall had mostly been felt across travel and tourism business but it is observed that ads are popping on social media. Perhaps unsurprisingly, there had been a pick-up in ads for food and groceries. Companies in the travel sector can pull spends in the wake of the coronavirus outbreak.”
Singh and Lokhande stated that there has been a drop in business observed across industries, it is inevitable. Adhering to the lockdown and the post-precautionary phase, all the big events scheduled in the upcoming months are likely to get canceled. “Situations like this where a majority of the audiences are ‘At Home’ is likely to have an opposite effect on the OOH industry. Currently, business across verticals is at a standstill. We will have to wait and watch where the growth chart goes.”
Nanda said that due to Coronavirus and global economic constraints have kept spends under solid binds. “India’s GDP growth slowdown to below 5% even soured the brands, making them hesitant to spend money on advertisement and in-turn affecting the OOH industry.”
So, how much will the OOH industry be impacted by the crises? According to Nanda, there could be a sluggish growth. “However, along with our Country, we will emerge stronger. OOH Media has significant power to reach out to citizens, convey vital messages and catalyze the desired behavioral change in the months to come. Brands resuming their advertising on all media, and of course OOH, will send the right signals to re-build consumer confidence and spur our growth trajectory. At Times OOH, we are confident that new brands and new categories will emerge as this kind of pandemic changes consumer behavior and habits.”
Srivastava said that Out-of-home (OOH) ad spending could feel an initial negative impact due to social distancing and isolation measures. “Our forecasts are for the full year, and there is still a strong possibility that the virus could be contained in the coming months, allowing for a rebound in the Q2 itself. As it is, the bulk of ad spending takes place in the later part of the year only for the holiday and festive season. Nobody wants to do a product push right now, but sooner than later brands will seek the consumer attention to make good for the sales loss and demand for OOH advertising too will zoom. I can predict the shortage of OOH media in H2 this year.”
“COVID-19 has struck businesses as a catastrophe. Along with cinemas, activations too, have received a major hit. With the government’s ‘Stay at home’ mandate, the majority of clients have also pulled off their campaigns, because all key touchpoints such as airports, railway stations, metros, bus terminals, malls - Everything is shut!It will take us at least two weeks to settle down and estimate the full impact on the industry. But we are positive that the industry will undoubtedly bounce back. Post recovery, we will also have to gauge the situation globally and assist our clients to realign their business priorities,” concluded the Co-Ceo’s of Kinetic India.
With the current pandemic, it seems that the industry will have to fight tooth and nail to reach the estimated Rs 2 billion mark by 2022.
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