OOH: Hurt and recovering
Uncertainty prevails in the OOH advertising sector as spends fluctuate; industry feels a correction is due
Was 2011 the worst year in recent times for the Indian Outdoor Advertising industry? There are varied opinions about it. There are conflicting reports too. A recent report released by the Indian Outdoor Advertising Association (IOAA) suggests that despite cuts in ad spends on outdoor platforms by some leading advertisers, the industry need not panic and that stable growth has been registered in the previous year. However, another study by Pitch (an exchange4media Group publication) and Madison Media Group indicates that 2011 was a challenging year for the industry as telecom operators, which are one of the biggest advertisers on outdoor media, cut down their budget for the medium heavily.
Estimates of the study indicate negative growth (-10 per cent) of the medium in 2011 as against the previous year. While it does not include the unorganised data of signages, etc., in rural India, an extrapolation of this data for a pan-India understanding of the medium signals a slow growth. Pitch-Madison Outlook, 2011 had projected substantial growth of the industry in 2012, but it showed skewed results, as the telecom sector that spends about Rs 800 crore every year on advertising and 30 per cent of the total amount on the outdoor medium, spent five per cent less than the previous year.
Sudesh Paul, Manager, Business Development at Bright Outdoor Advertising explains, “This year is definitely going to be uncertain because of the overall macro-economic situation of the country. Advertisers are cautious about advertising in general, and hence outdoor advertising, more particularly after the 2G scam unfolded.”
The negativity was coupled with less spends from the consumer durables segment and entry of more players into the business. This raises a question whether 2012 is going to be an uncertain year for the medium. Noomi Mehta, Chairman and Managing Director of Selvel One Group and Chairman, Indian Outdoor Advertising Association (IOAA) agrees, “Growth rate could be dangerous this year, but we are hoping to re-establish seven per cent share of the outdoor industry in the overall advertising pie.” He adds that the revenue of his company is down by 10 per cent and it is by and large true for the rest of the industry.
Apart from airport terminals of metro cities and a few other transit points in the country, business in most of the areas has slowed down considerably. However, if all other factors such as airport terminals, railways and non-transit media sales of smaller towns are taken into account, overall sale volume has significantly grown over the last year. Sale figures and overall outdoor advertising have increased in the last two years. However, this has not translated into numbers when it comes to revenue generation.
OOH industry is optimistic
“The industry is doing badly, but that does not mean there is no growth in sales. It is like the television industry. There have been more sales in the entire sector, but at the same time, more players have joined the bandwagon,” says Mehta.
Outdoor media company owners are optimistic about the investments made. They are investing heavily in new sites to connect through localised messages and the most promising sectors are automobile, and media and entertainment. Advertising by automotive brands for the last three years has been consistent despite competition and hike in fuel prices. These sectors salvaged the medium after telecom and consumer durables cut down its outdoor budgets.
However, the post General Budget strategy of advertisers in the automobile sector could also be a crucial factor in deciding the growth of the medium. The industry believes that the second quarter of 2012 could take any turn depending upon the budgetary promises and regulatory changes. Ashish Bhasin, Chairman India and CEO South Asia, Aegis Media, explains, “The automobile sector has been advertising consistently last year, but a lot depends on the budget. Drastic regulatory challenges could have an adverse impact on the marketing spends of the segment, so it is linked directly to regulation. The automobile sector is dependent on the overall macro-economic environment.” Therefore, the industry is not banking heavily on the automobile sector, as it invests maximum in print and television.
In this context of negative growth and uncertainty, one of the most promising sectors for advertisers has been Media and Entertainment, which has significantly increased spends on outdoor ads along with several innovative ideas for the medium in the last one year. As this sector grew by over 11 per cent, its ad spends on different media platforms including outdoor, also shot up. The growth story and its contribution to outdoor was evident from a row of attractive 2D and 3D advertising in metro cities during the Cricket World Cup, Season 4 of the Indian Premier League (IPL) and Commonwealth Games. According to industry experts, the Media and Entertainment industry will continue to advertise heavily in the outdoor medium and there are reasons to believe in this hypothesis.
As per a PricewaterhouseCoopers report on Media and Entertainment Sector: 2011, consumption of traditional and modern media will only accelerate growth of the sector. This is expected to increase traditional modes of advertising; outdoor being one of the receivers. “Presence of Media and Entertainment properties on outdoor medium is very strong now. More the number of TV channels, greater is the need to advertise. The best way for films and media companies is to advertise on outdoor platforms because it addresses three major issues – localisation, reach and language-specific target groups,” elaborates Mehta.
Industry leaders believe that survival of the fittest will define the year for the outdoor industry. On the profit front, competitive advertising in telecom and FMCG sectors in the first two quarters is expected to stabilise the medium. While expectations from telecom and real estate sectors are high, many believe that this year will only be a year of recovering the dues and balancing the losses incurred.
What could prove to be game-changers are innovations and non-traditional approaches to the medium. The next big challenge could be an increasing rush of smaller players in the domain. In Mumbai alone, there are close to 400 vendors, who are eating into the revenues of larger outdoor media companies and obstructing consolidation. “This issue is going to hurt the industry badly. New players are entering the industry every day. Apart from competition, there will be a serious lack of study on the medium which will leave the industry clueless about the direction in which it is heading,” explains Paul.
The second big challenge is related to regulatory procedures. There is a clear lack of Standard Operating Procedure (SOP) for the medium, unlike other media platforms. The SOP is loosely defined and understood by the companies. Technically, SOP has been accepted by the industry in parts, and by and large, there is a standard procedure that the companies will accept Pay Orders (PO) within 15 days. “This is an area where the association has been focusing. Sometimes POs are released in six months which leads to losses. Clients can only be convinced of regulations and challenges of the industry only if SOP is accepted by all,” asserts Mehta.
A common regulatory protocol is expected to remove many hurdles. The IOAA is also considering regulations over terms of payment from clients and application of correct rates based on a memorandum. Building outdoor sites, building business around it and sustaining it in the long run is a more challenging task today.
Read more news about (internet advertising India, internet advertising, advertising India, digital advertising India, media advertising India)For more updates, be socially connected with us on
WhatsApp, Instagram, LinkedIn, Twitter, Facebook & Youtube