Rewind 2013: "It was an uncertain year for Indian outdoor advertising"
Mandeep Malhotra, President, DDB MudraMax - OOH, Retail & Experiential lists the ups & downs of the OOH sector in 2013 and hopes that it will move up the value chain & will no longer be seen as a mere residual category
2013 was a challenging year as we prepared to face another slowdown in the economy, with slowing consumer demands and rising interest rates impacting overall growth. In the previous years, though the aftermath of the financial crisis of 2009 and 2010 did hit the industry, the out of home sector did fairly well and showed a commendable growth. However, this year was a challenging year for the industry as a whole, it was also a year of significant changes. The economic slowdown hit the industry hard – especially advertising revenue. Advertising budgets were cut and plans had to be modified. Most companies had to revise previously robust projections to reflect a new macro – economic reality.Threats posed by the seemingly unstoppable migration of advertising expenditure to online and below the line added to that.
The year 2013 was an uncertain year for the Indian outdoor advertising industry, which had its share of highs and lows. A FICCI-KPMG report on the media and entertainment sectors released in March 2013 pegged the OOH industry in India at around Rs 1,823 crore (2012). Growing at a CAGR of 8.39 per cent, the sector is projected to touch Rs 2,727 crore by 2017. This growth is just marginally higher than its growth since 2006. Out-of-home enjoys a unique and fundamental advantage over other media: its audience is constantly growing, even during a recession. An increasingly urbanised global population is more mobile and spends more time outside the home, potentially exposed to ever more diverse and sophisticated advertising opportunities.
The year witnessed brands across industries actively experimenting with something new, something more creative and appealing – life size 3D cutouts, history making a coming back with the epic ‘Mahabharata’, cars making billboards their track, a ticking bomb on the billboard as a countdown to the show and many more. These innovations not only attracted eyeballs, but made some long lasting impressions.
The year saw many different trends in the out of home market. Changes in consumption patterns and fragmentation of ‘in-home’ media benefited outdoor. The category dependency on the medium changed. The revenues from telecom dipped, but at the same time entertainment industry used out of home as a medium very exhaustively. Certain categories just rode on the medium to make their presence felt. We saw tourism, online portals, retail and real estate spending a good share of their advertising spends on out of home medium.
The rural consumption increased. The huge untapped needs of the rural mass, the growing rural economy and the increasing media penetration and brand awareness made this market extremely attractive to marketers. While 50-60 per cent of the outdoor budget was consumed by Mumbai and Delhi alone a few years ago, there appears to be a marked shift to the Tier II and III cities – the top 10-12 markets’ spend has over the last few years reduced from 80 per cent to 60 per cent. The rural markets, therefore, became increasingly attractive in relation to urban markets.
The out of home industry also saw digitalisation. With the advertisers’ constant talk about wanting to “engage” with the consumer, the out of home media offered a potential of interactivity by bringing digital technology to the medium. Digital out of home is paving the way for integration of mobile and outdoor advertising. The holistic development of the medium is attracting new categories of advertisers. In combination with the mobile phone information from the smart phones, the billboard experience will become personal and specific.
Though the billboards are on course to remain the medium of choice, the transit OOH business in India, especially in airports and metros, has experienced rapid growth over the past few years. It continued to show the same trend. New channels such as LED billboards and street furniture are not being leveraged as widely in India as they are in other countries, where they form as much as 30 per cent to 40 per cent of the total industry. This is primarily attributable to high maintenance, fear of vandalism and poor infrastructure.
The key challenges that were faced this year, apart from the steep slashes in the advertising budgets, were the same which we have been trying to work on for a long time. The key requirement of OOH medium is a standardised measuring tool to justify spending in terms of ROI. Regulating a universal measurement system will help in the growth of the industry as well as it will add confidence in the media. The out of home sector is structurally exposed to a downtown, as it is a high fixed-cost business reliant upon long-term commercial contracts. Despite heavy license fees and taxes, permissions from various authorities and lack of clarity on regulations it continues to create operational challenges for the industry.
Another gradually emerging trend is the treatment of the out-of-home media segment as an independent medium, with specifically created ads as opposed to adaptations from the print or TV content. A concrete dialogue has started between the AAAI and the IOAA to establish a standard operating procedure that governs all transactions between media and agencies. This is expected to close soon with consensus amongst all stakeholders and create a reliable and more transparent business environment. This, then, will foster increased trust from advertisers and go long way to restoring growth. We hope that the OOH industry will move up the value chain and will no longer be seen as a mere residual category.
The author is President, DDB MudraMax – OOH, Retail and Experiential.
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