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PMMAO 2010 Review Outdoor : The clean slates

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The third largest traditional media format, with 6.1 per cent share in the national ad pie of Rs 18,670, the outdoor industry has met the projections made in the mid-term review of the Pitch-Madison Media Advertising Outlook. However, as compared to 2008 when the ad revenue for the outdoor industry stood at Rs 1,419, the industry has had a negative growth of 20 per cent, falling to Rs 1,135 crore.

The last quarter of the year 2008 saw the beginning of the economic slowdown, which continued well into the first half of 2009. This reflects in our data, which shows that in H1 of 2009, the outdoor industry saw as much as 30 per cent decline at Rs 477 crore (as compare to H1 2008). With only 11 per cent decline at Rs 658 crore in H2, the industry was on the recovery path.

Sunder Hemrajani, Managing Director, Times OOH, points out, “Advertisers were very cautious during the first half of 2009, especially in the January-March quarter. All of them were looking to conserve funds.”

According to him, heavy discounting was the order of the day, while fierce negotiations were adopted for all campaigns. “Billboards and bus queue shelters (BQS) went for as much as 50 per cent and 20-25 per cent discount respectively,” he adds. Perhaps, as Rabe Iyer, Business Head, Allied Businesses, BIG 92.7 FM, suggests, lack of proper accountability and measurement resulted in this medium being one of the worst hit amidst the slowdown. “One of the key takeaways from 2009 has been revaluation of properties and rationalisation of tender bids,” he says.

Indrajit Sen, President – Projects, Laqshya Media, on his turn says that overall revenues went down by about 30 per cent to about 2007 levels, which he estimates to be around Rs 1,400 crore. (The Pitch-Madison Media Ad Outlook 2008 indicates the same to be Rs 1,275 crore though.)

With the exception of mid-size hoardings, which did fairly well, large size hoardings in 2009 largely went vacant. According to Noomi Mehta, Managing Director, Selvel Vantage Group, the smallest format, lamp-post kiosks too did badly, due to the large numbers required to make an impact. “Across the industry, sales dipped between 40 per cent and 20 per cent ,” he says.

That exit costs for the industry players are high, did not help matters. Also since the license fee is fixed, beyond a point, it was not possible for an outdoor agency to cut costs. Therefore, it was all the more important that overall valuation of properties must be reasonable. Industry players suggest that as banks charge around 12 to 13 per cent interest on loans for biddings, the returns obviously should be higher at around 18 to 20 per cent.

However, all are not unhappy. Erosion in pricing may have acted as an advantage to some. Ishan Raina, CEO, OOH Media, says, “Erosion in pricing has resulted in leaders in each category getting stronger at the cost of weaker and smaller player. Clients have got excellent value from all media in 2009.”

Apart from that there have not been any major movements in the outdoor industry last year. According to Sen, no new formats and no major new contracts or tenders saw the light of the day. “Nothing especially new has been seen in any of the top 10 cities,” he says. Mumbai and Delhi street furniture contracts remained on paper only and the tenders that could have made the difference – Delhi domestic airport’s Terminal 3 and Mumbai’s Terminal 1C – didn’t move beyond the evaluation stages.

The gloom fades gradually

The turning point, for the outdoor industry, according to Hemrajani, was the period of general elections in April and May 2009, after which the situation began to look up. According to estimates, the general elections pumped approximately Rs 350 crore into the ad industry, which came as a welcome relief after a dry first quarter.

The industry’s perspective on a tough-to-handle year has been one of caution and measured optimism. Optimisation of spends was the priority on the minds of business managers. Efficient and cost effective use of smaller formats like BQS and transit media saw wider acceptance with advertisers, mainly because of their reach and frequency. Players like Big Street, focussed on investing in low-risk inventories like Haryana Roadways (HR), DMRC (Delhi Metro Rail Corporation) Line-2 structures, cantilevers and gantries in Hyderabad and the Mumbai street furniture project.

For Sen, recovery from sub-40 per cent occupancy levels to near-75 per cent occupancy – without any closures, bankruptcies, distress sales, proves the resilience of Indian ad industry and economy.
The year 2009 also saw acceptance of digital OOH. As companies felt the pinch of spending on advertising on traditional mediums, they began experimenting with newer mediums. They explored digital OOH and found it an effective medium giving returns on investment. According to Raina, the sector (digital OOH) grew between 30 and 35 per cent in 2009. He hopes for revenues to double in 2010. “Currently, the growth is centred largely to Tier-I cities, with metros accounting for more than 75 per cent of the total digital OOH market,” he adds.

In the opinion of Rajan Mehta, Founder and CEO, LiveMedia, digital OOH can boast of significant differentiators. Firstly, it provides captive audience network, especially where people are sitting and spending leisure time. Secondly, digital OOH can engage with consumers through its content. Currently, LiveMedia has 16 branded programmes, which follow a theme; and content such as ‘arrange the words’ is designed to involve groups of people. Both Raina and Mehta of LiveMedia emphasise that the slowdown has led to introspection among clients, who are now more open to experimenting with newer mediums. “Through digital OOH, advertisers are able to reach their target audience at lower budgets,” says Rajan Mehta.

Telecom keeps outdoor buoyant

Different media owners, Pitch spoke to, reiterated that the telecom sector has been one of the top spenders in the medium, commanding a large chunk of the Rs 1,135 crore outdoor ad pie. Besides telecom, some other large spenders have been media and entertainment, automobiles, BFSI (mainly Banking and Mutual Funds), retail and real estate. FMCG also caught up fast with the traditional spenders on outdoors.

“As per our internal tracking estimates, about 40 per cent of the outdoor advertising came from telecom brands. BFSI and entertainment contributed to around 15 per cent, while FMCG hovered around five per cent, followed by automobile advertising,” says Iyer.

Brands such as Vodafone, Airtel, Aircel, Loop Mobile, MTS and Tata DoCoMo launched pan-India outdoor campaigns on a large scale. In a year of slowdown, grabbing the ‘mind-share’ of consumers became even more important than grabbing attention or wallet-share. Various innovations were tried out for this purpose. One of the most memorable example is that of the Aircel lifeboat. Aircel stuck an empty raft on a billboard near Milan Subway in Mumbai, an area notorious for flooding during the monsoon. The board simply read “In case of emergency, cut rope.” Sure enough, the area flooded during the monsoon and people were seen using the raft on July 13 and 14.

Besides generating goodwill among people, the raft innovation had the media buzzing. “As a marketing focussed operator, we create opportunities to engage with consumers in a relevant manner, either through the message or the medium. In some cases, the medium becomes the message,” says Rahul Saighal, Chief Marketing Officer, Aircel.

Another, much talked about outdoor innovation is that of Idea’s launch of Blackberry services in Mohali, Punjab. To announce the launch, Idea converted a pole into a seven-foot, built-to-scale rotating Blackberry device, displaying the words “Work in progress” on the screen. Pradeep Shrivastava, Chief Marketing Officer, Idea Cellular, however points out the need for greater measurability in the medium. “With greater measurability attempted by OOH, the medium will gain more transparency and interest,” he says.

Conclusion

“The launch of India Outdoor Survey (IOS) is the first step to bring credibility to the medium. There will be more acceptability of OOH as a mainline medium,” says Iyer. IOS, the audience measurement system for outdoor media in India, was launched by Media Research User’s Council (MRUC). It comes as a planning software that provides details on 4,500 outdoor sites in 1,000 road stretches in Mumbai.

With an attempt to bring credibility to the outdoor medium like its counterparts and with marketers beginning to open their purse-strings a bit, things are looking positive for the industry. It may have been washed out in 2009, but the industry hopes for a vibrant come back.

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Neeta Nair

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