The success story of Focus Media China was the reason behind your investor, 3i and you starting OOH Media. Have you been able in re-creating history when it comes to success?
Yes definitely, the success story of Focus Media China was the reason behind us and our investor 3i starting OOH Media. We have not yet been able recreate the history when it comes to success in India because both markets—India and China--are different markets. But we always anticipated, we always said that this medium will be 2 to 3 per cent of the industry in five years’ time. In China, there isn’t so much television and India has a very buoyant television industry. The opportunity in India is not lack of competitive media; the opportunity in India is fragmentation of media. Lot of audience or SEC A audiences have become media-dark because there are 10 news channels, 20 newspapers, etc to choose from. Therefore, for a select group of people of about 60 billion according to the last audited number of people, for them to provide a continuous exposure within very high recall and within limited reach compared to television – the question that arises here is - will this medium do well in India? Then the answer is ‘Yes’. Will there be another Focus Media in India, one company with 98 per cent of the market share, then the answer is ‘No’, because it was never supposed to happen but Focus was the inspiration to start this medium here. Focus showed the way in LCD advertising.
How much time according to you will be required for this medium to grow in India?
It has been just two years. We need at least three years to grow this medium. Normally for three years, any new medium goes through a lot of struggle, lots of negative as well as positive hype and after that the real game starts between the third and the seventh years which reveals the status—who will be the survivors, the winners, or the losers. In every industry this happens, it was true with Internet, radio. Forget media, it was true with the telecom sector also 15 years ago. 15 years ago, the articles on the telecom sector would be like ‘Telecom revolution in India’; after two years, the articles would be like ‘All telecom companies will die’; but today, you have a number of telecom providers like Hutch, Airtel, Reliance, etc. This is the nature of most of the new things, new businesses. First, their potential is overestimated in the short term and then underestimated in long term. So when you build the business you have to have 5 to 7 years of horizon. When digital media was introduced two years back, that time, it was announced by the media that ‘digital OOH media is going to take over the industry’ and now the media is trying to say that ‘digital OOH is going to die’. But both are rubbish, both are incorrect, some companies will die and some will survive. The truth is - first there is too much of positive hype then there is too much of negative hype in the media, but both are linked with building up our business. A business operates on different parameters and to establish those parameters, its takes a period of time. We just entered in our third year of sale, so it is going to take two more years to grow. I don’t think we should even call this medium as an industry, I think it is still just a concept in India, it will take three to five years to build the industry. If you see in the first two years of satellite television 15 years ago, everybody said that satellite television in India will die because they don’t understand content, programming, etc, but look at the state of satellite television today, it doesn’t mean that some satellite companies didn’t die, it doesn’t mean that some ‘won’t die’ but the industry has not died. Industry never dies, only companies die. Companies die because they have shortage of funds, bad management, bad strategy, etc.
Where do you see this medium two to three years down the line?
Exactly in a place where I saw it two years back, it will be a niche industry. Total outdoor is about 15 per cent, this medium will be 20 per cent of that 15 per cent. It means one-seventh of the industry is outdoor, out of which one-fifth will be OOH television. It is still very small. Currently, there are not more than five companies who are into digital medium. After some years, two or three will survive. Notably, we currently have 60 per cent of the market share and I think we can keep that up in future as well.
On your partnership with Focus Media China, what kind of synergy do you share?
We learned very important things from Focus Media. First, Focus taught us that the business is not about screens, it is about audiences, it is about profitable screens. So put screens where the right audiences are, so that you are attractive to clients – very very important lesson from Focus. In India, people who are dying and who will die never understood that. They always have been busy with putting up screens in each and every place, in wrong places where nobody comes or visits. Focus has taught us that it is better not to put a screen instead of putting up screens in the wrong places. A client never buys a screen, they buy a human being who looks at that screen. Therefore the location of our screens, the premium nature of our screens is always decided accordingly. Today, it is not about the number of screens you have, it is about: do you have the right screen and the right audience.
The second important lesson from Focus Media is – ‘spend money on research if you have to build a medium’. We have the largest research done on digital OOH TV media in India in the two years. It has been done by us in partnership with Nielsen and is called OOH Metrics. In that, the study was done with a sample of 15,000 on the attitude, profile, and other demographics. This gives a company credibility. Then, we had campaign evaluation studies where we individually analysed campaigns to check what was a recall, what is an element of recall and this gives a client brief. Therefore, research is very important as it helps you in getting repeat business from clients. There are over 100 repeat customers who are constantly advertising with us, they come back to us because we have researched the medium. That’s how we have to build the industry. We cannot build the industry with those customers who come, try the medium and go away.
The third lesson is procurement (right price to take). In the past, there have been some entities that died because of overbidding. So, we have learned that if the price is not right then walk away, but in India, what happen is that during bids it is very difficult for a party to walk away because their egos get involved. Indians have lot of ego. First they want to manage their individual ego and then the money, but the Chinese are very practical. If they are asked to choose between money and ego, they will choose money because they only believe in money.
So these are the most important three lessons we learned from Focus Media. They have been very good partners to us.
How is the experience of advertising with OOH media till date?
Frankly speaking, all advertisers will not stick to us. We have different categories to advertise on our screens but few of them only trust our medium. For example, the retail sector has begun to trust us, automobile has trusted us for the last one year, telecom trusted us for the last nine months - it takes time to convince clients about this medium and it also takes time for a client to get convinced about the medium. I don’t think FMCG trusts us - we go, knock their door, push them, then they give us some business and that’s all. We always figure when the telecom, financial, insurance, automobile sectors draw plans for campaigns to launch their products and services, but till today we don’t figure so much in the plans of lifestyle, FMCG, the education or the healthcare sector. So right now we are interested in - what we need to do to become important medium for these sectors and that is why we concentrate more on doing research, case studies and conversations. Recently, one of our clients want screens in hospital, so this month, we are launching 250 screens in hospitals. Sometimes we have to listen to customers also because they can’t advertise in most of the places where your screens are, so they ask for the place they need. So we have started putting up screens in hospitals. Let us see how it goes. It may happen that after six months healthcare may become our largest advertiser.
Who is the largest advertiser on screens till now?
It depends from category to category. For example, this month, if four financial companies come and advertise then this particular sector becomes the largest category or advertiser on screens. So it varies month to month and category to category like telecom, financial, automobiles, durables, media & entertainment plus cinema etc.
Focus Media has posted a net loss of $5.7 million and the company said it would cease expansion of its digital poster frame network in the light of uncertain demand. Is that a note of concern for OOH?
I really don’t know about this, I am surprised they made a loss. I hope it’s not true. But for clarification, on the relation between Focus Media and us: we have a purely strategic alliance/relationship and that’s why we don’t get impacted by their financial results. But yes I am allowed to use their name, I have the name rights, if I want to change the name of my company to Focus, I have the rights to do the same.
What was the direct impact of the recession on OOH Media?
Price....my pricing. Everybody has got hurt by recession. The funny part is that we have good news as well as bad news because of recession. The good news is that the number of advertisers has increased because a lot of people started looking at value for their money into media, and with this, I think the cheaper media like Internet has benefited. Even we would have benefited but because it is a new industry/media, we got hit on pricing like anything as compared to other media. What happened was when everybody as in TV, radio, etc. cut prices due to recession, we also had to cut prices despite being a cost-effective media. So we got impacted more on pricing compared to other media due to recession.
What was the growth rate then and now at what rate is OOH Media growing?
I am still growing, I am still struggling, I need to double every two years. Ideally, I need to double every year if you have to build the industry.
According to you, is the market recovering from the recession or not?
The recession is still there. Even after it recovers, once the client has tasted blood at a low price, it will take at least one year to increase prices. So I expect price pressure on the media industry to continue for two to three years. So at this point of time, we have to be very careful about our cost. We have to increase our market. In future, even if we become 2 to 3 per cent of the market, we will be fine as an industry.
Currently you have 5,000 live screens, any plan on increasing the number of screens?
Yes, we will but gradually. Earlier we used to add 1,000 screens in a quarter, now we will add 200 to 300 screens a quarter. There is no target we have decided for the number of screens. My only target is to make money. According to me, the number of screens is not the game. When we started off, at that time it was the number of screens. Now it is the number of customers and that’s why my target is to increase from 300 to 1,000 customers.
How are advertisers responding to your media planning tool called Flexicasting? Can you share more details about Flexicasting?
Advertisers are responding to Flexicasting very well. To be honest, the idea to come up with such tools was not our idea, it was a client’s idea. One of our clients told me: why are you selling screens like the way television, print or radio does. We thought on this and then finally we launched the media planning tool called Flexicasting and now almost 30 per cent of our revenue is coming from this tool because it is actually designed by an advertiser for the advertiser. For example, at one point of time on our screens, there was a car advertiser who had four different cars running and three different creatives in two different languages, no other media can do this. It is ultimately all about customisation, everybody needs customise the media today.
According to you, what are the key challenges for digital OOH media at this point of time?
The biggest challenge will be in growing the clients’ categories like the Initial Public Offer (IPO) category, healthcare category, etc. It is very hard to make these categories trust this medium. Right now the good scene is that few of our clients who are convinced about our network, themselves convey the importance of this media to the media planner. Once the client is positive about your network then it is easier for the media agency to select this digital medium in their media plan and we are seeing that change beginning now. Actually recession has really helped us to be a client-choice. In a recession, people tend to become open-minded, tend to change their mindset because they start looking for cheaper and efficient media options like us. Therefore, this has helped companies to change their mindset towards our medium.