Looking around, it's almost hard to tell that the out of home advertising industry was in a recession. Yes, numbers were down. However, the industry continues to prove itself as the creativity and innovation hub of the advertising world. The industry stakeholders are still moving forward with research, technology, new products and creative execution; that keeps the ever adapting outdoor advertising industry on top.
Year 2009 could well have been a defining period for the OOH industry. A mid-year economic recovery has seen some of the gloom abate and the festive season may have imparted added buoyancy. But the mood in the Indian media industry as it heads into the New Year remains somber. The industry faces serious questions today about the sustainability of the current upturn. Does it really have the momentum to overcome multiple adversities -- a global economy mired in debt, currencies prone to violent gyrations, a possible surge of inflation and a real erosion of living standards? Or will a recovery that has rather too hastily been proclaimed, prove all too illusory?
Allaboutoutdoor spoke to media owners, OOH agencies to understand the implications and the way ahead. Excerpts:
A year of learning and correction
Abhijit Sengupta, CEO, OAP, said, “I am not really an expert to predict whether we have managed to move out of recession completely. In the last couple of months we have definitely seen an upturn in the number of outdoor campaigns, but I am not sure whether the revenue growth is commensurate with it. Advertising on a whole and outdoor media in particular is the most vulnerable in such scenarios. Another dip in the market would again have a negative effect in our business, which I hope doesn't happen. But on an immediate note I think the next quarter should be good. I have seen a marked change in the way outdoor is being planned and bought these days. Due to lack of budgets, advertisers have reduced the number of days of their campaigns. Well this is not been a welcome change by media owners, as expressed in various forums. But what it has done is that the number of sites been bought in any campaign has increased manifold. This I feel is a good sign of change in perception of the advertisers, where they won't cling to those few high quality sites, and blow off their entire budget, as well as drive away low intensity categories. The net result will be higher usage of media and newer categories and advertisers coming in.
2009 was a year of learning and correction, I guess. IOS was the greatest thing that could have happened for the industry. It has shown us how warped idea we had about effective reach. Correction in pricing, talent compensation, and corporate governance was a crying need for quite a few years, which I think has happened. We plan to consolidate and build on from the learning’s we have had in the difficult times, especially in tapping all the various touchpoints that we have figured out in the various consumers day in life and creating engaging content around it.”
The market has shrunk
Sanjay Pareek, President, Percept OOH, said, “I don’t think so as the industry would have shrunk this year to about 1300 -1500crores. The volume of square feet used this year may be same or bigger than last year, but in terms of value the market has shrunk, because the assets were discounted. The drivers in business change every year. The Industry stake holders drivers are: standardization of outdoor policy across the country; clients putting more trust in the outdoor agencies; creative’s to be thought thru separately for outdoor media, should be different than TV and print. Agencies should think out of home than outdoors. Measurements for ROI to be brought in Outdoor, to help media planners to use outdoor in Media plan. External Drivers are: Innovation and Technology will be key drivers. As per PWC, KPMG and other industry watchers have indicated that the out of home industry is sunshine and I tend to agree with them except for this year which was a blip, but the future is bright for the industry. Our plan for 2010 will be to add value to the employees, share holders and vendor partners.”
Impact of downturn across Media Platforms
Arminio Ribeiro, CEO, Madison OOH Group, said, “The downturn had certainly impacted spends across media platforms and it seemed to have had the biggest impact on outdoor especially post mid 2008 prior to which the industry seemed to have enjoyed a period of unprecedented growth. Over the past 12 months we have passed through the recession and entered the phase of recovery and it’s heartening to see that the Indian Economy and consumer confidence is strong. During the early months of the downturn, the industry – be it the specialist agency, the media owner or the supplementary support services, recognized the fact that they needed to focus their energy on building efficiencies, increase productivity in everything they do, as well as invest in newer formats (transit and ambient) that are more consumer focused and resulted in better ROI for advertisers.
In addition, advertiser confidence in the recovery of the economy resulted in accelerated spends. Spends grew by approx 200 % for the period Jun- Nov’09 as compared with the same in 2008. This growth in spends which peaked during the Jun-Sept’09 is due to new circle launches of existing telecom players- eg. Idea and Aircel, the arrival of new telecom players such as Docomo, MTS and recently Unilor along with the revival in the financial and real estate sectors. Out-of-home continues to be seen as an integral part in today’s media mix whether it is for strategic or tactical reasons. Today newer formats and supported by technology have given a further impetus to outdoor as the chosen one for effective communication plans.
During the past 12 months, we steadily built our capacity for challenge and change and built our process efficiency. We will now consolidate our position with our clients and keep building our capabilities towards attaining leadership position in the industry. We have faith in our core capabilities, will stay the course and remain flexible and agile and keep innovating to meet client/brand expectations.
Anil Kannambille, Co-Founder, Accord Advertising, said, “Surely not. We are still awaiting the financial clients, the NFOs. The builders and construction giants are still far away. Whatever little improvement happened was more out of the festive season, and the Channels advertised because they got a great-buy. It is still in a very infant stage. Surely, the quality of the media and creative has improved, and will continue to improve. Advertisers now have more trust in the media. Also the media itself has seen improvements in the designing of the sites or any other infra structure erections. We will observe the market, and then look into expansion. Presently, we have been selectively participating in a few government tenders.”
Moving out of recession
Ishan Raina, CEO, OOH Media, said, “Industry is slowly and steadily moving out of recession. Even after it recovers, once the client has experienced the low pricing, 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 but at the same time 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. People are spending more and more time out of home which makes this medium an important part of their daily life. Also clients tried and explored new media options for more benefits and value, during the last year and their response to OOH Media overall has been very positive.
During economic slowdown as well, OOH Media was one of the most cost effective mediums for advertisers. We have always believed in providing maximum value to our advertisers. There was a significant rise in the number of advertisers but we had to decrease our price by 30 % to stay competitive. Inspite of economic slowdown companies invested in OOH advertising for their brands. This happened because they saw a great value in this medium. Also the tremendous change in lifestyle of people to spend more and more time out of home has added to this. Clients understand the importance of medium and hence are making it as an important part of their media plan. 2010 will also be a challenging year but our role as leaders of this industry will be to keep building relevance of this medium to clients. We want to focus on increasing the number of customers as well as categories. The industry is still emerging and there is immense scope for new clients, categories and growth. It can’t be limited to just few categories. Every category can get their share of audience they are looking for. Currently Automobile, Telecom, financial services and Media & entertainment are our largest categories. FMCG was a late starter but is now increasing rapidly – healthcare has also started advertising with us.”
OOH industry hit badly
Nabendu Bhattacharyya, Founder & MD, Milestone Brandcom, said, “I think IOS was the most important event for the OOH industry. Recession hit the OOH industry badly due to its unorganized nature marketers were skeptical putting their monies on OOH as it is non measurable. Increased level of tender defaulter on acquiring ooh properties. Last quarter of 2009 have shown positive sentiment with economy improvement , couple of new telecom launch , financial and media entertainment became active improved the industry and industry have shown positive growth by about 2 to 3 % over 2008. I strongly believe authorities will impose strict control over OOH formats and Medias. Marketers will demand ROI based planning hence, IOS will see light of the day with 11 cities study. All OOH stake holders will get together to form one single association. Marketers will demand accountability and transparency from media owners and agency specialists. Marketers will demand media specific creative from creative agencies. International players will take greater interest in India hence technology; production techniques will flood the market place. Consolidation process will start amongst media owners and agency specialists.”
OOH Industry moving in right direction
Sunder Hemrajani, MD, Times Innovative Media Ltd., said, “The situation called for discontinuous action and the industry focused on category development, targeting new segments, increasing customer engagement through customer centric format innovation, providing more value, optimizing cost and enhancing productivity & accountability. Since the beginning of Q2 of 2009, the market started looking up and the signs of recovery could be seen from the trends of the key sectors affected by slow down. Real estate, infrastructure, BFSI, auto, etc. has been the high spenders and now market started looking significantly up for them as well. One can now see quite a few new real estate projects, IPOs, car launches, etc. being announced.
The positive change in the market started to impact the media industry as well in a positive way and the economic turnaround was clearly visible. With the airports and metros up for modernization & expansion plans, emergence of malls, multiplexes, real-estate and other state-of-art infrastructure, there is an enormous potential for quality OOH in the coming years.
Overall, 2009 has been an extremely challenging year for the OOH industry. While the worst is over, the industry will take some more time to recover completely from the ‘meltdown shock’. It is moving in the right direction. Though the recovery is slow, the path seems to be right and the sector is definitely poised to do better than others in long term. Different industry reports have different estimates for OOH business market size and the range as of now is from about 1500 Cr. to Rs.1700 Cr. The market would possibly have been bigger if the slowdown had not hit us. The OOH industry has definitely moved a significant distance. The Out-of-Home advertising is evolving fast to bring the customer closer to the actual product. When the times are tough, the focus is on the value extracted for every penny spent.
Now, OOH & its effectiveness is being measured to give advertiser more confidence & showcase value proposition. Recent effort by MRUC is a very positive step in this direction. Players are also now gauging & showcasing OOH potential & value proposition. TOOH along with IMRB conducted a comprehensive study of the airport media audience and their profile. Nielsen conducted an airport advertising recall & effectiveness study at Delhi Airport and audience research at DND Flyway & DMRC Blue Line Stretch for TOOH. Other key players are also conducting such studies across properties to measure effectiveness of OOH and showcase value proposition.
Business from new categories coupled with innovations will hold the key. The need is to invest in world-class quality & technology and offer new & better products to advertisers. Focus has to be on innovations, experimental marketing & product promotions as it helps to rise above the clutter & provides for a better brand recall. The advertisers are looking for opportunities to out-smart each other by focusing more on media and properties that are in line with their target-groups. A number of international & best-in-class brands have started eying India as a potential market and they would definitely be looking for innovative & out-of-box OOH solutions to establish themselves. This would require best quality execution & client servicing. India is on a fast track of development and good infrastructure would hold the key to this. OOH industry contribution to the good infrastructure development will be critical and organized OOH players can play a crucial role in building ‘Incredible India’.”
OOH Media expected to grow
Mandeep Malhotra, Sr. Vice President, Primesite, said, “The OOH market grew by only 4% in 2009 and closed at Rs.1, 448 crore, much lower than the Rs. 1,698 crore forecasted. Mumbai was worst hit by the recession with 40% market shrinkage in Q4 of 2008 and inventory utilization falling 60%. Among categories, the Financial Services segment saw a huge drop in spends while DTH category saw a big new OOH user with the launch of three new service providers. While OOH media is expected to grow by 4% in 20010-11 to Rs.1, 500 crores, like telecom, financial sectors and media will be on the active side by the next year. Seeing the neighboring countries going bust, Indian economy is gradually showing an upward trend. The sentiment and stability of the government too is helping in bringing the faith back in the market. Our future: Strengthening our share of space in the OOH by offering various propositions to brands like StreetsSmart(ambient out of home solutions) and Clear Channel Mudra( global out of home solutions).Our intend is also to have the best talent in the country.
2009!! Challenging year for the OOH industry
Ankur Rastogi, Jt. Managing Director, MPG Active, said, “The industry is slowly but surely on its way out of the slowdown. Last quarter of 2009 has shown positive sentiment. Active investments from categories such as Media, Financial and telecom has contributed to the growth. Overall, 2009 has been an extremely challenging year for the OOH industry. While the worst is over, the industry will take some more time to recover completely from the ‘meltdown shock’. It is moving in the right direction. Though the recovery is slow, the path seems to be right and the sector is definitely poised to do better than others in long term. Different industry reports have different estimates for OOH business market size and the range as of now is from about 1500 Cr. to Rs.1700 Cr. Recent effort by MRUC is a very positive step in this direction.”
The market is still slower
Kalpesh T. Vora, Director, Creation Publicity, said, “The market is still slower. The three drivers of the growth in the sector are Telecom launches, New Budgets and Innovations. Due to recession in first 2 quarters out of home advertising 2009 was a disaster as far as revenues are concerned. Supply has increased by double while demand has gone down 2 times .However; there were good moves in the last quarter which saved the industry from darkness. Although of this decline there were major innovations this year which is a very good sign. In the end, we hope to Service few larger clients directly with the help of few small agencies, show aggressiveness in signages & visual merchandising and Opt out of Expensive tenders for some time.”
Recession was only a passing phase
Mukesh Gupta, MD, Graphisads, said, “Yes. Recession was only a passing phase as far as Indian outdoor industry was concerned. When the so called recession began in the second half of 2008, initially there were some pointers which indicated that in general the economy would face a slow down and that will impact our industry too. But that was not to be, as advertisers soon realized that outdoor is one medium, which will not cost them the earth, and they will be able to do mass advertising through outdoor media. So, they began to patronize it wholeheartedly.
In 2009 outdoor media grew based on its intrinsic strength of value for money advertising. The duration of outdoor campaigns ranged from 3 to 6 months which gave fabulous results from the enormous exposures outdoor medium provided. Further the outdoor advertisers worked in unison to bring in more professionalism to the industry and that attracted quality advertisers towards the media. The spend on outdoor in 2009 has been well over Rs.1600/- crore all over the country. Out-of-home was the most effective medium in 2009. The slowdown sentiment due to recession was prevalent in some quarters. Naturally money was in short supply and cost cutting was the buzzword. In the circumstances out of home media emerged as the most economical and effective medium. In fact a few of our clients openly admitted that outdoor was as effective as other media yet it didn’t cost them much. We have plans to acquire new media and enlarge the spread of mobile vans. We also have plans to synergies CSR activities of leading corporate with out of home media in the form of mobile ambulances which will cater to emergency medical needs besides providing branding for the advertisers. Thirdly we want to go through the BOT route to bring in more scope to outdoor advertising which will have a positive impact on the infrastructure development as well as maintenance.
Industry on its way out of recession
Ajaz Memon, Director, Network Media Solutions, said, “The industry is slowly but surely on its way out of the slowdown(not recession). You simply have to take one look around you outdoors to see that most OOH sites are once again carrying client ads instead of telephone numbers. One factor responsible has been the stock markets bouncing back smartly, thereby restoring both investor, and by a natural corollary, consumer confidence. If advertisers are confident of consumers being willing to spend on their products, they will advertise more in OOH, so the circle is complete. With a slew of telecom brands slated to be launched between Dec 2009 and January 2010, there is an exciting quarter ahead of us. OOH definitely took a big leap forward in 2009 despite the initial slowdown.
A growing lot of enlightened advertisers are now planning OOH budgets as a standalone medium of communication instead of simply a supplement to their mainline media budgets. Even hitherto brands which were not traditionally big OOH spenders have begun asking their media planners, "What about OOH?" Focus on our core segment which is Airports, at the same time be on the lookout for lucrative opportunities in other ambient/transit media sector. We have managed to take some firm strides towards growing our Airport AOR business wherein we become the single access point for a brand to do an Airport campaign at multiple airports across India (and indeed the globe). We have been acquiring some of the largest and most respected brands in India as our clients for this business stream, giving it a sure fillip upwards.”On the whole it can be said that the OOH industry appears to be promising but the future road map requires serious contribution from all stakeholders to achieve growth for this trade.