OOH: The reminder media under review

Indrajit Sen Executive Director - IOAA and Promoter-Director, Media, Analytics & Design P Limited, opines, "2012 has been a disappointing year, increased fragmentation and a lot of impractical regulations that impede business have taken their toll on this medium in the last one year. This is especially true in Mumbai and Delhi which together account for a huge majority of total spends that this medium sees. Bangalore also has its usual bout of annual problems with the regulations and steep increases in fees. Digital everywhere else continues to languish because of advertiser's reluctance to share space in view of only so much of exclusive space being available to them in the same location or in the same vicinity.” 

It has been observed that few years ago 50-60 percent of the outdoor budget was consumed by Mumbai and Delhi alone but now there appears to be a marked shift of it to the Tier II and III cities - the top 10-12 markets' spend has over the last few years reduced from 80 percent to 60 percent, however this trend is expected to continue. Last year was marred by a significant slowdown of GDP growth rate in India, resulting from domestic factors as well as slowing growth in Europe and China. As the outlook for overall growth continued to stay muted, advertisers cut their spends significantly or directed them towards other media.

In 2012, the OOH industry  saw increased contribution from other sectors such as auto, retail, white goods and real estate unlike 2011, when 76 percent of OOH media consumption was concentrated amongst four industry sectors. Revenues dipped from telecom in the first half of the year but it gained momentum with a veer of new tablets and laptops device launches in the market, especially in the festive season during second half of the year. FMCG with 14 percent growth in the sector also contributed to outdoor in 2012 in comparison to earlier years.

Apart from the billboards which are the traditional medium of choice for OOH, other formats may gradually gain share over time. Transit media especially in airports and metros, has experienced rapid growth over the past few years in India. Brands such as Hyundai, Tata Photon, Intel, ING Vysa, Microsoft and others have been prominent. With various airport modernization and new metro projects in the pipeline, this format is expected to outpace other segments with a CAGR of 11 percent. Reflective of this trend, two stations of the Rapid Metro Rail Gurgaon line ('RMGL') will be branded as Vodafone and Micromax stations as the two telecom companies have entered into a memorandum of understanding with the operator, RMGL, for a full fledged branding exercise. 

N Subramanian Group CFO, Entertainment Network (India) Limited, states, "The transit segment continued to make further strides. Digital OOH is paving the way for integration of mobile and outdoor advertising. The holistic development of the medium is attracting new categories of advertisers and augurs well for the future of outdoor advertising.”

The other formats like bus shelters, LED Billboards, street furniture are not used as widely in India as other countries, where they form as much as 30 percent to 40 percent of the total industry. This is primarily because of poor infrastructure and the absence of a secured environment (fear of theft or vandalism). Limited customization of content to suit the medium is another obstacle currently. Some of the key challenges which the outdoor industry is facing are -

• Lack of unified common measurement platform

• Apathy of civic agencies towards outdoor media

• Lack of adequate security measures 

With FDI in retail gaining approval from the Central Government, there is expected to be a spurt in the retail business spends in advertising. Therefore, OOH will also acquire a reasonable share of the advertising budget, as the medium is very much apt for the retail business. 

Thus it is expected that the OOH industry will move up the value chain and will no longer be seen as a mere residual category. MRUC has embarked on a new IOS, so that the outdoor industry can prove to brands that their investment yields result from outdoor media and it does not remain just emotional acceptance of outdoor. This coupled with the IOAA's announcement of ADEX and online data of assets across markets will help improve the credibility of the OOH media.

 

Mandeep Malhotra, President, DDB Mudra Max, shares, "I am looking forward for a great 2013, a year where I want to see two seasons of Diwali, one in Q2 and the other in Q4. The OOH space may not see some great shakes and moves in terms of new options/media coming up. If the industry were to go ahead and have an intended 7 per growth it will be good news for the year. Telecom and automobile should keep the trend in OOH going with few new launches. I am very hopeful for retail and government/tourism departments to play a positive role for 2013.”

With e-commerce companies showing interest in outdoor, gaining popularity of flash mobs, treatment of the out-of-home media segment as an independent medium, activation programmes in the malls picking up, ooh will emerge in 2013 more and beyond. If the industry builds upon the meeting momentum , makes planned investments and stays dedicated to recovering trade practices, OOH in India will rapidly become a'must-have' for both global and local advertisers.

Source:  FICCI-KPMG Indian Media & Entertainment Industry Report 2013