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Where’s OOH headed in ‘God’s Own Country’?

By Ria Banerjee - May 31, 2021

Kerala was among the first to be hit by the pandemic last year. As the state battles the second wave along with the rest of the country, the OOH operators there are fighting their own battle to survive and move past the crisis. Support from government, combined with a cautiously strategic approach by media owners, growth of DOOH, and a mutually supportive role played by all stakeholders, can help fuel the state’s OOH industry.

The Covid19 pandemic and the consequent lockdown last year left no industry unscathed, and the OOH industry has been no exception. The OOH markets had started to recover in the last quarter of FY2021-21, and media owners had barely begun to get a grip on their business when the second wave of the pandemic swamped the country, bringing OOH operations to a grinding halt. The situation has been no different in the Kerala OOH space. 

Rise and fall

Industry trends in the state are a close reflection of the way the pandemic itself panned out. Between November 2020 and March 2021, businesses began picking up, and in the last five months of the year, Kerala OOH saw about 40% business occupancy, as shared by Dany Antony, Managing Director, Zero Degree OOH Media Assets & Solutions. While booking enquiries made up 60-70%, about 40% of the bookings were converted into sales.

Dany Antony, MD, Zero Degree<br>OOH Media Assets & SolutionsIcy Varghese, Managing Director<br>PlayAds Dany also informs that bookings began to occupy about 20-25% of OOH across Kerala after November last year. However, during election campaign this year, the OOH market collapsed again, triggered by the second wave of Covid-19.

Icy Varghese, Managing Director, PlayAds agrees that barring a few government advertisements, ad spends were at a new low during the pandemic. PlayAds for its part acquired permission from the central government to display public advertisements on social awareness regarding Covid safety measures. But on the whole, national brands have been shying away from advertising during this time. Campaigns plummeted 50-70% after last year’s lockdown, with about 30% being taken up by personal hygiene product categories like masks and sanitizers. But these are neither significant nor sufficient to sustain the operations of media owners. As a result, about 60-65% of OOH media assets in the state are vacant.

K Vijayakumar, MD<br>Aiswaria OOH MediaK Varghese Thomas, Patron, KAIA, & CEO<br>Century OOH Media & Assets SolutionsCompanies shutting shop and railways halting their operations in the state also added to the woes. As K Vijayakumar, Managing Director, Aiswaria OOH Media, reiterates, the pandemic has caused a big blow to the OOH industry. Prior to the state elections this year, there were advertisers occupying almost the entire OOH space in Kerala. But with the second wave hitting severely, approximately 10-20% of national campaigns have been dropped, albeit for the time being.

Highlighting the impact of pandemic on the OOH business, K Varghese Thomas, Patron, Kerala Advertising Industries Association (KAIA), and CEO, Century OOH Media & Assets Solutions, which has seen a boom period during the past two decades, echoes the common sentiment.  As he says, industries were stagnant during the lockdown and therefore the OOH spends of brands in Kerala, many of whom are from the real estate, entertainment, textiles and gold segments or comprise the national consumer brands, have also been impacted.

Local versus national

Local brands, however, have continued to spend on the medium and this has helped sustain the business of media owners in the state to some extent. For Rajesh Kumar M, Director, Chitra Painters, business had been reduced to zero in the previous year, but began slowly picking up from January this year, to such as extent that the company has managed to make up for last year’s losses in just three months, thanks to local brands.

Rajesh Kumar M, Director<br>Chitra PaintersAlso, as Rajesh Kumar points out, payments from local brands are higher and faster, unlike the national brands. Since the national brands have lower budgets to spend on OOH, they look for discounted rates which do not justify inventory costs of the media owners,who are therefore shifting the focus to local spenders.

The discount dynamics

Speaking of discounts, they are seen as helping the industry tide through the crisis, whether in terms of offering discounts on sites to clients or media owners availing of discounts on site rentals from landlords . But then  discounts don’t always seem to pay. As Dany Antony says, media owners offer discounts to advertisers with the expectation of better  business. But as was seen during the first wave of the pandemic last year, business did not pick up until November, after which national companies like Mercedes, some silk textiles brands and media brands like Mathrubhoomi began spending.  But then again, business generation becomes difficult when consumer purchase trends reduce, which in turn affects advertising spends.

Also, Vijaya Kumar feels that lower discounts (about 30%-40%)  and lesser media are offered to local advertisers. But national brands, which had an extension of their campaigns from last year post the first wave, are being carried forward. This poses challenge to media owners in terms of meeting their  expenses. But media owners are looking to regularise the rates.

Rajesh Kumar also points out that advertisers are misguided on the offered rates. National agencies offer low rates to national brands, which is adversely affecting media owners’ trade, as they have to bear the expenses and the additional operational costs. Moreover, there are differential printing rates offered by both the media owners and the national agencies. It may be that the prints for a particular ratio offered to the advertisers are at a higher rate than what it should have been. For instance, for 800 sq. feet, the rate is charged for 1,050 sq. ft., thus misleading the advertisers.

So in effect, media owners seem to be bearing the brunt of many issues. And many of them are also uncertain regarding the corrective measures to be taken.

As Icy Varghese points out, many media owners are resorting to job cuts, salary cuts and discounts to tide over the crisis. But the only means of sustenance at this hour, he feels, is for them to avail of discounts on site rentals, so that the industry can meet its operational cost.

Vijaya Kumar says the Kerala OOH industry association has been working on this front and has approached landlords, based on which they have offered discounts of some 10-30% on rents of the hoardings.

Varghese Thomas adds that the Kerala Advertising Industries Association (KAIA) has also urged the government to announce a moratorium for the payment of rent to private landlords. Based on the announcements made, the association has requested all member landlords for moratorium on the payment. The landlords have paid heed to the requests, which has immensely helped the association members survive this downturn.

OOH v/s Digital

In the midst of these challenges, the other question that emerges is that of traditional OOH versus DOOH. When it comes to digital, advertisers seem to demand bigger digital screens located at prime junctions, but on discounted rates lower than even those offered on traditional boards in the local areas. This is obviously not a feasible option, due to the higher inventory costs of digital outdoor media.

But Icy does believe that traditional media has lost its charm post lockdown and digital media is the way to go. His company PlayAds is in fact looking forward to a digital promotional campaign of the government, as public sector undertakings have begun to float tenders.

Vijaya Kumar also points out that media owners owning static OOH properties have begun diversifying into the digital platforms.

Rajesh Kumar however feels that digital screens are not many in Kerala due to the high inventory costs and with such small numbers, digital outdoor becomes non-profitable, especially when static media is available at low rates.  Also, as overall outside movement has been restricted, national brands do not see much reach through digital outdoors 

Growth v/s business sustainability 

Given all these issues, the main priority for media owners in the state currently is that of sustaining their business, and this is where local spending on the medium helps.  

Zero Degree for example has gained business from local brands, and along with the national brands, they help sustain the business. Fact is that with local brands, the campaign duration is less and so are the rates.

As Icy says, in terms of the ratio, the number of local brands that have advertised on OOH in recent past is higher. PlayAds is in fact supporting local advertisers by offering digital screens at a lower cost. They are also offering screens of different sizes, besides additional screens for greater reach. 

Varghese feels that though little can be done to attract OOH spends in Kerala in the current scenario, attractive packages may be helpful, once the economy revives. The IOAA or KAIA can in fact help tap advertising budgets at the Central and state level to increase OOH revenues, he feels.

Regulatory support: the road ahead

Indeed, any meaningful solution to the present industry challenges would rest on regulatory and government support. Dany for example has been expecting some hefty government advertisement campaigns to boost revenues and enable traction in the industry.

Also, as Icypoints out,  regulatory issues pertaining to static OOH media have been put on the back burner in the midst of the pandemic crisis. The government doesn’t have any guidelines either for installing digital screens on roadside. Besides, as these media owners point out, this is the right time for the government to grant licences to display boards and waive fees, so that corporates can spend more.

On the other hand, as Vijaya Kumar says, the association has standardised rates for advertising with regard to the licence fees, except at the Panchayat level.

Incidentally, the KAIA has submitted memorandums to the government requesting for billboards and other media installed on government property to be exempt from site rent. Varghese reveals that the association has also requested for fixed charges on electricity to be exempt and moratorium on association members' bank loan interest.

It remains to be seen how many of these needs will be fulfilled.  With a new term beginning for the state government, one hopes that new outdoor advertising policies will emerge that can help the state’s OOH industry move ahead with renewed vigour.  


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