'Consolidation will spur industry growth'

C D V Subba Rao, CEO & Director of Prakash Arts, believes that the Indian OOH industry will undergo a major transformation in the coming years. Tight regulation and a degree of consolidation of business will drive the change. He shares his views on the industry in conversation with Rajiv Raghunath. Edited excerpts of the interview: 

Prakash Arts is one of the longest running OOH firms in the country. Your firm forayed into the outdoor advertising space when the industry was in its nascent stage of development. Today, the OOH landscape in India has become highly competitive and complex. What steps have you taken in recent years to reinforce your strategic positioning in the industry?

The Indian outdoor industry is at the threshold of major changes. Prime Minister Narendra Modi himself called for greater regulation of outdoor advertising during a recent visit to Vizag. There is every reason to believe that in the coming times, the outdoor advertising industry will be strictly regulated.

Outdoor advertising is well regulated in most Asian countries. As the industry grows in these countries, the regulatory environment also undergoes concomitant changes.

As regards our approach to the business, we at Prakash Arts are directing sharp focus on acquiring long-term projects that are useful to the public. Until recently, outdoor advertising only served as a revenue source, but we would like to believe that the outdoor industry can also play a catalytic role in the development of infrastructure and other facilities that are useful to the local communities. Hence, we are taking up long-term contracts for the development of foot overbridges (FOBs), public toilets, bus queue shelters (bqs), etc.

Further, we believe that a certain degree of consolidation of OOH business across the country would be interest of the long-term viability of the industry. As there no real national players, the industry is not able to take a definitive shape. Ideally, there should be 4-5 OOH players with national presence, and that will enable a more effective regulation of the industry across the country.

Do you see any new growth opportunities in OOH business? What kind of formats will deliver greater returns in the coming times?

It is not about formats. We have been advocating that government bodies should contract more projects to the outdoor industry on build-operate-transfer (BOT) basis. And we would like the civic bodies to do this in a systematic way.

Looking ahead, street furniture could emerge as a key segment of the outdoor industry. In 2-3 years, I expect street furniture to come up in a big way, taking the focus away from hoardings.

OOH industry's share of the national advertising pie is not seemingly growing. What steps would you advocate for the industry to bring more advertising brands into its fold? Please share your own experience of engaging a greater number of brands.

Outdoor industry's share of the advertising pie must go up from 8% to 15%. This can be achieved since outdoor advertising is still comparatively economical compared with advertising on television and the print. There is a lot of potential for innovation in the outdoor. It is no longer just a reminder media.

As regards bringing more brands into the OOH fold, some studies need to be conducted on how to go about this task. I would add that adverting in the outdoor will gather greater momentum if there is some degree of consolidation of OOH businesses across the country, leading to the emergence of true national OOH players.

Lack of standard practices seems to be hurting the industry's growth prospects. What measures are needed to improve the industry's regulatory environment?

To begin with, government bodies should put in place clear and consistent outdoor policies that give the industry a clear sense of the future of business. Second, advertising clients need to set the expectation that the industry should follow standard practices.
I believe that sooner than later we will see a common outdoor policy in place. After all, if the much debated Goods & Services Tax (GST) can be enforced in the near future, a common outdoor policy is not a far-fetched idea.

Tier 2 cities in India are seeing significant growth. Does it make good business sense for national players like you to expand your footprints in these markets? Or, would you be better off leveraging new opportunities in the Metros and major cities?

While we have presence in Tier 2 & 3 markets, major revenues necessarily come from the major markets. That is because large markets have a larger population, so adverting spends there will be much more than in other cities. Investments in Tier 2 cities take a long time to deliver returns.

Opportunities in transit infrastructure have grown much faster than many other OOH segments. Tell us about your forays into this segment.
Transit media will continue to grow and it will remain one of the key segments of outdoor advertising industry. We have been leveraging opportunities in this segment by picking up contracts on BOT basis.

Various civic bodies are now taking firm steps to regulate the use of traditional formats like hoardings. What is your opinion on this?

The fact is that anyone can start an outdoor advertising firm without any prior experience. As the entry barriers are low a very large number of players are there in the market, so we don't see common standards being followed. It is not enough to frame rules and regulations. They need to be enforced and the industry should follow them meticulously.

Tell us about your team strength and organisational structure. How do you find the right balance between ownership and professional management of business?

While I am personally involved in managing finance and media acquisition, we have senior professionals who drive the marketing function. Worldwide, outdoor businesses are run by owners.

I would like to see big industries entering the outdoor business. They will bring in time-tested systems and processes. In turn, the outdoor industry will also get more organised.

At Prakash Arts we have over 400 people working for us.

Where do you see Prakash Arts two years from now?

We are focused on Karnataka, TN and Andhra Pradesh. We will look at other markets depending on the kind of BOT projects that are available there.

I would like to mention that we are developing a park near Vijayawada where our work and capabilities are showcased. Officials and advertisers can visit the park and see how, for instance, how quality bqs are developed. We will continue to look at new and innovative ways to grow our business.