'Give Traditional Outdoor Media Its Due'
By M4G Bureau - September 22, 2014
Traditional outdoor media including hoardings form the core of the Indian outdoor industry, yet this segment fails to earn due recognition of advertising clients, specialist agencies and media owners themselves. Time has come for concerted efforts to boost the growth prospects of traditional outdoor business.
The 10th Outdoor Advertising Convention (OAC) that was held in Goa in early July this year pointed to the new priorities of the outdoor industry, some of which are subject to debate. As has been the case down the years, the convention was attended by the leading lights of the industry.
The high level participation and the engaging deliberations at the convention notwithstanding, I came away wondering if the traditional outdoor segment had been denied its due. The entire convention seemed to focus on various new dimensions of the outdoor advertising industry, but rather surprisingly none spoke about the contributions of the traditional outdoor players, who I must assert, continue to form the fulcrum of this industry. After all, the myriad hoardings that dot the Indian outdoor landscape are what give advertising brands a larger-than-life standing in the minds of countless consumers.
Many of the speakers were focused on the new OOH formats and what they can deliver to the brands. They also turned the spotlight on the happenings in the outdoor industries in other markets like Europe, USA, etc. Even our own traditional media owners seem to talk about trends in other markets, and preferred not to discuss the opportunities and challenges in India's own traditional outdoor media segment. To me, that is not an encouraging trend. Let us not overlook the fact that as outdoor players in the Indian market, we all have to operate in this very market. So, should we not address the largest segment of Indian outdoor, which is traditional hoarding, and identify ways and means to accelerate its growth?
The traditional outdoor media has been at the receiving end of various sections that include different non-governmental organisations (NG0s), and TV and print media. These groups are seen to target the hoardings and even approach the Court for stoppage of work, citing various reasons. The outdoor industry on its part is taking steps to tackle the issues, but the time has come for the industry members to work closely with each other in meeting these challenges.
The lack of a cohesive industry approach is hurting the outdoor business in a big way. For instance, clients and buyers are seen to take advantage of the differing approaches of outdoor players on various matters, resulting in significant price squeeze. This becomes acute when the media owners and OOH specialist agencies work at cross-purposes. Keeping in view this scenario, I would urge all segments of the outdoor industry to work in unison and convert the collective efforts into a strong negotiating capability.
The outdoor media, especially the media owners, are also battling with the issue of increasing rentals. While the rentals are spiraling and the License Fee, and the Assessment Tax (Property Tax) imposed by different civic bodies are also rising, the media agencies continue to push down the rates without consulting the media owners. This is a disturbing trend and needs to be addressed in right earnest.
It has now reached a point of no return. The profit margins are literally zero in many cases. Many specialised media agencies are working at just 2 per cent agency commission. I do not understand how it is possible to do business with a mere 2 per cent agency commission? Can this be the key reason for the non-profitability of many media agencies?
Although many media agencies (mainline agencies), part of AAAI, opened their outdoor wings in recent times, some of them have had to close down the outdoor specialist business, apparently due to the corrupt practices of working professionals with vested interests. Very high salaries are paid but with no meaningful results (profits to the agencies). The headcount in some of the agencies had increased to the extent that there was no proper monitoring of whether those professionals worked for the organisation or for themselves.
Such professionals have done a lot of harm to the industry as a whole. They have portrayed the makings of the Indian outdoor industry in rather poor light to different multinational agencies who then opted out of operating in India. The industry thus lost out on investment inflows from P.E. firms and financial institutions as they were misguided.
There are two types of processes to be followed to acquire media, one through "tendersâ€ and other through "private land and building ownersâ€ for which permissions have to be taken separately from the authorities for hoardings (this process takes time as you have to take permission from local authorities).
The tendering system is followed by all governments, corporations, and Railways for hoardings, bus shelters, street furniture properties, etc. It was seen that unscrupulous elements misguide the overseas agencies, PE firms / FIs and financial agencies into believing that media can be procured only through the "tenderâ€. So, while the valuation of the media owner goes up ten-fold (depending upon his turnover), after the expiry of the tender, the same valuation goes down if the media owner does not get the tender, and there is a serious impact on the business.
In the case of hoardings on private land and buildings, it is common knowledge that almost all the hoardings are on different locations and so different landlords/owners, etc., have to be approached for sites. The only thing is that we have to negotiate with each and every landlord/owner, but the fact still remains that the media owner can hardly lose 5-10 per cent hoardings out of hundreds, but also can add 5-10 per cent more hoardings in the upcoming new areas, which are developed but in no case and under no circumstances his valuation will go down to zero unlike when dealing with "tendered hoardingsâ€. So, it is safer to take the hoardings on private land and buildings from the landlords and owners rather than through "tendersâ€.
In view of these undesirable developments, I had requested the Indian Outdoor Advertising Association (IOAA) to take up the matter with AAAI to ban such people who harm the industry for their personal gain; such people should not get any employment in the future. I do not wish to mention the major 3-4 agencies that have shut shop. But, it will not be out of place to say that most of the executives who worked in those agencies had made considerable wealth, while leaving the agencies in the red and have not paid the dues to the media owners in most instances.
One advertising client pointed out in a discussion that while the hoardings are well maintained, they are often found in clusters which dilutes the communication of a given brand. Not just that, the hoardings are invariably set against a background that has dilapidated buildings. Now, the outdoor industry can do precious little to ensure the upkeep of the buildings. That is a role best left to the civic authorities. Nonetheless, keeping in view the gravity of this misperception I would have wanted issues like this to be discussed in open forums and events like the OAC.
We do know that advertising clients will have many expectations from the outdoor media, and more specifically, from the traditional hoarding segment. But we must be aware that clients have been using this media all through, which is proof enough of the effectiveness of our media. Let us take cognizance of our strengths before we engage in any discussions with the advertising clients. So, while we should continue to take steps for improvements in the outdoor media, we should also prevent any outside player from running down the media itself. To prevent any deep-rooted misperceptions regarding hoardings, for example, we could aggregate the statistics on the effectiveness of the media and use them as reference points in our external engagements.
I wish to bring to your notice that the outdoor media is used by television channels, news channels, press, political groups, corporations, etc. While they all derive benefits from the use of this media, they are also a party to the criticisms being levelled against outdoor media.
In my 23 years of experience in the outdoor industry I have come to believe that the outdoor media delivers to brands in a big way. This has become all the more evident as more people spend more time out of home. The slow moving traffic on the roads (sorry to say "pot holesâ€ have helped us) is also contributing to greater consumption of outdoor media. I believe the visibility of the media increases manifold as more people spend more time on the roads for a variety of reasons. But the advertising clients don't seem to acknowledge these facts. And, we ourselves are not talking about this.
Talking about improvements in the outdoor industry, hoardings in Mumbai bear testimony to these positive developments. The hoardings comply with the norms laid down by the civic authorities, and perhaps, the situation is the same in many other cities.
Coming to the basic point, why nobody is talking about the traditional outdoor media? People seem to be pre-occupied with developments like digital media. Instead, while we discuss digital OOH media, we should also concentrate on the traditional media as a whole and try to convince the Government to create an enabling environment for this industry to grow and carry out more public service messages in the outdoor for causes like water conservation, prevention of diseases, etc.
Let us come together and fight the forces of evil. I am not against anyone as I have grown in this industry and this write-up is only to protect our industry.
Nitin A. Kshirsagar is one of the foremost outdoor media leaders in the country.