OOH: Hoping against hope

Last Updated: Thu, Aug 02, 2012 19:06 hrs

Travellers at the Mumbai airport were in for a surprise recently. They were greeted by Volkswagen’s flagship product Beetle. Not the original one, but a car made from scrap, which was a “tailor-made” out of home (OOH) advertisement designed by DDB MudraMax.

Launched at the Delhi Auto Expo, this Beetle was also exhibited at the Kala Ghoda Festival in Mumbai. It took the DDB team 15 days to put together a real sized Beetle using 2,805 pieces of waste products collected from the Think Blue clean-up drives of Volkswagen.

Weighed down by the slowdown that has seen their business go down by 15-20 per cent, OOH advertisers are going off the beaten track to beat the empty billboard blues. The ast three to four months have been exceptionally bad. So, tailor-made solutions for clients, diversifying the business and additional coverage of public sector clients are what the OOH industry is looking at.

Mandeep Malhotra, President, DDB MudraMax, says the plan for 2013 includes looking at new offerings within the business. “We are also looking at diversifying our services in terms of brand investments and tailormade solutions for clients. FMCG and telecom would be back in action in 2013. E-commerce, media and auto are the second category which is expected to come up next year,” he says, adding unlike others, his firm hasn’t pressed the panic button yet. One reason for this is that the non-metros have shown a reasonable 10 per cent growth in OOH ads, partly nullifying the slowdown in urban areas.

Others share that optimism. Shashi Sinha, Senior Vice President, Laqshya Group, says though empty billboards create a sense of oversupply and drive prices and margin down, the situation is not that bad,as government and public sector ads are continuing. “Mumbai is facing a bit of a challenge but other markets and media formats are doing well,” he says.

The Laqshya Group says media and entertainment has emerged as one of the key revenue drivers for OOH media. Telecom still remains the highest spender, followed by automobiles, courtesy the flurry of launches. Sinha claims things would improve as he is seeing a renewed enthusiasm from various high spending categories like FMCG & consumer durables.

Others like Zenith are sustaining themselves by introducing new clients to the business. Yashraj Gala, MD, Zenith Outdoors, says the economy in general is in a wait-and-watch mode and it is not something specific to billboards. “Falling profitability is a concern for all businesses. We have sustained ourselves this year by concentrating on certain categories and introducing new clients to OOH. Price is not always the best consideration, rather innovative approaches to OOH delight clients more,” said Gala.

Analysts agree with the general optimistic mood despite the telltale signs of a huge slowdown. Jehil Thakkar, Head of Media and Entertainment, KPMG, says though the OOH media in urban India is not doing well, it is still active in rural markets. Since telecom and real estate sectors are cutting back on spending, the urban markets have slowed down. However, sectors like films, which have continuously performed well, will help keep the OOH advertisers going.

Not everybody shares the optimism and cite the KPMG-FICCI 2012 media and entertainment report, which said that the OOH sector was hit relatively harder by the global economic slowdown than other sectors of the advertising industry. Although OOH is said to be less than 8 per cent of the total advertising market in India, it was expected to grow in double digits. Instead, the billboard industry may actually see revenue decline.

But Thakkar says “there is no need for them to worry. They just need to wait and watch.” What gives him hope is the new auto launches lined up towards the end of this year and the launch of 4G services by telecom players. They will help fill up billboards in the later part of this year, Thakkar says. The OOH industry would be hoping he is correct.

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