Economic slowdown: Vacant hoardings on the rise

By Surina Sayal , afaqs!, Mumbai | In OOH News | December 11, 2008
The outdoor industry has taken a hit due to the economic recession that's affected most sectors in the country


you are driving on the Western Express Highway in Mumbai, the hoardings on both sides of the road are hard to ignore. But of late the number of vacant outdoor sites seems to be increasing by the day. It's an indication that the economic slowdown has had its effect on the OOH industry.

As per industry estimates, the spends on OOH have decreased by 10-15 per cent in the last few months, and the overall occupancy has dropped by 20-25 per cent. As Raj B Bhattacharjee, assistant vice-president, business development, Serve & Volley Outdoor, says, "There are many campaigns which have been postponed or shelved. Besides, brand owners have also shortened the duration of existing campaigns."

The biggest spenders in the OOH space have been real-estate players, financial companies, white goods and electronics brands, mobile handsets, airlines and broadcasters. Most of these sectors have been hit by the economic slowdown. There are no new IPOs; financial clients do not have any campaigns; even in sectors such as white goods and electronics brands, mobile handsets aren't launching any new products or services. The only category to have maintained spends in the OOH space is broadcasters, who have launched new shows.

Many in the industry believe that cutting media spends in OOH is more of a precautionary step than a genuine lack of budget. There is insecurity in the market and people are unsure about the future.

"Interestingly, as of now, this squeeze is being felt more in larger cities such as Mumbai and Delhi," says Praveen Vadhera, country head, out of home services, 141 Wall Street, a division of Bates 141. However, it is anticipated that the smaller markets won't remain untouched for long.

Robin Carruthers, chief executive officer, Clear Channel, also attributes the slowdown to the media plan of many companies and their target group. "If the television audience is its core TG, and OOH is used as a reminder medium, then spends in OOH are certain to get affected. But if the brand traditionally advertises on OOH, then the effect will be much less."

However, Carruthers comments that in the present scenario, OOH media is being used very strategically, especially by players such as telecom companies, which normally use large volumes of OOH to gain high penetration levels.

Indrajit Sen, president, Laqshya Media, is of the opinion that "this is a good time to rationalise, get all the regulations in place, get innovative with media and get on with business as usual."

Bhattacharjee of Serve & Volley says he feels that this situation could turn out to be a boon in disguise. "This shakedown will separate the men from the boys, drive consolidation and regulation in our industry and finally lead to de-commoditisation."

Talking about the long-term effect of this situation, Mangesh Borse, director, Symbiosis Advertising, says, "I also believe the advertisers will look for innovative and novel methods of buying outdoor, including long-term contracts, value-additions and volume commitments."

The effect of the slowdown could extend till mid-2009. However, quite a few, such as Sen of Laqshya, are unperturbed by this thought. "There is no panic situation as such. It is a slowdown, but not a recession. Yes, there are some spend cuts. But the OOH industry has seen such ups and downs regularly over the last decade, and we are not seeing anything particularly unusual just now."

"On the contrary," says Sen, "the positive part is that there is no slowdown in the announcement of tenders or in the responses that such announcements receive."

"Outdoor will bounce back simply because of its cost efficiencies. To support an 8 per cent projected economy growth post slowdown, advertisers will have to look at outdoor because it continues to be cost effective," concludes Borse of Symbiosis Advertising.

Search Tags

© 2008 afaqs!