No longer the great outdoors

Purvita Chatterjee

Some weeks ago, there was a big white illuminated moon floating on the bay at Marine Drive in Mumbai. On coming closer, it turned out to be an outdoor promotion for Hindustan Lever Ltd's (HLL) Fair and Lovely, which promised to make you as fair as the moon. It's an indication that technology is indeed helping outdoor companies get noticed from the usual splash of mundane hoardings. Innovation may be just the key to help these companies face the current slowdown in their business, thanks to the general downturn in the economy at large.

In India, while ad spends are reportedly being slashed across all categories, outdoors has always remained a cheaper option compared to other media. But suddenly billboards, hitherto filled largely with dotcom and public issue ads, also seem to be going blank across metros.

While the dotcom bust and the stock market crash may be responsible for billboard sites appearing vacant, there could be a demand-supply mismatch which has resulted in blank sites.

With no fixed rules for owning and setting up such sites, sanctions are usually obtained from the Municipal Corporations and Collectorates, which give permission for hoardings to be put up without any fixed limit, mostly in a bid to fill empty coffers.

Explains Meenakshi Madhvani, CEO, Carat Media Services India Ltd, ``There have been empty boards in Mumbai for more than a year now. The situation has worsened because the BMC (Bombay Municipal Corporation) has sanctioned an additional 250 sites throughout the city. It is, however, unlikely that prices are going to come down as a result of this.'' As a result while topline growth may be happening for outdoor companies, their bottomlines are definitely feeling the pressure.

Lamenting the overcrowding of billboards, Indrajit Sen, CEO, Primesite, an independent outdoor specialist owned by Mudra Communications, says, ``Such clutter does not help in adding to anyone's business. Clients want exclusive displays and competing in a crowded market does not help outdoor companies.''

While it is doubtful whether prices will actually go down since strategically located sites will continue to command a premium, there might just be some elasticity built over a period of time to get prices down.

According to J. C. Giri, Managing Consultant, Outdoor, a division of Ogilvy & Mather, ``Although the slump in the market is temporary, now there is excess supply compared to the demand in the market. Prices are already coming down by almost 20 per cent from the days of the dotcoms when the rates did go up.'' Thus the number of sites has been on the rise leading to growth in inventory over the years. In the recent past, cities such as Mumbai, Hyderabad and to a certain extent even Chennai, have been witnessing a number of vacant spots.

Estimated at Rs 650 crore, the outdoor media business now comprises about 10 per cent of the total revenues spent on advertising. With the rate of growth hovering between 15 per cent and 20 per cent, it is mainly industries such as media, FMCG, textiles and private insurance companies which continue to use hoardings extensively in spite of the existing slowdown in their businesses.

For instance in Mumbai itself, Star, Sony, Siyaram and all the big HLL brands continue to get splashed across all `out of home' sites. As Giri adds, ``FMCGs like Hindustan Lever may have slashed ad budgets in the metros but they certainly do not intend slowing down in the smaller towns and cities.'' Not to forget the media companies which dominate the hoarding platforms at every nook and corner. In fact, even abroad, radio and television companies continue to be the biggest users of outdoors.

The dotcoms too were responsible for hiking the hoarding rates when they wanted more visibility. Today site owners do not want to compromise on clients who want to slash their budgets. Although they know they cannot hold on to unrealistic rates and that prices are bound to fall, some of the site owners may be just holding on to these `unrealistic' rates hoping to get business at the earlier rates.

Explains Anand Oberoi, Director, Oberoi Multimedia Ltd, ``Dotcoms raised the ad rates and despite them no longer existing, hoarding owners somehow do not want to compromise and bring down these rates. This leaves them without any business.''

Besides, most corporates realise that today television is the best medium to get visibility considering its increasing penetration. The clutter of channels has led to increased airtime inventory, with prices dropping drastically in spite of what is printed in rate cards. This obviously would not apply to the leading premium channels such as Star and Sony which can command steep rates, but smaller channels with lesser revenues have emerged as an option for advertisers looking for quicker and cheaper visibility with hoardings taking a back seat in their media strategy.

Adds Oberoi, ``Television today remains the most cost-effective medium. We are in fact getting our clients to shift from outdoor to television. It makes no sense to spend Rs 4 lakh on just one prime hoarding when you can almost buy up an entire channel with the same amount of money. Why should I shell out Rs 4.5 lakh to buy the Patel Bridge hoarding on Marine Drive when I can bombard the B4U channel with the same amount? Today it does not make sense to spend money on hoardings. Even if I cannot get the premium channels like Star and Sony, there are others like Sahara and B4U which can offer me a better deal.''

Points out M. M. Nandwani, CEO, More Group India Pvt. Ltd, ``There has not been much of a slowdown in television advertising. In spite of outdoors being more economical, television is still considered to be the best medium to get noticed.'' The More Group is possibly the only MNC in the outdoor industry. The US-headquartered subsidiary company has yet to post any profit after two years of operation.

At the same time, corporates are preferring more options within outdoors itself. As S. Yesudas, Vice-President, Initiative Media, says, ``The market is not particularly down. It is just that clients are looking beyond billboards at other options.'' Considering there has been advancement in technology to facilitate some innovation in this medium, the big moon floating on Marine Drive may just be an indication of things to come within this industry.

For instance, Initiative Media, the media buying division of AP Lintas, is exploring more options within outdoors such as `street furniture' which includes public utilities, dustbins and kiosks to give outdoor advertising a new dimension.

Yesudas adds, ``A couple of years ago outdoors served as a reminder medium but today technology has changed the face of this industry. Now marketers could even think of launching their brand through this medium.''

Meanwhile the pioneers of the outdoor medium since 1945, Selvel Publicity & Consultants Ltd, are not too pleased about the present condition of their industry. States Nitin A. Kshirsagar, Manager Sales, Selvel, Publicity & Consultants Ltd, ``At the moment we are holding on to goodwill. Profits are just about average.''

If the dotcoms truly raised the hopes of the outdoor industry last year, today it is just a matter of supply surpassing demand. Summing up the present situation, Mike Khanna, Chief Executive Officer, Hindustan Thompson Associates, says, ``It was the dotcoms who strongly believed in this medium. Today it is just a case of excess supply in the market.''