OOH in the times of Digital

12 Aug,2015


We may skip the occasional YouTube ad and attend to some chores while the television commercial is on, but Out-Of-Home advertising is one form of promotional activity we cannot avoid. It is right there whether we are on our way to work, out for a party or even when we are driving away for a holiday. In this interview at the Outdoor Advertising Convention 2015 last month, Amit Sarkar, Chief Operating Officer, Kinetic India talks about the growth of OOH in India and what lies ahead.


Can you give us a broad idea of how OOH has been growing over the years in India especially at a time when there’s so much buzz about digital.

Anything that is new will always have a buzz. So digital has been growing at a larger pace because it is a new evolution of media format. And a large part of digital is growing because you look at the age groups which are digitised, they are our larger consumers today. If you look at the larger shifts from consumer-centric age groups, young people are more prone to digital. OOH has been growing at a logical pace, 5 percent, 4.5 percent, except for last year towards the end of the second quarter when elections happened and we saw a lot of money in OOH. I think that’s an interim situation which actually took the pie to about 10-12 percent growth last year. But, if you have to keep that out of the event of normal spending pattern, I think we grew about 4.5-5 percent.


So would you say that this digital buzz has stolen the thunder of OOH and other mediums as well?

I really don’t buy that story, because when digital was not there, OOH still grew at the same pace. Which means OOH has its own independent challenges of growth and decline. Digital is something that is new, so obviously there is a perception that that is pulling out more monies. I can tell you with assurance that digital has pulled money out from television and they would be having the same sort of concern which OOH may have. I think OOH’s problem is independent of whether digital or mobile advertising is going out or not. And these are very uniquely positioned over the last one decade that we have been seen in OOH as a business. It’s very independent. I mean OOH doesn’t grow because of larger logical reasons like we have become pretty format-driven, we have regulation problems, different cities and different municipal corporations and revenues from OOH is different. While there is tremendous opportunity, but a slow pace of growth is largely to be blamed in the way media has been consumed, and also position perception. If you look at it, it’s more of positioning.


What is the difference in the growth of OOH in a metro like Mumbai versus a Tier 2 or a Tier 3 city?

If you look at it, about 75-80 percent of consumption today is all in the urban cities. While Tier2, Tier3 is extremely growing and that’s because of any other reasons of all businesses.
If you see telecom as a category, these are pockets that are growing too. If you look at FMCG as a category, these are pockets that are growing too. New acquisitions have been drying up in our own cities. So OOH thereis more an evolved format, better environment, but if we look at core OOH in terms of visibility perspective, Tier2, Tier3 and Tier4 towns are the ones which provide us business. Because more as we progress, when you look at rural India where there is a lot of purchasing ability for people who are just farmers in the context of it. Gradually when their behavioural pattern changes in the way they consume something from a media format perspective, OOH in those markets will evolve, but need wise, there is tremendous potential. I have seen double digit growth inside that 5 percent, coming only from Tier 2 and Tier 3 towns.


Does that have anything to do with the fact that internet penetration is also slightly lower in a Tier 2, Tier 3 city compared with a metro?

I think they are two independent points, but all independent points from a consumer’s perspective have a correlation, which means more internet penetration, more exposure, therefor more knowledge clearly, more aptitude towards media. So similarly, just take an example I would say, if you would have looked at a city like Mysore about 10 years back, till the time Infosys actually made a game-changer there and all of us know that Mysore is great for Mysore palace. Today if you look at a lot of people who have migrated to Mysore, from Bangalore and other large cities, your consumption pattern of that particular city has changed. Your real estate prices have gone up. Almost everything around it is a newer ecosystem. That proves ability and OOH would actually work with it.


Measurement in OOH, unlike digital and other mediums, it still a weak point. In your opinion what is the best way to tackle this?

Every media format has its own challenges. Not to say digital for clicks could be measureable, because clicking and getting absolute time to consume an advertisement are two different things. Just because of clicks, it doesn’t mean that your attention towards an advertisement in digital is great. OOH has challenges of currency and ROI. But the reason for it is also that it is more difficult to measure OOH because of the nature of the business, the geographical spread, the immense amount of unorganized formats across different markets. If you look at television, you would actually take a smaller sample size to determine what will be your viewership pattern. In OOH every market works differently, vendors are different, formats are different, cultures, languages are different. Just to give you an example, in Karnataka if you ever do OOH, you have to actually put a sign of the creative in the local language. Without that you will not be able to display. The same thing is not really applicable in Delhi. So it has perennial challenges, however to build a currency, it has to have industry initiative and investments have to come in. So that’s the larger challenge. There’s no trial. There has been trial for the last 10 years that I know of, but everytime you progressed. So I’m hopeful it will happen sometime tomorrow, and it has to happen, otherwise the trade matrix will die. I mean our margins are shrinking, investments are not coming in, regulations are a challenge. You have to have a modelling of ROI which will move you fast. In closed environments like the airports and malls, it’s still addressable, because you can assure walk ins, profile a TG, it’s a closed environment you know how things are. It becomes very difficult on roadsides, on larger platforms.


In this perspective do you think it’s good to have competition between mediums, or do you think that all need to work in synchronisation to ensure sales for the brand?

OOH all of us realise has become more environment-driven. So whether it is an experience to be combined with digital, social, or anything to do with word-of-mouth as well, which amplifies it to a larger extent is OOH. So, just because digital and OOH can combine together to give a larger proliferation, it may not be a right story, all forms of media, together form an OOH ecosystem today. And that’s where the importance and the opportunity lies.


From the perspective of your clients, what are the spends on OOH versus other mediums?

On an average 5-6 percent. Some categories actually would be more spendthrift. So telecom is high spendthrift in OOH, FMCG to an extent yes, but largely on an average it is about 5-6 percent.


So according to you is that fine, or should clients allocate a larger portion of the budget to OOH?

OOH is the most seen medium according to TGI consistently for years together. But if you look at commitments of budgets, it’s still very vague, because at the end of the day everyone needs to understand what is an ROI. I’m not debating the fact that every media ROI is absolutely correct, but it is the time we have a matrix and if we keep on selling OOH in the way it is positioned today, there are challenges. So from the way I look at it, OOH has to shift from its current positioning. So that proposition becomes robust and therefore currency will still matter, but what will matter more is experience with consumers. And that will actually drive it.


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