Out of home boom: Future looking good

Ramu Ramanathan spoke to Noomi Mehta, the chairman of Indian Outdoor Advertising Association (IOAA) and head of Selvel One Group about Indian OOH

28 Jan 2012 | By Ramu Ramanathan

Ramu Ramanathan (RR): The Standard Operating Procedures (SOP) was launched at the Outdoor Advertising Convention (OAC) in 2011. What’s the update?
Noomi Mehta (NM): SOP re-defines the way business is conducted. It is very difficult to change something that has been in practice for more than 65 years in a non-structured way. Even while introducing the SOP we figured that it would take at least a year to put it into practice and gain acceptance. We might gain more than what we intended. I think the key factor now is how seriously we, in outdoor advertising push the SOP through the Indian Outdoor Advertsing Association (IOAA).

RR: In that sense the two sessions between OOH owners and OOH clients with the support of Campaign India magazine was a positive step ...
NM: The sessions were an important signal for the outdoor industry and its three direct stakeholders. This particular meeting serves all three. For the client, it’s a direct one-on-one with media owners and gives them a chance to interact with us. From our side it’s important because it tells the smaller players that this is a national association and it is worthwhile being a part of it because through the IOAA they can get their point of view across to the clients. If we contact the client base directly the agencies will come to the IOAA meetings by themselves.

RR: What is your assessment of the OOH scenario in India?
NM: As of now, the resolve is there. Everyone is very keen. I think the agencies will come on board in the next couple of months once the impact of service tax hits them. After all the SOP promises to enforce timely documentation, timely invoicing and timely payments across the industry.

RR: Feedback that we received after the OAC meet was that there are too many voices, too many stakeholders, the issue of fragmentation and Ravana having ten-heads. So it is not clear which head one should pay heed to? And the second concern was about the legitimacy of IOAA. How seriously should one take it and do they represent only the top 15 big players?
NM: IOAA does represent the big players, which in any case represents 75 to 80% of the billing in OOH, so it wouldn’t really worry me beyond a point of time. The problem is to make all these big players to come on board and stay on board. Just now IOAA has by reasons of birthright, a status of a national association and the only national association. But I think it’s continued existence and acceptance will depend on its ability to do something – transform the way in which the industry is being managed – which means the ability to deliver to different stakeholders. The two sessions were a first interaction with clients and it turned out to be good. It illustrated the positive fact that the client seems to be willing to listen and to talk. That in itself makes a change from the way outdoor is being perceived.

RR: What role will agencies play in outdoor?
NM: In the very long term the agencies don’t matter because they are the ‘in between’ factor and will not have a significant role to play. The role that they have carved for themselves is possibly short-term in duration, particularly the suicidal tendency of offering discounted rates. This seems to be the only competitive advantage or specialisation that they have to offer.

RR: There was a time when Selvel whose operation you head in Kolkata and Delhi were the first and last name in outdoor. In 2000, Selvel pioneered technology in OOH and you introduced flex into India. What has changed since then?
NM: In the past decade, the one problem that lingers in spite of major international players entering the outdoor space, there has been zero consolidation. Times OOH focussed on space in Mumbai through bus shelters and airports in Delhi and Mumbai opening up a new segment. J C Decaux opened up its new segment by taking bus shelters in Delhi. Then came the Bengaluru and Hyderabad airports as new segments. So, no consolidation has been happening in the traditional space.

RR: What do you suggest?
NM: I think the next important strategy to be followed nationally or internationally by any player who has ambitions is to consolidate. It is possible to consolidate but one must have the stomach for it and the knowledge base to work and invest sensibly. Reliance came in four years ago with a big announcement that they are going to invest Rs 2,000-cr in outdoor, which I was sceptical about. How would that be possible when the OOH industry turnover was Rs 1200-cr? Then there is an example of Laqshya opting for the digital format which didn’t work out to their satisfaction. So, the playing field is littered with examples of new players making huge mistakes. If these big guns start consolidating then there will be a stir in the outdoor media space.

RR: Around ten years ago, you imported a kit from Australia, it created a stir in wide-format printing. At the same time you had projected numbers for OOH. Is the picture for billboards as rosy as you had predicted a decade ago?
NM: The growth of outdoor has been phenomenal. It’s unrecognisable compared to what it was in the nineties. There must be a percentage difference of around 20 times which is 2,000%. This is in terms of both size and potential. In the current scenario, new outdoor requires very heavy investment. and this is where the twist comes. How would the smaller players be able to survive without deep pockets.  If there are 1,000 bus shelters available, a bus shelter would cost on an average of Rs 12 lakhs  and multiplying the amount by a thousand would come to an investment figure of Rs 120-cr. This is not possible for small players and the big players will have a clean sweep. But that does not lead to consolidation, it leads to further fragmentation. The smaller players will keep cutting corners and rates to stay alive. They will carry on destabilising the industry. We are adding greater capacities instead of enveloping the whole. Today, what outdoor needs more than anything else is consolidation.

RR: What do you anticipate hereon?
NM: I don’t see the large players having the stomach to consolidate. With regards to smaller players, the issue is lack of ambition and appetite. This is a small scale industry with the second generation showing resistance to step in and hold the reigns, again because of the way in which it is perceived. This generation is finding the industry too small.

RR: What about the shift in ownership equations?
NM: True. Outdoor business, particularly in a large city like Mumbai is politically driven. Most of the top sites belong to politicians who give it to different media owners to ‘run’. Now this is a dangerous way of doing business. It creates an unequal playground and a huge risk. It’s however easy money. So it does not portray a real growth story. In the major cities, the change will have to come from cleaning of the business.

RR: In this entire scenario, does Selvel still hold the numero uno position?
NM: If you take Selvel as a whole, we would still be number one. In the pure outdoor market, we would be worth Rs 250-280-crore. Separately we would be lagging behind Times OOH, Laqshya and Pioneer.

RR: Selvel was a pioneer in bringing large-format digital printing technology to India. Tell us about that …
NM: To learn the mounting technology, we brought down an Australian team to teach us how to make back-lit boxes and do the correct mounting. After that we innovated and adapted according to the Indian market. I remember doing the first campaign for 555 cigarettes. Six or seven sites were displayed throughout the country and it was written about in all the magazines as “the” outdoor campaign. This was the 1990s, when contract advertising had just begun. We got our single largest cheque of Rs one-crore plus at that time.

RR: Is there anything you would like to tweak in the Selvel legacy from what you did ten years ago?
NM: (chuckles) I would like to shoot couple of my staff.

RR: Why?
NM: For pushing through the concept of specialised media and agencies. It helped me understand the entire corruption issue in OOH. The genesis of corruption in outdoor started with financial advertising. This was at a time when we had the bridge at Chowpatty as one of our sites. We used to sell it in ten-day slots for a lakh and a half rupees. Just at that point of time, we found out that someone had sold it to another agency for Rs eight lakhs for a ten-day slot after having taken it from us. That gave me a lot of insight into the functioning of financial advertising. A large part of financial advertising came from companies going in for IPOs. Many of them wanted to buy-back their own shares in the company through benami transactions. So OOH started getting a large slice of gigantic budgets for IPOs. Giants budgets were allocated to ‘financial agencies’ as high as Rs 150-cr out of which top management of the clients demanded back huge sums, not just in cash but through benami shareholdings which had to be arranged by the agencies.

RR: Do you see these under-hand deals being eliminated from OOH in the next five years in India?
NM: A lot of it depends on the government getting its act together. The policies of the government are highly erratic. IOAA can impress upon the government the basic cost of infrastructure, educate the bureaucrats and the officers.

RR: The good news is, there is growth in OOH. As clients like Vodafone, Future, Uninor, General Motors, Fox, MTS  and Kotak stated during the two sessions, there is a deep penetration in 160 to 200 cities and small towns in outdoor.
NM: A leading telecom giant has outdoor sites in 110 cities. The issue is how much of it is properly controlled, how much is reasonably  profitable or not and the positive role of speciality shops, which is at the moment largely absent. Their current idea of a positive role is to squeeze the market as much as possible. They have completely ruined the media ownership scenario and therefore, their own future with this. There is not a single media speciality shop that is making money today. They have completely destroyed themselves with this ridiculous and absurd discount theory. Add to this their resistance to approach the client for proper signed approvals and sensible operating budgets means the additional burden to make them fulfil their commitments and giving them money to survive falls on us.

RR: How different are operations in countries like Australia as compared to what we have in India?
NM:  Massively different. The quality is very important component there and the rates are high. If we talk about the impact of outdoor, I was reading about a study of one of the campaigns that they had done to study the effectiveness of OOH campaigns. They felt that the best way to judge the impact of an outdoor campaign was by creating an outdoor campaign. Now, they could not create a different campaign for an existing product to study the impact, because the product would already carry baggage  and there would already be perceptions about that product. So they created a campaign only from the advertising point of view for a brand that did not exist. They came up with an idea to market a beer since it is very popular. They called it the Haka beer with a tagline of ‘naturally booed in Australia’. This, in a  highly competitive beer market- there were around 25 brands of beer brewed and sold at the time. They ran the campaign for three weeks at the same time when another beer was getting re-launched with press, TV and no outdoor. There was a third  beer campaign using press and outdoor and then there was Haka beer, using only outdoor. It outranked both in the recall of the campaign which was very high. The creative played an important role and recall was so high that they ultimately sold the brand and the beer was produced afterwards. On the launch day people were thronging at the bars looking for Haka beer. [For recall, Haka achieved 7% after one month on Outdoor with only a $25,000 investment. Some weeks prior another beer brand, Powers Extra, was launched in Brisbane using TV only. Powers Extra only achieved a 3% spontaneous recall after one month despite a TV spend of $183,000.]

RR: Any examples of this effectiveness through Selvel’s work?
NM: We did a research for a campaign we did for Dunlop called “Citizen Dunlop”. This was during the hand painting days. We manufactured the cutouts for the campaign centrally at three or four locations and then sent them around the country. It became a big hit. Now, when we hired an agency to do the recall study, 70% of the respondents said they had seen it on TV. Although it hadn’t been on TV. So the fact is that they had seen it and it got registered. Where they had  seen it however created great confusion. Whatever studies we have done conveys that outdoor is an extremely powerful medium if it is used properly. Effectiveness also comes through innovation. Like, for a long time the 555 ad at the by-pass in Kolkata was asked for by the name where clients said they wanted the 555 site. After 555 exited, the site had to be removed. But the clients still ask for that site. It was the most memorable site in outdoor in the study we had conducted. The study we did revealed responders saying they had seen it a week ago although it had been eight years after the campaign was off. Because it was India’s first back-lit. And it was a 120x40 feet back-lit. It was on a three-foot wide structure that was geared to take the box.

RR: In India, we do not shout about the successes of OOH?
NM: By far the best was “Hi Hutch” outdoor campaign. The execution was brilliant and it was a huge success. They used the best quality vinyls. Today, a lot of clients are wasting money on bad quality vinyls. They think they are being smart by getting cheap vinyls but they are losing days in displays. A one-day display in a city like Mumbai can cost you anywhere from Rs 10,000 onwards. So you lose two days and because of a bad vinyl you lose Rs 20,000. I had come out with a booklet earlier trying to educate the client on the proper gauge vinyl, what should it be, what is the system of attachment, how should it be stuck and other standard practices.

RR: Other fantastic OOH campaigns according to you?
NM: There is Air India, Amul and Polo, all very effective.