Billboard Boom: The future of OOH in India

After the Breakfast Session between OOH owners and clients at the Campaign India office, Ramu Ramanathan spoke to Noomi Mehta, the chairman of Indian Outdoor Advertising Association (IOAA) and head of Selvel One Group about a bullish future for OOH in India.

Ramu Ramanathan (RR): The Standard Operating Procedures (SOP) was launched at the Outdoor Advertising Convention (OAC) in mid-2011. What's the progress since then?

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 IOAA.

RR: In that sense the Breakfast session between OOH owners and OOH clients on 4th January 2012 with the support of Campaign India was a positive step ...
NM: The Breakfast Session is 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 a very 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. Some agencies don’t realise it, but it’s going to cost them the service tax on 105%  and what they are going to get out of the whole deal is just 5%. 

RR: That plus the interest factor, which would be at least 6 to 8% for a period of six months ... 
NM: Yes, and this would eventually mean that their 5% commission would be wiped out and their existence would be threatened. If that happens then the client will have no option but to deal directly with media owners for OOH. I don’t know why the agencies haven’t figured this out as yet. It’s a matter of simple book keeping. Some of the agencies have already taken strong measures to involve themselves in SOP, others are choosing to ignore it. Pretending it does not exist. The individual’s agenda above the agency’s is very high and in this there is practically no agency that can be held blameless. Mind you, if you take bulk discount from the media owners and don’t pass it on to the client, the basic bottom line is that you are stealing from your client. And then there is the old the old saying which  kicks in –"he who starts to steals for you, Ends up stealing from you".

RR: Two important feedback that we received after the OAC meet was that there are too many voices, too many stakeholders involved, the issue of fragmentation and Ravana having ten-heads. So it is not very 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 Breakfast Session on 4th January 2012 at the Campaign India office was the 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. Because individual operators do not have access to these clients on a regular basis. So that is one way for the outdoor operators to reach out to these clients, put their point of view through IOAA which the clients are willing to accept. 

RR: What about the agencies? What role will they play in outdoor?
NM: In the very long term the agencies don’t matter because they are the ‘in between’ factor and will have not 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: In what way?
NM: Very recently, a client conducted an online auction for sites. The agency came running to me to inquire what is the lowest rate that we could offer. This was a mistaken notion that the lowest bidder gets the job in auction whereas it is the opposite. If out of the three agencies that come to me for hiring the same site  it’s a matter of sense that I will give it to the one who is paying me the highest. But the agency persisted with lowering the cost by as much as 10%. That is when it became painfully obvious that speciality shops must have some speciality other than discounted rates and endless negotiations.  They need to introspect on what is it that they are actually bringing to the table. Up till now they were getting away with posing and posturing and dressing up small bits of research because there was no common currency. Once the research studies get established, then the style of smoke and mirrors that they have been showing for outdoor suddenly disappears and a genuine base rate gets established which is more acceptable to the client side.

RR: There was a time when Selvel whose operation you head in Kolkata and Delhi were the first and the last name in outdoor. In 2000, Selvel pioneered new 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 Of India 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 possible when the OOH industry turnover was Rs 1200-cr? Then there is an example of Laqshaya 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 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 2000%. 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 1000 bus shelters available for example. 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 the smaller players, the issue is lack of ambition and appetite. This is largely 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 highly dangerous way of doing business – on an unequal playground and with a huge risk involved. 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. We are too democratic a nation and there is too much freedom, particularly for people in the government. What we need is greater accountability from them …

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, Laqshaya 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 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 members.

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 the 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 Reliance for Rs 8 lakhs for a ten day slot after having taken 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 benamishareholdings 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 IAS officers. Lot of work needs to be done on that front, which means IOAA should shift to the next level of engagement with consultants, honorary members, governing body members being able to put our point of view across to them at the highest levels.

RR: The good news is, there is growth in OOH. As clients like Vodafone, Future and Kotak stated during the Breakfast Session, 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 enough money to survive falls on us.

RR: Is the tender system an ineffective module for the outdoor business?
NM: There is an Indian psyche of being overly competitive. There will be half a dozen of guys giving ridiculous quotations to get the tender. You get a government tender and everyone goes mad and absolutely berserk. At the rates that are being quoted, there is no way you can make money. Normally what I have seen in government tenders is that the first mover gets the advantage. The rest are consigned to the dust heap of losers. To give you an example, the last persons to make money on bus shelters in Mumbai were us, when we first took it from Publicis. We paid Rs 7 crores for three years. A media house quoted Rs 30-crores  and took the bus shelters after our contract of three years. Plus they had to pay extra to get the tender. So from seven crore to thirty crores in a span of three years, it was ridiculous. Obviously, the media house took a huge beating.

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 Hakka 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 spontaneous 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: The last time, we met, you spoke about the importance of research, its implementation and the effectiveness of OOH
NM: I have read researches on how human eyesight works, how a human mind picks colour, how eyesight works at a distance, which colours register first, how do eyes track – left to right or right to left. Inevitably it works from the centre towards the outside. This should give indications to the creative minds. The mind will pick up what it wants to see. You will go through a thousand ads without blinking and that one ad you want to see you will see and get perplexed as to how on earth  you managed to pick up this post-it size of an ad when surrounded by monstrously large spectaculars around screaming their messages. The mind sees but it does not necessarily register. It will only register what you want to see. 

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 for 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: At one point of time you also created a media agency. What is the rationale behind that? A good step?
NM: I did not create an agency as much as backed the person who wanted to run it and who created it. Then Rediffusion came in and we did a joint venture. We did Airtel together. But the promised campaigns after Airtel, did not come from. Rediffusion changed their priorities and we had discussions and I offered to take-over their stake. Rediffusion, managed to introduce a sound and professional system that is high on integrity and ethical values. We are very happy with the outcome of our association in the form of Outdoor Advertising Professionals. It is a completely independent entity which decides it's own targets and budgets and we get their reports and MIS statements.  We did it because it felt good that about 80 to 100 youngsters got a future and are involved in pushing it forward and take it to a higher level.

RR: In India, we do not shout about the successes of the OOH campaigns. 
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: What are the other fantastic OOH campaigns according to you?
NM: There are the usual OOH campaigns by Air India, Amul and Polo, all very effective.

Noomi Mehta will be attending the OOH session presented by IOAA and supported by Campaign India. 

It will be held at the Crowne Plaza, Gurgaon from 5 pm to to 8 pm on 18 January (Wednesday).The discussion shall be initiated by Indrajit Sen, executive director, IOAA, followed by a round-table discussion with clients and marketers on their expectations from the OOH media.

For more information, contact: [email protected] and [email protected]