It is one of the most reviled of media formats. Across the world outdoor or out-of-home (OOH) media faces the wrath of environmentalists, regulators and traffic authorities so much so that in most developed markets OOH companies and associations spend a lot of money on studies to prove that outdoor media does not cause accidents, is not harmful to the environment and reduces the civic authorities dependence on taxes among other things.
In India, the Rs 1,300 crore OOH media market faces even more flak because it is completely disorganised and fragmented. Yet, between 2006 and 2008, private equity players pumped in an estimated Rs 964 crore into OOH media companies India. This was roughly 8 per cent of the capital the media and entertainment business raised in those years. For instance, Laqshya Media raised a total of Rs 467 crore from investors like Warburg Pincus, UTI and Amwal Al Khaleej in three rounds over these three years.
In addition, several multinationals, JCDecaux, Clear Channel and Stroeer among others, have come to India in the last five years. They are as yet minnows in a market that is dominated by half a dozen large Indian players and thousands of small ones.
If it is such an unorganised market why have investors been pouring money into outdoor media? Some of the reasons are obvious. Consumers are spending a lot of time outside their home — studying, walking, travelling, working, hanging out. So OOH media tries to attract them at these times, either in the ambience of their consumption or while they travel. Advertisers like OOH media for its local flavour and because it is difficult to ignore.
At a broader level however two key indicators show that the Indian market is hitting critical mass. First, one of the biggest areas for investment in India is infrastructure. The modernisation of existing airports and the development of new ones, along with the growth of organised retail and the increase in theatre chains and multiplexes are creating organised supply of OOH media. Most infrastructure project usually factor in advertising as a revenue stream. For instance, Times OOH has won the ad rights in Delhi and Mumbai Airports which account for 42.7 million footfalls in 2007. That is a lot of people with many hours to stare at billboards.
Similarly organised retail is not just one of the largest spenders on outdoor globally; it is also one of the biggest suppliers of it. In a fragmented and disorganised market such as India, dealing with just a few companies makes life easier for the advertiser. Future Media, for instance, offers television, print, activation and a host of other services like any other media company. It is an offshoot of Kishore Biyani’s Future Group and exploits the media possibilities in owning hundreds of retail stores across millions of square feet.
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Two, the penetration of both cars and two-wheelers in India is increasing. This means more people on the move or stuck in jams and, therefore, a larger audience for outdoor media. Globally, large OOH media markets are the ones that have the longest average annual traffic delays.
The increase in organised sources of OOH media is also forcing consolidation in the traditional part of the business, just as with cable. This is good news because in the long run it would mean better valuations and growth.
It took more than a decade of regulation for the cable business to become attractive for investors. Outdoor seems to have moved faster than that, albeit with ad hoc regulations that vary from city to city.
The only question given the slowdown and the pincer like squeeze on advertising is whether the sector can meet investor expectations in the short to medium term. It may not. The slowdown could set business plans back by a year. But since the fundamentals are sound there is no reason why outdoor shouldn’t fly again.
The writer is a media consultant vanitakohli@hotmail.com