Bright colours and fancy pictures that once adorned the billboards now appear barren and run down. With peeling paint and bold phone numbers painted on them?in a bid to attract advertisers?the billboards are now sending out a clear message that recession has stepped in into the country.
?Billboard prices across Mumbai have fallen by 30-40% at least. Mahim Casusway where rentals were once Rs 12-15 lakhs per month are now Rs 7-8 lakhs and in Peddar Road which was around 12 lakhs, is now Rs 5-6 lakhs per month,? says a shocked Ajaz Memon, director at Network Media Solutions.
Many in the industry admitted to the low moral and call of doom feeling, bracing themselves for a worse first quarter of 2009 and probably a long year ahead. Not very long back, most of the prime locations had waiting period of up to 60 days before one could rent them out. These days billboard owners are happy to reduce their margins in an attempt to boost the falling occupancy rates. ?At one time, average location areas had a 15% vacancy rate but would be fully occupied during the festive season. Currently, at least 30% of the billboards are found vacant,? says Nabendu Bhattacharya, country head (outdoor advertising) of O&M. ?The situation within the industry is one of panic. Privately owned held hoardings are trying to hold on without compromising on their margin. Those who use hoardings, tendered by the government, are in a fix as they had bided at high rates. However, they are now willing to cut prices. This Rs1500-1800-crore industry, inclusive of airport hoardings, has shrunk by 15-20%,? Bhattacharya adds.
Ishan Raina, an advertising veteran and founder of Out-of-Home Media Company, opines, ?Cash flow and management will play major roles in separating the men from the boys and the next 12 to18 months will be a struggle. I see so many empty hoarding spaces and wonder why.
This is probably a result of the legislation changes made for billboards as well as client uncertainty and budget cuts. The airport billboards are mostly empty due to their over-priced nature.?
Broadly, the outdoor advertising revenue comes mainly from the telecom industry which accounts for 40%, the financial services industry, accounting for 20% and the remaining 20% from the media and entertainment industry. With the growing telecom industry playing cautious and holding back, the media and entertainment sector which stopped spending for a while and the international banks staying away from billboard advertising like it were some plague, the industry felt the full effect of the recession.
With companies cost cutting and reducing advertising budgets by almost 35-40%, the outdoor advertising industry has lost out to the internet advertising firms, who are witnessing a growth of almost 65% CAGR.
This winter the gloom over the billboard world is chilling. An industry that?s expected to grow at a CAGR of at least 14% till 2012 and which touched 25% last year as per the FICCI ? PricewaterhouseCoopers 2008 Report on Indian Entertainment and Media Industry now faces a bitter battle of survival as the global financial meltdown creates way more then a ripple in their worlds.