Laqshya Media Group’s Atul Shrivastava on how OOH industry has resorted to discounting to survive

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Published: June 26, 2020 7:33 AM

Even before the lockdown, the local authorities occupied nearly 70% of the media

With brands withdrawing campaigns, OOH companies have had to resort to discounting, says Atul Shrivastava, CEO, Laqshya Media GroupWith brands withdrawing campaigns, OOH companies have had to resort to discounting, says Atul Shrivastava, CEO, Laqshya Media Group

The out-of-home media industry temporarily lost relevance, the day the lockdown came into effect across the country. With brands withdrawing campaigns, OOH companies have had to resort to discounting. Atul Shrivastava talks to Venkata Susmita Biswas about the slow resumption of outdoor advertising, declining ad rates, and the change in the profile of advertisers.

With people staying indoors for more than three months during lockdown, what has been the impact on the out-of-home media industry?

The out-of-home (OOH) industry in Mumbai was particularly affected because, even before the lockdown was announced, the local authorities occupied nearly 70% of the media for the government’s awareness campaign on coronavirus. As the awareness level is now high, and the easing phase has begun, we hope that the inventory used by the state government will be back in our control soon. In other parts of the country, clients withdrew ads once the lockdown was announced, as people were not to step out of their homes. We have revised our annual sales projection, and expect a 25% drop in revenue.

What is your forecast for the next six months for the OOH industry? Is the phased easing of the lockdown bringing advertisers back?

We are anticipating a healthy rebound during the festive season at the end of the year. Since brands have a huge inventory pile-up, they will be looking at liquidating that inventory during the festive season. And sales are very much dependent on visibility and marketing.

We have begun receiving queries from brands wanting to resume advertising —particularly those who had long-term contracts with us and had put their campaigns on hold. We are also seeing demand from regional brands who rely heavily on OOH for advertising.

How drastic is the impact on ad rates?

Advertising rates for OOH inventory have declined massively. Since fewer people are on the roads, advertisers are unwilling to pay us the same rates as they were in January and February. Brands are demanding discounts, not just for ongoing campaigns, but also for upcoming deals. Ad rates for the next quarter will continue to be lower than the pre-Covid times. On an average, OOH inventory is now selling at a 25% discount. These include sites inside airports and other conventional OOH display sites. However, we are not reducing the rates of super-premium displays located near airports that have exceedingly high visibility and demand, too.

How much uptake do you foresee for inventory at metro stations, suburban stations and shopping malls?

Ambient media in malls have been the worst affected. Even though the government has initiated a phased opening of markets, people may be hesitant to visit them. For the next three months, demand for ambient media will continue to be severely muted.

We have observed that footfall in malls that have opened in cities like Bengaluru, Hyderabad and Noida has been about 10% that of pre-covid footfall. Therefore, media owners are focussing on occupancy, rather than looking for better ad rates in places like malls. Because of low footfall, discounts in malls could go as high as 50%.

There was healthy demand for OOH inside and outside metro and suburban train stations from local brands, retailers and banks. Since brands have begun showing interest in airports, even though airlines are not running at full capacity, we expect similar demand for inventory in metro and local train stations when operations resume.

How has the pandemic impacted the profile of OOH advertisers?

A few categories that gained prominence during the lockdown are going to be bigger spenders on OOH. For example, e-commerce firms and digital payment gateways have greater demand now. We are also expecting a surge in advertising from manufacturers of two-wheelers and entry-level cars.

While OTT video streaming platforms were booming in terms of consumption during the lockdown, we expect a slowdown in OOH advertising from this category over the next few months because they are out of fresh content. However, we are expecting them to return with a bang soon.

Mobile phone brands that used to be fixtures on hoardings in and around airports, continue to advertise even now. However, real estate brands, which were also keen on airport display, are hesitant. Since airport media is priced at a premium, brands may take longer to return.

Read Also: Why brands must seize the influencer marketing opportunity now

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