The out-of-home, or OOH, market grew by only 4% in 2008 and closed at Rs1,448 crore, much lower than the Rs1,698 crore forecast. The economic meltdown severely affected key OOH markets (which contribute at least 80% of ad expenditure) in the fourth quarter, resulting in heavily reduced spending.
Advertising expenditure on OOH media is expected to grow by 4% this year to Rs1,500 crore. This will spring from a minority of categories, as a majority will spend less.
The general election will occupy about 5-7% of advertising expenditure this year, but we have not yet apportioned this predicted Rs350 crore effort between the individual media. Our predicted “like-for-like” OOH growth of 4% will, therefore, rise once election activity is consolidated.
Among the categories that traditionally use OOH media, telecom service providers will continue to be the biggest contributors to the medium. Other categories that are likely to show a surge in spending will be DTH services, automobiles and mobile handsets. Categories such as hospitality and health care that increased expenditure in end 2008 and early 2009 are likely to grow through the year, while others, such as financial services, media and entertainment, are likely to show a drop in spending this year. While the metros will be the largest contributors to the category, the contribution of tier II towns, having already risen from 25% to 27% in 2008, will continue to grow this year.
Regulation will continue to affect the industry this year. Given the downturn, media inflation is unlikely, though select formats (such as JCDecaux Advertising India Pvt. Ltd bus shelters) will continue to command a premium.
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Given the current economic crisis and liquidity crunch, most advertisers are likely to concentrate on their core media and be less experimental. As retail is yet to establish itself as a medium of choice for most categories, it is likely to take a hit when advertising budgets are allocated. In spite of this, retail media is estimated to grow marginally this year to reach Rs318 crore. Media available in organized retail spaces is expected to contribute about 5-7% of the total retail media ad expenditure this year.
There are a few players in the market who plan to drive the usage of this medium with the continued expansion of multiplexes and digital cinema theatres. This is expected to bring in revenue into the medium which will result in a growth of 5%, albeit from a small base.
Graphics by Ahmed Raza Khan/Mint
The report is based on spending data of marketeers. The data has been analysed by GroupM software METIS that uses ad volume data and then factors in rate discounts based on internal estimates. Live data from group agencies is pooled to arrive at estimates of the actual values realized by media brands.