Bangalore/Chennai: After taking a hit from a ban on billboards in Chennai, outdoor advertising firms are facing an uncertain future in Bangalore where the local government has stopped issuing licences and renewals for outdoor advertisements.
Karnataka chief minister B.S. Yeddyurappa said last week that the state capital’s municipal body would announce a new policy to check the proliferation of billboards and banners that do not have valid permits.
Removing clutter: Bangalore’s move to pull down billboards without valid permits came after opposition members in the legislature complained of revenue loss and visual pollution due to unregulated hoardings. Photograph: Hemant Mishra / Mint
The move came after opposition members in the legislature complained of revenue loss and visual pollution due to unregulated hoardings and banners on the city’s roads, where traffic moves at around 10km per hour.
One advertiser said a freeze on new licences would cause the industry to stagnate, and is likely to pull down 30-35% of the city’s billboards.
“The growth was around 16-18% last year. That is going to stop,” said B.S. Sujay, managing director of Sujay Advertising, which owns 200 billboards in Bangalore. The industry’s earnings in the state are estimated at Rs250 crore a year, he said.
In April, authorities in Chennai pulled down billboards without valid permits and those erected at public places such as footpaths, following a directive by the Supreme Court.
The Tamil Nadu Outdoor Advertising Association, a body representing 80 agencies holding some 1,100 billboards, or hoardings as they are known, said its members took a hit of Rs18 crore because of the move.
“The loss (to all advertisers) in Chennai would be around Rs40-50 crore,” said association president A.G. Nayagam.
However, another trade body, the Tamil Nadu Private Site Hoardings Owners’ Association, estimated the loss at around Rs100 crore.
“We have been in this business for the last 20 years and now, we are totally at a loss,” said K. Chandrashekaran, the association’s president. “We don’t know whether to wait and see what happens next, or start new businesses.”
India’s out-of-home, or OoH, advertising industry is growing because of increasing ad spending on billboards that essentially supplement television and print commercials. The sector is also a key source of income for city corporations and municipalities.
The segment is worth Rs1,800 crore, excluding retail, according to M. Kumar, general manager of brand development at Jagran Engage, the outdoor advertising division of Kanpur-based publisher Jagran Prakashan Ltd, which publishes Hindi daily Dainik Jagran. “The industry last year grew at 28%,” he said.
“(OoH) gives a boost to revenues (of municipal bodies),” Mukesh P. Mathur, a professor at the Delhi-based National Institute of Urban Affairs told Mint on the phone.
Bangalore’s municipality hopes to collect nearlyRs90 crore through advertisement tax in the year to March 2009, 10 times the revenue of Rs9 crore it earned in 2006-07. It also plans to attach radiodevices on billboards tokeep track of licences and check violation.
But talk of a new policy has taken advertisers by surprise, because the Greater Bangalore City Corporation was the first municipal body in the country to bring in revised by-laws for advertising in 2006 while most cities still follow laws dating back many decades.
The by-laws divided the city into zones and framed rules to monitor newer outdoor advertising systems such liquid crystal displays.
“We are not very clear as to what the government is thinking,” said Manmohan Singh, secretary of the Outdoor Advertisers Association, Bangalore. “We have always been pushing for regulation (of the industry).”
The mushrooming of billboards has seen crackdowns even in Delhi and Mumbai that together account for a close to 40% of the OoH industry in India. According to advertisers, authorities in both cities are formulating laws to better regulate billboards and advertisements.
“There has to be regulation for a robust outdoor industry,” said Adille J. Sumariwalla, chairman and managing director of Mumbai-based Clear Channel Communications India Pvt. Ltd.
“You must specify sizes, distances between hoardings and safety standards. Illegal billboards can also hike rates in the market,” said Sumariwalla, who also sits on the board of the Indian Outdoor Advertising Association, a body formed in 2007.