Aurora Magazine

Promoting excellence in advertising

Published in Nov-Dec 2015

Raking in the eyeballs

How the introduction of an audience measurement mechanism for OOH will provide a further boost for the medium.
Illustration by Creative Unit.
Illustration by Creative Unit.

The increasing clutter on TV is making OOH an increasingly popular advertising medium. For context, over the past seven years, OOH has grown by a whopping 45%, from Rs 5.5 billion in 2008 to eight billion rupees in 2014-15. By the end of this year spending on OOH is expected to increase by another half a billion. The top spenders have been, and are expected to remain, FMCGs, telecoms, handset manufacturers, textiles and the real estate sector.

Beyond the clutter on TV, several other factors have contributed to the growth of OOH. Firstly, it has benefited from the energy crisis as electricity outages have impacted the efficacy of TV advertising. Secondly, the textile and ready to wear industry has proved to be one of the greatest patrons of OOH in recent years. As their business is seasonal in nature, they invest heavily in OOH for a short duration to generate the requisite footfall and then retreat. This gives them the results they want and gives OOH a healthy boost.

The telecom industry, another big OOH spender, has capitalised on geography. Over the past few years, telecom operators have introduced location-based calling (LBC) offers and whenever they make an offer for a particular city, OOH remains the lead medium.

Although the growth in OOH is impressive, the medium faces many challenges. The industry remains fragmented, with countless individual players involved. Because of this fragmentation, there is no price benchmarking resulting in a constant struggle between the OOH owners and advertisers to determine the right price. Furthermore, buyers do not always have direct access to the OOH owners and in such cases there is an intermediary involved who increases the price for a share in the deal. The price is often determined by the supply and demand equation as well. Every industry favours certain sizes and locations and for them, the same site costs more than it would cost someone else.

The industry remains fragmented, with countless individual players involved. Because of this fragmentation, there is no price benchmarking resulting in a constant struggle between OOH owners and advertisers to determine the right price.

Until recently, there was no cohesive effort to ascertain the impact of OOH in terms of audience. The advertising spend was not recorded scientifically and the numbers were mostly an approximation. Under these circumstances, doing a correct cost-benefit analysis was a challenge, although advertisers kept using the medium because it did improve their results.

As John Wanamaker famously said, “Half of the money I spend on advertising is wasted. The trouble is I don’t know which half,” this seemed to be the case with OOH in Pakistan. Added to this was the lack of effort by the government to regulate this industry in any way. For example, the government has never formulated a policy on the choice of locations and the installation of sites. Globally, such policies are made keeping environmental concerns in view.

In Pakistan, every new provincial government takes such decisions on an ad-hoc basis, which is why, over the past five years we have seen numerous operations (without prior notice) aimed at removing structures across the major cities. This has increased the risk factor for OOH owners as their panels are sometimes removed overnight, causing serious financial losses. Such events also beg the question why the installation of these sites was allowed in the first place. Moreover, like many other industries, there are no health and safety measures in place, which puts people’s lives at risk.

The future however looks brighter as a much awaited OOH audience measurement mechanism is finally in place. This will help calculate audience numbers and offer a comparison with other media in the advertising mix. With the numbers finally coming to light, demand for media monitoring and ADEX facilities is bound to increase as well. Consequently, this will enable rationalisation of spending on different sites and geographic locations. It will also help OOH owners to justify their prices.

Another long-anticipated change is taking place within the advertising agencies. The conventional method was for advertisers to buy OOH space directly from the owners, but this is now being replaced by buying through an agency. As the agencies serve as intermediaries between the clients and the OOH owners, this may lead to less fragmentation, while agencies will be able to plan and suggest advertising locations based on data.

All these changes speak of a positive future. Teething pains can never be avoided but with the introduction of monitoring and evaluation, the OOH industry is set to prosper further.

Ali Hamdani is CEO, MOVE.