Tax reforms, investments part of Budget wish list for OOH industry

The OOH sector has had a positive start to the year and agency heads are hoping for a pro-business and pro-growth Budget that will ensure that this good run continues. Though there are no OOH-centric expectations, the general consensus is that a budget that supports growth and encourages investment will only lead to higher spends on advertising and thus, benefit all facets of the advertising ecosystem. 

Sanjeev Gupta, MD, Global Advertisers said, “After achieving a historic victory in the Lok Sabha Elections 2014, we have high expectations from the newly elected Modi-led Government. India is likely to emerge as the world’s largest middle class consumer market with aggregated consumer spends of $13 trillion by 2030. It has become essential for MNCs/ SMEs to be visible on different advertising media to promote their services/ products. Therefore, outdoor advertising industry needs Government support to grow in the future.” He further stated that the Centre should focus on creating new opportunities, allow FDI, develop transparent policies and reforms, address tax issues and licensing procedure of public structures.

While stating that the outlook in general is positive for the coming years, Rajiv Saxena, MD, Blue Ocean Media said, “We are expecting tax reforms and interest cost liberalisation.” According to him, with such reforms corporates will save more money, which could lead to higher advertising budgets and ad spends. The outdoor agencies we spoke to agreed that one of the main facets of the budget should be to create an economy that promotes spending and investments.

Rajan Mehta, Founder and CEO, LiveMedia added here, “Overall, for the media industry, it is important that the Budget spurs investments through tax reforms. Consumption is still low and the Government needs to bring in liquidity (for consumers) so that spending increases.” Another important thing, according to Mehta, is that I&B policies should be comprehensive and be implemented properly.

Echoing similar thoughts, Atul Shrivastava, COO, Laqshya Media remarked that the Budget should help bring down soaring prices and cost of living and infuse confidence in investors. “This will allow more disposable income to consumers and spends to increase, while also increasing flow of capital in the market, which will improve sentiment as well as availability of funds for new ventures.”

He also pointed out that some other steps to help consumers would be to provide income tax relief and reduction of housing and consumer loan interest rates. “Steps should be initiated/ charted out to reduce India’s dependence on monsoon for agricultural output. Bad monsoon is gloomy and brings down the market sentiment drastically. Connecting the rivers is an idea being discussed in this connection,” Shrivastava added.

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OOH industry buoyant after landmark NDA win

Following the BJP-led NDA’s sweeping win at the Lok Sabha Elections, there is a sense of optimism among India Inc. The general opinion is that this feeling of well-being will lead to further investment by brands and a loosening of purse strings, which will also help the advertising industry, including the outdoor segment.

A government change, pointed out some agency heads we spoke to, usually increases confidence. For example, Sunder Hemrajani, MD, Times Innovative Media gave the example of 2009 when the UPA did much better than expected. “We saw an increase in positive sentiment even back then. It is the same this time; I am seeing a lot of positive sentiment. April and May have been very tight for all media but I feel that things will be even better this time than 2009,” he said.

Though sentiment from India Inc. has been leaning towards a Modi-led government with its promise of development and progress, the new prime minister’s recent statements and energetic first few days since securing victory have also helped. “He (Narendra Modi) seems to be continuing with the same motto that he used in Gujarat. Since advertising is perception driven, we could see an increased spending this year,” said Rajiv Saxena, MD, Blue Ocean Media.

On being asked whether there were any specific changes that were expected for the OOH sector, Saxena opined that spending from real estate and telecom, two sectors which had reduced spending last year, might increase.

The election year saw a windfall for most OOH agencies, who normally expect a slow start to any year with business usually picking during the festive seasons. For example, even after the results were declared, BJP launched a massive outdoor campaign thanking voters for their support.

The Mumbai leg of the campaign was handled by Bright Outdoor Media and Yogesh Lakhani, CMD of Bright Outdoor Media informed us that it comprised of some 135 hoardings across Mumbai. Given the general sense of optimism in the market, he mentioned that business could improve by as much as 10 per cent. “In any business there is always a positive and negative cycle. For the last few years we have had a negative cycle, so things definitely have to change now,” he said.

Another way of looking at the massive OOH campaigns run during the elections by political parties is that it showed the strength of OOH advertising in creating recall and spreading awareness, opines Sanjeev Gupta, MD, Global Advertisers. He expects more and more brands to spend on OOH advertising. When asked for his expectations, Gupta said that June-July will see a lot of advertising from FMCG brands, tourism, real-estate, e-commerce, automobile and education sectors also.

The OOH sector has had a good start to the year and with the positive sentiment in the market, it is no surprise that most OOH agencies are expecting a boost in ad spends by brands in the coming months. What remains to be seen is whether this will continue past 2014 and how do OOH players make use of this perceived change in the business cycle to create a more robust outdoor advertising ecosystem, which is even more attractive to advertisers.

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