Lower costs attract FMCG companies to outdoor campaigns
Advertisers in the FMCG sector are pressurising outdoor media companies to get minimum-cost offers on their outdoor media campaigns, said industry leaders.
Since the outdoor media started to incur major losses following the global financial crisis that hit the real estate sector – the largest bidder on outdoor media in 2008 – FMCG have started to reappear on billboards.
Before that, between the years 2007 and 2008, consumer products, household products and consumer electronics were almost absent from the streets, driven away by the unreasonable increase in outdoor prices.
Local and multinational companies, alike, chose to shift to other more cost-effective, and mass targeting media such as TV.
Rami Benjamin, Business Development Manager, Masafi, confirmed that outdoor media companies are offering to put up their campaigns for prices that cover operational costs with no profit margins to keep their spaces occupied. He said: "We do not want to say that we are taking advantage of outdoor media companies, but when we have a chance to negotiate we are seizing this opportunity to get lower prices. We negotiate."
Benjamin said that the water and juice producer had just recently returned to outdoor media advertising after being away for a year during 2008.
"Outdoor is one of the important media we use, but with the real estate hype we had to disappear from the outdoor. Suddenly, unipoles on Sheikh Zayed Road that were being sold for Dh1 million to Dh1.5m and went up to Dh6m in 2008. It was unreasonable," said Benjamin. He added: "In 2009, we started returning to outdoor media on unipoles and lamp posts with flexible terms. We even had a one-month campaign last year, that remained on the billboards for three months, because there was no other bookings and due to the costs of removing the campaign from the unipoles."
While prices of outdoor media have been noticed by FMCG companies to have declined between 70 per cent and 80 per cent, Benjamin said that outdoor media now comprised 25 per cent of their budget.
This share is currently at equal levels with 2007, with a slight increase of three per cent to four per cent.
Benjamin said that the outdoor share might continue to form a quarter of the ad spend budget, and even increase if prices remained at the current 2010 levels, noting that this year had seen a further decline from 2009.
Benjamin said that the continuing decline in prices is luring FMCG advertisers to increase their focus on outdoor media.
He explained: "In 2010, we have added one more campaign for Ramadan because of the price advantages of outdoor media."
Margie Gilbride, Marketing Communications Manager, Beiersdorf Middle East, said: "Our use of outdoor has increased quite significantly since 2008 but that was from a very small base.
"I think the drop in outdoor advertising rates has varied significantly depending on the media.
"The very large boards, building wraps and bridge banners have probably been hit hardest but then their prices were way off our radar anyway.
"The smaller size spaces, mupis and lampposts on key routes seem to have been less affected," she said.
Gilbride of Beiersdorf, however, declined to give a specific figure of the growth in the company's use of outdoor media.
In the meantime, while a Unilever spokesperson confirmed to Emirates Business that the multinational has seen a drastic drop in outdoor media prices driven by the lack of demand, which could be to the advantage of FMCG, he stressed that outdoor media was only one element of the brand building strategy.
FMCG companies continued to use traditional media as a compensation for their absence from outdoor media, including TV, newspapers and magazines.
Although prices have declined they are expected to continue to focus on those media in addition to digital media. Gilbride said: "FMCG products have unquestionably increased their usage of outdoor signage because of more attractive prices. However, there are still many huge billboards standing empty as even the production costs can be quite prohibitive."
She added: "We use outdoor to reinforce our brand campaigns. Outdoor is a great medium for building profile and visibility. It is an ideal medium for us to reinforce TV brand campaigns at a local level.
"But specific consumer targeting with outdoor campaigns is limited because it reaches everyone passing that particular spot.
"This is why location of the outdoor medium is everything. We spend a lot of time ensuring we get the right locations to maximise the opportunities that our selected target market will see our ads and minimise the 'wastage' factor."
This means that outdoor media prices would not lead FMCG advertisers to withdraw from other media such as newspapers and TV.
Television, which profited from the outdoor crisis, is expected to retain its advertising profits.
Newspapers, in the meantime, might also see increases in ad spend, according to Benjamin, who said that the further decline in outdoor prices, left room for buying additional ad space in print media.
He said: "Due to this situation, we have decided to increase the placements for one of our upcoming campaigns in newspapers by 30 per cent.
"We are back to outdoor, and outdoor media will form a significant part of our strategy for 2011, but we still need to advertise in other media and we will use the budgets saved from additional outdoor price drops to pump into newspapers," said Benjamin.
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