The OOH industry of Kerala is undergoing a difficult situation. Along with the ban of flex, GST and cash demonetisation, things are hard for the industry to sustain
After the effects of globalisation and digitalisation, Kerala OOH industry is still moving on without much changes to its traditional style and legacy. The advertising world created by early traditional artists and painters have survived the wave of changes by adapting to new standards. It is estimated that more than 1400 advertising agencies are active in Kerala which provide jobs to as many as one lakh people. It is their hard work which we see in the length and breadth of the state as different OOH campaigns.
Unlike any other industry in India,OOH industry face many problems and constraints. First comes the difficulties faced by the industry in the market. The market faces acute shortage of capital. The industry is yet to recover from the after effects of cash demonetisation and unprepared introduction of GST which has in fact slowed down the consumer market. The OOH industry is currently facing acute constraints in terms of growth. The stringent laws introduced by government on advertising industry, along with Disaster Management Act,Road Safety Council are the next set of constraints. The occasional departmental announcements made through newspapers about new measures planning to implement on the advertising industry makes it even harder. All this will lead the already weaker Kerala advertising industry into more depths. It might make the consumers of advertising industry and corporate agencies to look out for advertising agencies outside Kerala to avoid the complications. From 1996 itself, Government of India has approved advertising industry as a service sector and collected taxes in 4, 8, 12, 15 percent category. With the introduction of GST, the tax rates were raised to 18%. On the other hand, Kerala Sales Tax Department is planning to collect 5% VAT (effective from the past) and it will be the last nail on the coffin. It is said that this move by the government is the result of a case with an advertising company in Kerala. The Sales Tax Department of Kerala has served notice to several advertising agencies claiming that billboards are moving goods and will come under Deemed Sales. The dispute has reached till Supreme Court now.
The claims by advertising agencies that billboards are static and not constructed in a way to move in to another place easily, billboards are the property of advertising companies and can be exhibited for a long period of time and its authority and care taking rests with the agency are not heard by the Sales Tax Department. Apart from Service Tax, Advertising Tax and Permit Fees, an additional tax of 5% will eventually lead to the death of Advertising industry in Kerala. However we are hopeful that the final decision of Supreme Court will be in favour of advertising industry.
Eacj billboards inserted in private property of individuals and on buildings needs huge investment. Most often the much needed money is met with loans from financial houses with high interest rates. The current situation is that sales are low and most billboards are unoccupied. Only a few billboards are booked that through corporate agencies for a very limited period of time. Like a one-window scheme, the corporate agencies in Mumbai, Delhi, Bengaluru collect the orders for all OOH advertising in the country and later implement it through small advertising agencies. In short, the consumers who used to give orders directly to advertising agencies is no longer there. The roadmap of Kerala is plentily available with agencies in Mumbai and Delhi and as these corporate agencies grew more stronger, the middle and small scale advertising organisations are finding it hard to sustain. Already many such small scale players have left the field to some other areas.
The word advertisement has got several implications. The advertisers can reach through several ways to the consumers like newspaper advertising, electronic media advertising, online advertising and so. It is just 4% of the advertisement budget which is kept for outdoor advertisements. Everything else are kept for advertisements through other mediums. In India only outdoor advertising industry had been under the 15% service tax. Every other sector had only a namesake tax from their commission. It resulted in an increase of the print media advertisements and subsequently the number of pages in the newspaper. Outdoor advertising industry is fast turning into an irrelevant sector in the 21st century. The news of ban on flex boards also comes at this ‘auspicious’ time. It is estimated that more than 10,000 printing units function in Kerala. Flex or Flexible Laminated Fabric products are directly connected to the outdoor advertising sector. If flex is banned, there is no doubt that advertising industry will be demolished. Overall printing units employ more than 10,000 people including expert technicians. Flex is not a product which is handled casually. It is recycled properly and in cities like Kolkata there are industries which make products out of used flex.
We believe the government of Kerala will not move out from the responsibility of protecting the small and medium scale Outdoor Advertising industry. Our capital lies in the form of mute billboards on the roadsides. Even when you find it simple in the view, there lies deep hardships including the high investments and the annual fee to the land owners. We believe that we are also contributing indirectly towards the sustainable economy of the state through this. A slogan even if doesn’t glow can be spread in the speed of wind through advertisement boards. We have many examples in front of us. Within 20 minutes you can get an overall view of a newspaper. Within a glance, the electronic ads will change. But a billboard will be there for you all the time. Advertising is a science, an art form, a selling of an idea and an information. It is inevitable in modern world. Providing strength to the industry is the responsibility of the government along with local governing bodies and industries department.