Breaking: OOH agencies object to bank guarantee clause, suggest 5 years’ time for renewal

Out-of-home (OOH) advertising agencies have raised objections to several clauses in the BMC's draft policy on OOH advertising. According to documents reviewed by Storyboard18 regarding objections and suggestions from OOH agencies, stakeholders have specifically opposed the mandatory bank guarantee clause imposed by the civic body. Additionally, the agencies have recommended that the civic body extend the renewal process from two years to five years and refrain from increasing license fees for the next few years.

The OOH agencies have also suggested that the civic body eliminate smaller hoardings, such as those measuring 10x10, 10x15, 10x20, and 20x10, to prevent visual clutter, which contradicts the vision of the 2008 policy. They propose that hoardings up to 1600 square feet (with the largest size being 40x40) should be allowed.

According to clause 4.5 (c) of BMC's draft policy, advertisers or agencies are required to provide a bank guarantee equivalent to six months' license fees to ensure the recovery of advertisement fees in cases where advertisers or agencies fail to pay BMC dues.

The OOH agencies have objected to this clause, stating, "The method of calculating the insurance for each hoarding needs clarification, as many advertisers take a group policy. This clause requires further deliberation. The bank guarantee clause is not feasible for business. There are already provisions in the policy for non-payment, such as the cancellation of permits."

The objection further states, "A six-month bank guarantee amounting to a significant sum would require substantial investments from the industry and could ultimately cause the industry to become obsolete. Data shows that association members collectively pay 158 crores to the license department in license fees alone, and a six-month bank guarantee totaling nearly 80 crores would be blocked, jeopardizing the entire business viability."

Dr. Yogesh Lakhani, Chairman and Managing Director of Bright Outdoor Media Limited, said, "We have extensively studied Digital OOH worldwide. Whether it's Times Square, Hong Kong, or any other part of the world, Digital OOH is the global trend. It is disheartening that BMC has decided to ban video hoardings in the city."

Lakhani added, "The bank guarantee clause imposed by BMC is not beneficial to the OOH ad industry and will negatively impact business. The industry has collectively opposed this clause, as well as the increase in license fees, which will further burden OOH ad agencies in the state."

The OOH agencies have also requested an extension of the structure erection period from 90 days to 120 days, with an option for another 120-day extension upon receiving the NOC. The draft policy currently restricts the grace period to 90 days, with an extension of 180 days, after which the NOC will be revoked and no further extension will be granted.

Furthermore, BMC's draft proposal mandates that agencies must display a civic message or any other message as directed by the BMC for a period of no less than 15 days in a calendar year.

The OOH agencies have suggested that clarification is needed regarding the term "any other message" beyond civic messages. Such messages should only be displayed when the hoarding is vacant and should not be imposed if there is a client booking. Agencies have also requested that the draft specify a maximum of 15 days in a calendar year for such messages. Additionally, they noted that the waiver of one month's license fees, as provided in the previous policy, is not mentioned in the draft.