Subsidy Removal, Insecurity Impact Marketing Communications in 2012

09 Jan 2013

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President Goodluck Jonathan

After overcoming the distraction that came with the 2011 general elections and other related factors, marketing practitioners looked forward for a better 2012 but the fuel subsidy removal and other factors impacted the industry negatively, Raheem Akingbolu writes

The crisis-free 2011 general elections, which guaranteed a strengthened democracy, provided the needed foundation for a better business year in 2012.
As a result of this, not a few business owners and their patrons hoped for another year of surplus. But few hours into the year, President Goodluck Jonathan’s broadcast, which pronounced the removal of oil subsidy, succinctly killed the dream.

For Marketing Communications practitioners who had thought it would be a better year, they started on a bitter note as local and multinational companies couldn’t make any categorical statement on their annual budgets for more than a month for the fear of unknown.
In fact, the business environment was dampened for months because of the crisis that greeted the Federal Government pronouncement.

Though the subsidy removal was not the only thing that slowed business in the out-gone year, it laid the foundation because of its attendant slow growth of GDP to 6.48 per cent as against expected 7.8 per cent budget growth. For outdoor practitioners, theirs was a multiple problem because of the effect of the insecurity in the north and multiple taxations in some states on their businesses.

As a sector whose fortune relies on the clean bill of health of other sectors of the economy, what affected other businesses became instant burden for all the practitioners in the industry.
Coming from the lingering global economic crunch and later the fuel subsidy debacle, the sector witnessed decline in ad spend due to a shrink in campaign plan. As a result of this, some agencies lost their plum businesses while some diversified into other areas.

Insecurity in the North
The activities of the Boko Haram members in the Northern part of the country did not only slow down business, it frustrated the activities of outdoor practitioners and people in experiential marketing arm of the industry.

Just last month, some faceless individuals, suspected to be members of the dreaded group, had attacked the masts of some Telecommunication companies in the North, which paralysed businesses and led to poor service offering from the affected networks.
President, Outdoor Advertising Association of Nigeria, Mr. Charles Chijide, described the situation in the North as worrisome, arguing that the outdoor industry would have recorded more ad revenue in 2012 if the area was safe for business.
“2012 was a year we all looked forward to with all enthusiasm but our business was threatened in the Northern part of the country as a result of the activities of hoodlums who, from time to time, attacked billboards and other public areas where products and services are displayed. This frustrated our members and discouraged investors, especially the multinationals, from investing in the outdoor industry,” he said.

Managing Director of Brand Footprint Communications, an experiential marketing communication firm, Mr. Otis Ojeikhoa, also lamented that experiential marketing, which thrives on street activities, could not record an appreciative success in 2012 because of the insecurity in the North.
“Our business involves face-to-face dealings with consumers and this cannot be achieved in the room but in the public glare, but it was difficult to do so in the North in 2012 without thinking twice because of the fear of possible attack,” he said.

Government Policy
Another challenge faced in 2012 was multiple taxations, which also affected the outdoor sector and increased rates.

Tired of the development, with many ad agencies closing shops, the Advertising Practitioners Council of Nigeria, in collaboration with other stakeholders which include the Advertisers Association of Nigeria (ADVAN), Association of Advertising Agencies of Nigeria (AAAN), Outdoor Advertising Association of Nigeria (OAAN), and others whose businesses were also affected, rose against the trend a few months ago during the 2012 Advertising Forum.

At the forum, where stakeholders from the industry and government bared their minds on the regulation of outdoor business by state agencies, the chairman of APCON, Mr. ‘Lolu Akinwunmi stated that; “Out of N28 billion total outdoor revenue nationwide, Lagos has the share of 17 per cent. We have over 65 outdoor managing over 750 billboards cross the country. But it suffers over 100 percent decline as a result of multiple taxes.”

OAAN President, Charles Chijide, who also spoke at the forum, noted that OAAN lost over 60 per cent revenue to multiple taxes and levies as a result of desperate drive for Internally Generated Revenue (IGR) by various states advertisement and signage agencies.
But in a swift reaction to the fact that the government agencies were established mainly to jack up state revenue, the Director of the Oyo State Signage and Advertising Agencies of Nigeria (OYSAA), Mr. Yinka Adepoju, whose agency was established in last year, argued that the primary reason for setting up OYSAA in Oyo was to create a beautiful environment out of the wreckage of the old Oyo State.

“For many years, Oyo State endured poor outdoor outlook, characterised of abandoned sites and poor structures. This was what gave birth to OYSAA with a view of changing the face of the state for better and we will carry out the exercise with the interest of practitioners at heart,” Adepoju said.

New Development
Despite the challenges that greeted the year, foreign practitioners, who had for a long time seen the market as full of opportunities, made their inroads in 2012.
For instance, BBDO, a renowned advertising network, joined the list of world’s leading agencies that were keen on operating in Nigeria by commencing business in the market recently. Before its inauguration, WPP-owned marketing research company, Millward Brown, had opened its Nigeria office after five years of overseeing its Nigerian business from Ghana, a neighbouring country.

Also in 2012, the immediate past President of the Association of Advertising Agencies of Nigeria (AAAN), Mr. Rufai Ladipo, dumped STB-McCann as CEO to assume office as the Managing Director of Scanad Nigeria.

Scanad is a subsidiary of Africa’s leading marketing services group, Scangroup Limited, which was said to be listed on the Nairobi Security Exchange as the only listed marketing communication company in Africa.
Meanwhile, a source had revealed that the decision of Ladipo to leave his former plum job was as a result of the fall of business in STB McCann in 2012, which forced the agency to sell its big corporate head office at Yaba and relocate to another property in Ikeja, Lagos.

PR Growth
For Public Relations agencies, the year was not entirely tough if one considered the growth in fortune of some agencies and the fact that the sub-sector gained from the loss of others, especially the outdoor, experiential and creative agencies.

For instance, TPT International, which last month clinched Diamond Bank PR Account, saw the year as a year of great achievement. Its chairman, Adetokunbo Modupe, described the year as a year that came with its challenges but offered opportunities for agencies that were not tired of being innovative and creative.

He said, “2012 came with some challenges but it was a great year because it offered opportunities for agencies that were not tired of providing innovative ideas”.
“Other agencies that did well in the year were; Neo Media, with PR account of Unilever and event account from Nigerian Breweries, XLR8 with MTN and MultiChoice accounts, Brooks and Blakes with Guinness account, BlueFlower with Airtel, C & F Porter Novelli with Coca Cola, BD Consult with Indomie and Cadbury and The Quadrant Company with Etisalat.

In a review of the industry, the President of Public Relations Consultants Association of Nigeria (PRCAN), and Managing Director of BlueFlower, Mr. Chido Nwakama, said, “Year 2012 was a significant year for public relations in Nigeria as it made steady progress though quietly. There were positive developments in the private sector as well as in the public sector.”

“Unlike outdoor and ad agencies that witnessed membership decline, PRCAN said its membership grew in 2012 while many are still on the queue. “The Nigerian Institute of Public Relations elevated five senior professionals to Fellow category, the highest honour, at the last annual conference in Akure attended by over 250 professionals.
“In the private sector, recognition and deployment of public relations as a strategic tool has continued to grow. Firms that hitherto did not deploy public relations are beginning to do so; firms in the PZ Cussons Group engaged public relations agencies for the first time to help drive their marketing communications.” he said.

At the regulatory level, APCON, the industry regulator for advertising businesses set several agenda in 2012 through proposed industry reform and alcoholic beverage marketing communication.

As Nigeria’s beer consumer market continues to record growth hanging at 19.5 million hecto-litres in 2012 and in excess of $3billion capital investment as well as taxes and levies standing in excess of N100 million per annum, stakeholders at the 2012 APCON summit in partnership with International Centre for Alcohol Policies, (ICAP) and Beer Sector Group, (BSG), set the agenda for alcoholic beverage advertisement to reduce health hazards, road accidents as well as other social vices claimed to have been aggravated by abuse of alcohol consumption.
The stakeholders charged brewers to adopt responsible approach to their promotion messages in line with global standard.

The year also witnessed the most flamboyant brand promos where MTN offered an aeroplane as prize in its MTN Ultimate Wonder Promo. The promos fuelled public outrage against such exercise, which forced the Nigerian Communications Commission (NCC), to wield its big stick and banned all promotions and lotteries ran by telecommunications network operators in the country.

Meanwhile, the Marketing Director, MTN Nigeria, who is also the President of the Advertisers Association of Nigeria (ADVAN), Mr. Kola Oyeyemi, described year 2012 as a challenging year for the industry. “It was a volatile year considering what happened in the beginning of the year and globally,” he said.

President of AAAN, Mrs. Bunmi Oke, who also described the year as challenging however argued that the year came with a number of opportunities for members of her association.
“Generally speaking, one will admit that 2012 started on a tough note and witnessed a lot of security occurrences but this notwithstanding, ad practitioners did play their role effectively to survive within the available resources. We hope for a better 2013,” she said.

Tags: Business, Nigeria, Featured, Subsidy Removal

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