Marketing Budgets Shrank in Bahari’s First Year

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When the economy is in contractionary mode, the first casualty is marketing. This was evident in the last one year, as players in the Nigerian marketing communications industry struggled to survive. Raheem Akingbolu reports

The business of the Advertising and Public Relations practitioners thrive when the economy is good. The success of the players is determined by activities in other major sectors of the economy, especially manufacturing. In Nigeria, things are not looking up for local and multinational companies and this has dealt a blow on the marketing communication industry.

To this end, marketing communications practitioners have used many fora to express their worries about how consistence shrink in marketing budget is killing their businesses. At the maiden edition of the Marketers’ Conference organised by the Advertisers’ Association of Nigeria (ADVAN) in Lagos, business owners were urged to involve in more engagement. This was also the situation at the April edition of the roundtable meeting of the Public Relations Consultant Association of Nigeria, where practitioners spoke glowingly on how Economic recession is affecting Public Relations. During the business session at the 43rd Annual General Meeting of the Association of Advertising Agencies of Nigeria (AAAN), held at the of the association in Uyo, Akwa Ibom State, recently, members of the association opened up on their challenges and the fact that many advertising agencies have closed their businesses in the last one year because of lack of account to survive on.

According to the association, registered agencies that have been delisted from AAAN list because they couldn’t meet their outstanding financial obligation are; 24-7 Communications Limited, Comex Limited, Grant Advertising Limited, Media Plus International Limited and Adpure Limited. Others are BTAS Communications Limited, Novitas Limited, Sloane Communications Limited, Pemetad Limited, Elsia Communications Limited and Platform Branding Limited. The rest are; Campaign Palace Limited, Alder Media Limited, Angels Communications Limited and Explicit Communications Limited. THISDAY findings have also revealed that most of the existing advertising and PR agencies in Nigeria have reduced their staff strength by over 50% for lack of business.

Reasons for marketing decline

Despite the drop in oil revenue, marketing communication practitioners still had hope when President Muhammadu Buhari was sworn in May last year. The administration’s brand promise that was cleverly weaved around ‘change’ fired up the hope in the practitioners. Another thing that encouraged agency owners was the promise that the administration would control waste in the public sector and increase capital expenditure.

The first signal that things would not be as easy as assumed was the long time it took the administration to form a cabinet. For months Nigerians waited in limbo to see the list of cabinet members who would design policy direction for the new government. After ministers were eventually appointed, the passage of the 2016 budget became another subject of controversy. Again, for months, Nigerians waited in vain until few weeks ago when the issue was resolved.
The current situation in the Nigerian foreign exchange market has also not favoured many companies in the country as most manufacturing companies could not access raw material. As a result of this, it was difficult to engage Advertising or PR Agencies, when they are recording any success.
The immediate past president of AAAN, Mr. Kelechi Nwosu, admitted when he spoke to THISDAY that things have been difficult in the last one year for his members.

“Our clients are majorly in the manufacturing sector and things are not easy for them. Our industry has recorded low performance more than any year in recent time because marketing budget has suffered. Manufacturing companies are not sure of getting raw material and they are not sure of whether they would sell because consumer’s confidence has nose-dived. When they are not sure of what to sell, why should they engage ad agencies? It is a simple Economics –you don’t supply when there is no demand. Another critical issue is that there is no government patronage. In most countries, the major chunk of advertising revenue comes from the government but in Nigeria, things are different. Finally and one instructive thing; decline in GDP will always affect marketing budget and every other things we do.”
Another issue that appears to have also affected the marketing communication industry is lack of proper marketing of Nigeria and her potentials by President Buhari and his Information Minister, Mr. Lai Mohammed. At every opportunity, within and outside Nigeria, the duo present Nigeria as a bad product and this, according to experts, is scaring investors.

A former President of AAAN and Managing Director of SO&U, Mr. Udeme Ufot, while reacting to this said: “There is nothing Nigerians enjoy more, both the lowly and the highly placed, than to denigrate their nation, even in the midst of foreign audiences, laying before them all our dirty linen. As marketing communicators, you would obviously feel scandalised if the marketing director of a brewery consistently tells whoever cares to listen how bitter the beer he sells is, how overpriced it is and how it is no better than other beers, you would be even more shocked if he proceeds to warn you that you could become an alcoholic if you start drinking beer, and how better off you would be saving money for your family’s upkeep and investments than buying beer.
“It may sound extreme, but that is what our chief marketing officers do to our country sometimes, not because they do not love their country, it is just that they do not understand the full implications of their utterances as it impacts the image of their country,” Ufot stated.

Consumer index

Measuring 120 points in Q1 2016, Nigeria’s consumer confidence is reported to have dropped to its lowest levels in about two years, according to the latest Consumer Confidence Index released in May 2016 by Nielsen, a global information & measurement company.

The report stated that confidence levels in Nigeria dropped by 7 index points from Q4 2015 as FX challenges, Naira depreciation, higher energy & food costs drove inflation to a 4-year all-time high of 13.7% ; negatively impacting consumer disposable income and spending intentions.

Meanwhile, in the last one year, the confidence level of consumers in the economy has witnessed a downward slide amid rising cost of living and prices of basic goods including foodstuffs. The global performance management company that provides a comprehensive understanding of what consumers want to buy had confirmed earlier that consumer confidence in Nigeria dropped in the fourth quarter of 2015.
The analysts noted that Nigeria’s Consumer Confidence Index for the fourth quarter of 2015 dropped to 100 points from more than 120 points recorded earlier. The CCI is an indicator designed to measure consumer confidence, which is defined as the degree of optimism in the state of the economy that consumers are expressing through their activities of savings and spending.

The Managing Director, Nielsen West Africa, Mr. Lampe Omoyele, said Nigeria’s CCI was very high before 2015.
He said: “While Nigeria has always been very high and the highest in Africa, we were concerned when, for the first time in quarter three of 2015, there was a decline in the points. So, while it was still over 100, it had declined and this was driven by a number of factors: the inflation and other macroeconomic issues and the oil prices. The non-approval of the budget had a lot of impact because wages were static; some were cut. So, consumer disposable income had declined. While ours was still high in relation to other markets in Africa, the concern for us is that it was declining,” he said.

Given the declining condition of the outlook for many consumers; they are expected to re-prioritise spend to survive the times. The impact of this is already being seen with decline in consumption of many FMCG categories.

To win, FMCG players must strive to position themselves to consumers as offering the best “value” for their products in terms of pricing & packaging. Driving availability, awareness and trust would equally be critical

APCON dissolution

Another reason stakeholders cited for slow activities in the marketing communications industry was the sudden dissolution of the Advertising Practitioners Council of Nigeria (APCON) board along with other government parastatals by the president. One year after, the body that is saddled with the regulation of the entire industry is yet to have a board. For a council that was just coming out of crises when Buhari assumed office, following the imposition of a non-professional in the person of Prince Ngozi Enioma as the APCON Chairman, by the former President Goodluck Jonathan, many expected a better regime under Buhari. But the sudden ban of a newly constituted council led by Udeme Ufot, a thorough-bred advertising man was considered a setback for the industry.

As at the time Ufot came in, it was expected that regulation, especially as it concerned the recent industry reform would get good attention, which probably would have aligned with the ‘change’ mantra of the Buhari’s administration. Unfortunately, the sudden ban of the council scuttled this, and killed the hope of many practitioners, who had earnestly waited for the implementation of the long-awaited advertising reform. Meanwhile, there is a pending clog in the whole process over the belief in some quarters that government made a mistake, while the late Prof. Dora Akunyili was Information minister, to have wrongly listed APCON as a parastatal instead of being treated as a regulatory body.

To say this is not the best of times for players in the industry is like stating the obvious. Now that marketing has naturally become the first casualty of the current economic recession, stakeholders are calling on President Buhari to give his policy a human face. Though his fight against corruption is applauded in many quarters, many marketing communication practitioners have faulted it on the basis that it is scaring away investors.
“The hype in our fight against corruption is more than the substance and this is not good for our image as a nation, we are simply telling the rest of the world that, go, go we are thieves. New businesses are not coming in and the existing ones are cutting down the budget. As I talk, most agencies are downsizing, throwing more people into the labour market,” a concerned practitioner said.

Meanwhile, the Publicity Secretary of the Media Independent Practitioners Association of Nigeria, Mr. Yinka Adebayo, has urged the current administration to give marketing communications professional good recognition.
“I can only advise government to build on what was achieved during the electioneering campaigns when most of them engage professionals to handle their campaigns. By the recent statistic, our industry now worth N120 billion and about 80 percent of this is contributed by registered media independent firms. With this, I think the industry is critical to the economy and so government should endeavour to give us more recognition,” he said.