Marketing Fortunes Nosedive as Recession Bites Harder

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Despite the growth recorded over the last 56 years, the fortunes of the marketing communications sector have nosedived due to the downturn in the private sector, writes Raheem Akingbolu

If considered from the point of view of business billings and proliferation of agencies and media houses, then one can conveniently say the marketing communications industry has witnessed tremendous growth in recent times.
In advertising industry for instance, while major players have hit the billions of naira billings mark, the collective billing for the industry has since jumped over the N50 billion target of eight years ago. But this year, things suddenly took a dramatic trend when first rated agencies started recording decline in their businesses as a result of the harsh economic climate that has bedeviled the private sector where the industry draws its revenue. Asides, practitioners have also been criticised for not upping their game in the area of creativity, a situation which has made them lost businesses to foreign and younger agencies.
For instance, Insight Communications Limited and Prima Garnet, which used to be among the top five in the industry are now grappling with challenges of retaining their prime positions. Few months ago, Insight lost the Gulder account to JWT, a South African firm. The client was said to have complained that it was not getting the required creative expectation from the foremost Nigeria agency. In the same way, FrieslandCampina WAMCO, manufacturer of Peak Milk has dropped Insight Communications and called for a pitch which might lead to the emergence of a new agency. Few months ago, the same agency lost the Techno account to Stream Advertising Limited, a barely known agency, as a result of the need to get more value for its array of products in the telecommunications market. Few months ago, the Diageo business also left SO&U to DDB Lagos.
In international rating, Nigerian agencies like, DDB Lagos, Noah’s Ark Communications Limited and X3M Ideas have made the country proud in recent time by winning awards from outside the country. At the just concluded Loeries International Advertising Festival held in Durban, South Africa, Noah’s Ark added yet another feather to its creative hat by clinching one Silver and two Bronze awards. The Loeries is the biggest creative gathering in Africa and Middle East that seeks to reward and inspire innovation and relevance across the different spheres of brand communication. Also, X3M Ideas recently proved its mettle in Marrakesh, Morocco, as a leading digital advertising creative agency at the African Cristal Festivals, where it won a bronze medal in the media category under the ‘Best Use of Social Media’ sub-category at the awards. Though Insights and some other agencies attended the 2016 Cannes Lions International Festival of Creativity in France, only few agencies put in entry. However, the event was used by the Troyka Group to celebrate its recent partnership with the Publicis Groupe, one of the biggest advertising networks in the world. Strategically, this was cleverly achieved through a publication that was published by a Nigerian wholly marketing communication journal which was dedicated to celebrate the strength of Troyka and the influence of its chairman, Mr. Biodun Shobanjo. To reach relevant quarters, the publication was said to have been distributed freely at the event.

Indices for growth

The growth in the entire marketing industry in recent years could be attributed to the recapitalisation exercise by banks, a directive of the apex bank –the Central Bank of Nigeria and liberalisation of the telecommunications industry which broke NITEL’s monopoly thereby attracting private investments in the industry. The two key economic developments engendered tremendous marketing communication activities with agencies raking in millions of naira. In short, it has witnessed significant growth especially in terms of billings and number of agencies. But the sector has also witnessed many challenging moments from 1960 to date.

Poor regulation
Cutting corners among practitioners, influx of quacks and indifferent attitude to regulatory are persistent problems in the marketing communications industry. But despite the odds, the industry has recorded tremendous growth over the years. It has also produced many professionals and contributed in no small measure to the nation’s economy. Besides, digital technologies have redefined the industry and boost its global profiles.

Four years after the Advertising Practitioners Council of Nigeria came out with a major reform, which redefined the entry requirements for foreigners into the market, some aspects of the initiative have been faulted. At the annual general meeting of the Association of Advertising Agencies of Nigeria (AAAN), held in Osogbo last year, discussions were centred on what the future holds for the industry.

Among other issues, the 2013 APCON Reforms that reviewed the process of participation of foreign practitioners in the market took the centre stage. Under this, issues related to license to foreign agencies and sharing formula were considered, especially as it concerned the 25 per cent stake, initially penciled down for foreign investors who choose to trade in Nigeria, 75 per cent goes to local agencies.

Chief Executive Officer of Noah’s Ark, Lanre Adisa, who delivered a paper at the event, was of the opinion that stakeholders should review the reform in line with current realities in the global advertising environment.

At a time many stakeholders are thinking of the way out of the various challenges facing the industry in the area of regulation, the failure of federal government to appoint chairman for APCON appeared to be throwing spanners in the entire process. Despite his assurance that the issue would be resolved as soon as possible, the body language of the current Minister of Information, Mr. Lai Muhammed doesn’t show that he is keen about the appointment.

In the PR industry, players are also yet to agree on the influence of the Nigeria Institute of Public Relations (NIPR), a major regulator of PR practice, especially as concerns the power the body give to the Public Relations Consultant Association of Nigeria, (PRCAN).

In the beginning
Advertising began humbly in Nigeria before independence with the establishment of Lintas, (Then West African Publicity) in 1928. The profession was basically unknown then and that informed why there was no clear-cut regulatory frame work that could guide the conducts and practice of the business. Between then and now, the industry has developed to allow specialisation. Unlike in those days when it was combined in one basket, today there is Advertising, Public Relations, Out-of-home and experiential marketing. The complementary role digital is playing is also telling on the activities of all the branches. Over the years, the various sub-sectors have grown in leaps and bounds.

Sectoral growth
Advertising business, for instance, has witnessed tremendous growth especially since the enactment of Indigenisation Policy of 1972, which lifted a few ambitious local players to assume ownership positions in agencies. Aside the contribution of the promotion decree, the volume of agency billings, proliferation of advertising firms and media houses, also indicate growth in the industry.

However, the industry is not without challenges. Aside that weak regulations still stand as barrier, poor entry requirements and proliferation of agencies, are also posing challenges to the growth and development of the marketing communications industry.
Stakeholders are still concerned about how the gap between the second generation agencies and the new ones has continued to wide by the day. Record shows that major advertising businesses in the market are still under the control of the top agencies with the smaller ones feeding on the crumbs.

The outdoor industry has also grown from the era of pasting posters on the wall and the period of erecting planks along the roads. The trend has now gone digital with local and international agencies making efforts to catch up with the global phenomenon.
After years of misconception about public relations and its practitioners, the profession is beginning to earn credibility and attract local and international recognition. As a result of this, hardly there is any company in Nigeria that has no link with one or two PR agencies to manage its affairs. The industry has therefore grown from being a department in organisations to full blown businesses. The establishment of the Nigerian Institute of Public Relations (NIPR) and the PRCAN can be said to have prepared a good ground for training and regulation in the industry.

However, a major setback in the PR industry is the minimal or even non-utilisation of public relations by the government and its agencies. This also affects political parties and candidates during elections that often resort to PR only when they are in crisis. There were very few structured political communication campaigns properly anchored by recognised agencies under the PRCAN fold. It is believed that trained PR practitioners can help government agencies and politicians communicate their programmes better to the public.

Though activation is not new, especially among the operators in the Fast Moving Consumer Goods (FMCG), sector, it was not carved out as a separate arm of marketing in Nigeria until recently. Three years ago, the practitioners in the business came together to form an umbrella body called Experiential Marketers Association of Nigeria, (EXMAN). Fast forward to 2016, most business owners appear to be looking in the direction of experiential activities to maximize their spending, a situation which has encouraged the opening of more Experiential agencies.
It is believed in many quarters that beyond the primary function of creating awareness, experiential marketing creates an instant bond between consumers and brands. This explains why many brands now use it more to launch new products or re-introduce existing ones.

Merger and Acquisition
Corporate leaders working to expand their market share or looking to reduce costs often look to mergers and acquisitions. Though the growth strategy has remained a tall dream in Nigeria’s marketing industry, it is necessary for the industry regulatory body to give it a priority to strengthen the industry.

The scenario in the marketing industry is almost beyond logical reasoning. Unlike other industries where the volume of business naturally dictates the size of operators, marketing communication agencies have continued to soar while marketing budget is shrinking.
Since the economic downturn when most business owners deliberately reduced their advertising budget to prune down costs, pundits in the marketing communication industry have been suggesting the need for mergers and acquisitions.

Proponents of merger and acquisition believe the strategy could be a way for businesses to bypass the time and resources entailed in achieving organic growth.