President of Outdoor Advertising Association of Nigeria, Babatunde Adedoyin speaks on the various challenges facing the out-of-home sub-sector of the advertising industry, particularly regulation and competition. Raheem Akingbolu presents the excerpts:
Could you share with us the impact of recession on the out-of-home industry?
One thing that is certain is that recession is not only affecting advertising, it affects across all the sub sectors of the industry. But it is very important to note that in terms of recession there is still need to advertise. Unfortunately, most marketing directors or companies when they have issue of recession like this; the area they first of all look at is media and advertising. That is why in the last two years, it has been very severe on advertising and media placement and buying. As we speak, we cannot say that we are totally out of it.
But we thank God that there is a little bit of progress, we are still in recession, clients are not spending much as many are cutting budget, including those who were spending well on marketing before recession. In our own industry, they use to do media placement for twelve months, but these days, they have come up with all form of tactics, one month, three months, in order to save money. That has been the style in the last three years. But we are very hopeful that things will get better; it is all about managing our economy. But in a nutshell, the economy is improving.
What is OAAN’s current relationship with outdoor regulators in the country?
Before now, we were paying to local governments in terms of rate on billboards, but about ten or eleven years ago when we started this political dispensation, a new regime commenced, starting Abuja and quickly followed by Lagos State. From there on, all other states followed. It was very unfortunate that by the time they were starting, we were not involved because ordinarily we suppose to have inputs if states would regulate alongside APCON. But unfortunately, some of the newly established agencies were only looking at the financial aspect of it; how much money they could rake in for the government, without considering the sustainability of the industry. Majority of them started rolling out unfriendly rates that were unfriendly to businesses. Of course, in the last ten years we have been battling not only with LASAA but with all other agencies to let them reason with us and look at their rates.
To keep the industry going, we need a rate that is not only friendly to business but to our clients as well. This money is not our money and at the end of it all everyone will pay for it because if you charge Cadbury or Coca-cola very high on their billboards, they will have no option than to spread it on their products and it is the consumer that will eventually buy. So, if government thinks they are making money, the money is coming back to us in a way. What has happened in the last ten years is that they made our medium so expensive that it is only the multinationals that can place adverts or campaigns on billboards. In the past, when we started, we had the likes of barbing salons, tailoring people and people importing products for Christmas who were placing campaigns on billboards because it was reasonable.
Today, you hardly find them on our billboards. So, this has reduced our capacity and even to invest is becoming impossible. It is like you are sharing the profits with the government and at the same time clients are running away because they believe that your rates are very high.
How does this actually affect government revenue because the more people come on billboards, the more money that government will make?
That is our own point of argument that look, if the price comes down, you are likely to make more money because you will see more people coming on board. One major clog in the whole process is that some of these people that are regulating are civil servants. I am not trying to run anybody down, but they are not commercially oriented, they don’t look at it deeply and some of them cannot face their governors or their boards to present a paper and say, look, let us look at this thing objectively. Ask any of them that how do they arrive at this rates? They cannot tell you the scientific way they have arrived at the rates. They will just say 48 sheets should be this rate or unipole should be that rate.
It doesn’t work that way, there must be facts and figures behind it so that if you are presenting even to your own client, you will have something to show. Unfortunately, some of them are yielding while some are still being difficult but we believe as an association we will continue to engage and discuss with them to get what we want. Part of the things we are trying to tell them is that whenever they are appointing a DG or managing director for a signage company should be an advertising practitioner because if it is a person that understands the business, when we are talking, we will be on the same page; he will understand what we are saying. As we speak, a lot of the agencies are still charging high but we are consulting. In some states, we have gone to court, in some, we are discussing, depending on how the institution is.
Has the issue of vacant billboards been resolved?
In some states, the issue of vacant billboards has been resolved but in Lagos it has not been resolved. At the last meeting we held with LASAA those things still came up and the MD of LASAA promised to look into it by giving some conditions. Like I said earlier, we want to keep engaging, we want to keep working on them we expect that very soon.
Don’t you think OAAN as an association needs to refocus, considering the level technology that has come into the business of outdoor advertising and the clamour for merger and acquisition?
If we start from the issue of merger and acquisition, we cannot force it on our member; it has to come voluntarily. Besides, the economy and times dictate that. As for OAAN, we have been doing series of restructuring that is why we are still surviving because there are other media platforms that are competing with outdoor now. As we speak, some of our members are dropping their rates as a strategy for survival.
They are reducing their rates, even on LED, in order to survive. We have also told our clients that it is not everybody that must come on unipole or come on a large format. In the past, we had 16 sheets and A4 panels because there were some towns where profit margin did not justify the profit clients are making and so putting up a unipole or even a 48 sheet billboard would not be advisable. A4 panel or 16 sheets could be sufficient, so that clients would not be spending more than necessary. But some of the clients have ego, they want to be seen as being big. They want to replicate what they are doing in Lagos in other parts of the country. Most of the time, it doesn’t pay because rather than having five 16 sheets in small community, the rate will not be up to the rate of unipole.
By doing so, clients could still get the same value that a unipole will offer. This is part of the things we have been advocating to maximize profit. Another challenge in this area is that some marketing managers and marketing directors of some multinationals get directives from their parent companies abroad. Oftentimes, they may not want to change some of these directives even when you advise them because sometime it is difficult for them to push. Because some of these companies want a uniformed standard in all the countries they operate.
They forget that the economy of each country is different because you cannot import what is applicable in South Africa and force it on Nigeria. It doesn’t work.
What effect do these challenges have on unemployment or revenue to the government?
This is a very straight forward question. When a company is being over taxed and there are multiple taxations, you will find a way to reduce cost. Of course, you cannot say because you have paid Inland Water Ways Authority or you have paid LASAA or Parks and Gardens as a result you want to increase the rate of your board, it doesn’t work that way. At this stage, it will dove tail to reduction in employment.
There are two things that are causing unemployment in our industry now; multiple taxation and technology. If you are a serious high tech technology company, you hardly need many staff. You outsource your engineers and your technicians and of course, form your office you can control your billboards. As I speak, more than 50 percent of agencies have reduced staff strength.
There is issue of debt where Globacom, a Nigerian telecom company, has cancelled billboard contracts and is believed to owe some OAAN members. Which level are you now in trying to recover the money?
On the Glo issue, it is true that the company owes some of our members. The promoters cancelled contracts since last year May and up till now have refused to pay those debts. Thereafter, the management made an attempt to start recruiting new outdoor companies to start doing business.
As at that point, we had to call an extra ordinary meeting of the association to make a bold decision on this issue. At that meeting, we all agreed that none of us should work for Glo until it pays the debt and this was communicated to the management and Advertising Practitioners Council of Nigeria (APCON) because we got APCON involved in this.
APCON wrote to ask the promoters why they were doing that. As we speak, the telecom company is still hiding under another legal tussle with another company. But the fact is that we have been able to unite on this and that is why you have not been seeing its campaigns on the street.
Your members were owed for carrying some political campaigns during the last general election, how far have you gone in recovering this debt?
We are yet to collect our money but we seriously believe we are going to collect it. Because we are still talking to government, we have had series of meetings in the last few weeks about it and it has got to the highest level of authority and it looks like we will get the money. We are not relenting on getting that money. The total debt is in the range of about 1.3 billion naira.