Policy Volatility, Consumer Behaviour as Major Influencers in 2017  

 CONSUMER YEAR REVIEW

Raheem Akingbolu writes on the activities in the marketing communications industry in 2017, positing that policy volatility and the recession affected  the marketing spend of most companies and dictated consumption patterns among consumers

If there is any sector of the economy that has been negatively affected by the economic recession that recently bedeviled the country, it is the marketing communications industry.  The reason is simple; when economy nosedives, marketing budget drops and practitioners bear the brunt.

Though both marketing practitioners and consumers of goods and services enter the year with hopes, the first six months was nothing to write home about due to consistent drop in the budget and disposable income. To this end, consumption drastically dropped, manufacturers struggled to survive while the businesses of marketing agencies also suffered. However, things picked up a little in the third quarter but the overall performances remains  low compared to the years before the recession.

Aside businesses that have nosedived, some agencies have closed shops while hundreds of their employees have been sent back to the labour market. This has also greatly affected consumption as consumers have been forced to readjust their scale of preferences to contend with the existing market reality.

Mixed feelings among Advertising practitioners

Looking at the activities in the industry in 2017, the President of the Advertisers Association of Nigeria (ADVAN), Mrs. Folake Ani-Mumuney, stated that as the economy picked up in 2017, her members saw a corresponding rise in marketing communications activity, being a barometer of confidence.

‘’With increased economic activity, we saw laudable creativity also as marcomms practitioners raised the bar and held themselves accountable for improved return on investment (ROI). Doing more with less became the order of the day and at the end of the year we celebrated the brands who demonstrated a mastery of this at the 2017 ADVAN Marketing Awards, the defining event for the industry.

‘’Of notable mention is what we are beginning to see with the Buhari-led administration who appear to be embracing the value in engaging marcomms professionals to get their strategic communications out. A clear example is the ongoing VAIDS campaign using an effective messaging and media mix, speaking to all demographics and successfully conveying a challenging complex proposition to an audience with different levels of understanding,” she said.

Going forward in the years ahead, she encouraged the government to continue to tap into the expertise and embrace the advisory services of marketing communication practitioners who excel in positioning brands under their care.

According to her, the role of marcomms must be properly understood and never underestimated in building and sustaining confidence in any venture.

 Looking ahead into 2018, Ani-Mumuney said practitioners are optimistic that the green shoots of recovery will take firmer root and players in the marketing communication industry will see more vibrant economic activity with the necessary trickle down that will lift more Nigerians out of poverty.

‘’ However to fully maximize the opportunities that recovery offers, we must address the various issues affecting the sector; multiple  taxation from the various regulatory bodies, arbitrary demands and lack of transparency on rates and fees from some and other practices aimed at driving their revenue up is certainly not helpful for the sector at large,’’ she said.

On a final note, the advertisers’ chief urged the authorities to conclude on the necessary appointments in APCON and the other boards to strengthen the industry.

In an interview with THISDAY, the Publicity Secretary of the Association of Advertising Agencies of Nigeria, (AAAN), Mr. Steve Babaeko, was quick to admit that the year 2017 has been a painful journey for creatives agencies in the country.

According to him, ‘”The advertising industry is not immune to the economic reversal going on in the country. Thankfully, the oil price is going up now. The dwindling oil revenue occasioned by the price slash and producing below capacity starting from 2016 still affects the economy and affects creative agencies in the country.”

But he is confident that if the country gets the budget passed on time in 2018 by the  National Assembly, practitioners would begin to see some positive changes in the economy.

Babaeko, however, advised the lawmakers to give issues related to the budget a great priority, adding that for now, between the lawmakers and executive arm, there is buck passing and foot-dragging over the budget.

He also believes that things will improve in the year ahead, given the electioneering campaign and the World Cup that are around the corner.

He said: ‘’Definitely, electioneering campaign and world cup are going to help because the World Cup is a very major event. Some of our clients will participate, which is good for the industry as spending is expected to pick up. Same with politics, the race for 2019 basically starts now.  You will see more smart politicians engage the services of professional agencies. They won’t give their political communication or advertising campaigns to their brothers and sisters in-law to do. If they really want to get good outcome, they need to invest in quality campaign. In that wise, we should expect a boost in the industry.’’

Performance of the PR industry 2017

According to the Holmes Report, while global PR industry rebounded to seven per cent in 2016, up from  five per cent  growth in 2015, hitting the $15 billion  in total spend, with the likes of BlueFocus, Webber Shanwick, Golin and Ketchum out performing industry average,  same could not be said of Nigeria PR firms in 2016. The state of affairs was driven largely by currency volatility, macro-economic shocks and policy issues with big spenders like MTN and Etisalat (now 9Mobile) in the Telecom sector, the Unilevers and the P&G’s in the FMCG sector crawling back with consequent squeeze on the local PR industry in 2016. The year 2017 opened with a host of foreign multi-nationals downgrading Nigeria and centralising their PR businesses in South Africa and Kenya.

According to the Managing Director, Precise, a reputation design and generation company, Mr. Bolaji Okusaga, this was due largely to prevalence of foreign currency volatility which saw a great gap between official and black market rates and created a tough operating environment for businesses as they were not able to access dollars at the official rate.

He said: ‘’Under this context, 2017 opened on a bleak note for most PR practices given the impact of macro-economic shock on marketing spend and by implication, the PR share of that spend. However, following Nigeria’s exit from five  consecutive quarters of negative growth in the second quarter of 2017 with the economy recording a positive but fragile growth of 0.72 per cent , we saw a restoration of confidence in the market. This confidence saw a limited rebound in PR activities as foreign and local businesses hoping to cash in on the prospects of a full recovery began to raise their spend, albeit cautiously. So in terms of the knock-on effect of the recovery on the PR industry, it is still largely marginal given the fact that the non-oil GDP elements are not growing as fast as required for a big effect on marketing spend, at least not yet.”

‘’The reason why the effect of this recovery are not yet visible are not therefore contestable. I did say earlier that while Oil GDP expanded considerably in the second quarter of 2017, non-oil GDP only grew at 0.45 per cent, down from 0.72 per cent in the preceding quarter and -0.38 in the corresponding period in 2016. In quarter 3 of 2017 GDP grew by 1.4 per cent,  showing sustained momentum. However, quarter three GDP results also showed that the nation’s economy is still exposed to the risks especially on the real sector side, as only two out of 10 sectors grew during the quarter. While the oil and gas sector grew by 25.89 percent, the non- oil sector from which a larger pool of marketing spend is obtained contracted by 0.76 percent. Under this context, it does not take rocket science to see that the PR industry did not grow last year,’’

While the year 2018 promises to be brighter and better, given the obvious recovery of the economy and a projected increase in government and political spending being a year before the general elections, Okusaga said there is a big need for caution because while government spending goes up in the year preceding an election as the government will be in a haste to deliver on its electoral promises, the nature of the spending and the fiscal discipline around the spending may make or mar opportunities in the real sector.

According to him, this is so because an uncontrolled spending regime may increase inflation and lower consumer spending power with attendant impact on goods and services from which marketing spend is derived.

Okusaga is also of the opinion that new technologies like Facebook live, Youtube, Instagram, online TV’s, online radios and other digital platforms, also affected the industry in the year under review.

CPC perspective

For the Consumer Protection Council (CPC), 2017 experienced key developments.  According to the Director General of the agency, Tunde Irukera, among other achievements, the council used the year to meet extensively with industry and encouraged them to make consumer protection a core and not ancillary of their business, adding that as such, he expects industry to take a more robust role in resolving complaints and consumer education.

‘’The current model translates to government subsidising industry as CPC receives even the most monite dissatisfaction which industry should resolve without intervention. Further, as they have mastered advertising and have multiple channels for reaching consumers, we have mutual responsibilities to educate consumers and I expect them to leverage their messaging and channels for this. A generally more responsive attitude and prioritising of consumer issues is inviolate and non negotiable,’’ he said.

As consumers prepare to enter 2018, the CPC boss stated that what government needs to do to grow industry is just a clearer, more consistent and more certain regulatory framework and approach, letting industry know regulatory priorities and working with industry where necessary to secure compliance and raise standards.

He said: ‘’Economic performance is tied to consumer spending and consumer spending is as much a function of satisfaction as it is of disposable income so prioritising consumer protection, working with industry while firmly holding them accountable will be key to industry growth and economic expansion.  I also advise consumers to be more discriminatory. They should become more aware of rights, demand and insist on those rights, and where dissatisfied seek enforcement,’’ he stated.

Experiential marketing grows

While other sectors recorded decline in 2017, the same cannot be said of experiential marketing agencies as more organisation turned to them for solutions that would be impactful and yet cost effective. Since few years ago when experiential marketing practitioners saw the need to form a professional body -the Experiential Marketers Association of Nigeria (EXMAN),  and reposition the sub-sector, more attention is being given to members and the service they offer. Two major things have continued to give them an edge –cost effectiveness and ability to measure the impact of their activation exercise.

President of EXMAN, Kehinde Salami,  said experiential marketing activities this year, has witnessed a definite improvement from 2016 as a direct result of many factors.  He gave his reasons to include: stable exchange rate (essential for multinational companies’ importation of raw materials and effective planning), improved confidence especially in quarter three and four and improvement in security which, he claimed has helped multinationals to supply some no go areas of the past.

‘’For experiential agencies the ripple effect has certainly been felt with many agencies in EXMAN witnessing an improvement from last year’s position. Having said this, tighter controls coupled with inability of members to access working capital to finance projects has had a negative effect on profitability scores, capacity building and investments in key goal areas,’’ he said.

Salami, however, urged government to partner EXMAN by creating accessible funds at single digits for their members.

‘’In the coming year, we intend to begin the engagement process with relevant stakeholders. As an industry that engages no fewer than 100,000 personnel annually and 500,000 indirectly, the need to further support this SME sub sector in 2018 cannot be understated,” he said.

Outdoor industry misfortune

To say the last 10 years have been difficult for outdoor practitioners is like stating the obvious. Aside facing challenges of multiple taxation and unfriendly rates, the fear of likely takeover of their businesses by foreign firms has remained a recurring decimal. In Lagos, where they have the largest chunk of their businesses, the challenges have been tougher than other places, especially since 2006 when the state government decided to create a parallel regulatory agency -The Lagos State Signage and Advertisement Agency (LASAA), to rival the federal government’s owned Advertising Practitioners Council of Nigeria (APCON). Despite efforts by stakeholders to mend the wall between the Outdoor Advertising Association of Nigeria (OAAN) and LASAA, the relationship is still like  that of cat and mouse.

In 2017 when many thought the war was over, the decision of the state government to allocate major sites in the commercial city to a French Company – JCDecaux Group became another cause for concern among practitioners.

Speaking on the performance of the sub-sector in 2017, OAAN General Secretary, Femi Ogala, didn’t mince words in stating emphatically that the year has remained the worst for out-of-home practitioners. Ogala didn’t only blame Lagos State government  and  LASAA for double standard, he also condemned the agency for introducing unfriendly payment pattern to frustrate local practitioners.

‘’For outdoor practitioners, 2017 is a bad year, no thanks to LASAA and the Lagos State government that boosted the activities of a foreign firm -JCDecaux Group, at the expense of the local operators.  As I speak, major streets in Lagos like Ikorodu road, 3^rd Mainland Bridge, Oshodi, Ojota and others have been ceded to the foreign company. Our members are particularly sad because some areas where the state had initially marked untouchable are now being controlled by the company. Besides, the rates being given to us are not friendly. LASAA insists that we pay N3million  per space, which equal to N9million naira where the boards are three facets.  In a few cases, you are charged N2.4 million per annum and by March or April; you are expected to have paid your rate. Failure to do so, their men will remove our campaigns. For God’s sake, where do you get money to pay when the campaigns are no more running. It is when our works add values to clients’ businesses that we will be paid and get money to pay government,’’ he said.

In the overall assessment of the various sectoral bodies, it is obvious that the general performance has been below average. But with the assurance from many quarters that the country has wriggled out of the recession, coupled with business opportunities that World Cup and the 2019 general election could offer, it is believed that 2018 would be a year of surplus for marketing practitioners.