Expectations from Marketing Communications Sector

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As players in the integrated marketing communications industry reminiscent over the changing business landscape in the year 2020, Raheem Akingbolu foresees a near-turbulent business environment in 2021.

Business owners and custodian of brands in the Nigerian marketing environment entered the year 2020 with enormous hope that fortune would smile on them in the year.

The previous year -2019, was characterised by apprehension and fear of the likely negative fallouts from the general elections.

By January 2020, investors who were in doubt in 2019 had started readjusting and setting for business.

In the same manner, government as the custodian of public enterprise and executor of the national budget had also assured the business community of enviable environment that would enhance growth.

As a result of this, the integrated marketing communications (IMC) community, whose success naturally depends on the success of other sectors, set for business. But in February, a negative signal surfaced in the mood of the global pandemic that later crippled the world economy.

The ‘new normal’

By March 2020, the COVID-19 wave had blown across the nations and compelled countries including Nigeria to lockdown cities and businesses. This development instantly threw players in the marketing communications industry off-balance because most of them relied on outdoor structures and crowd to ply their trade. To worsen the situation, brand owners, who are the major clients, indicated the decision to rejig their marketing spending in view of the COVID-19 pandemic.

According to THISDAY checks, not a few banks and multinationals in the fast-moving consumer goods (FMCG) sector of the economy reached out to their agencies on the need to review business relationships.

To connect with their target audience, companies quickly readjusted by leveraging on new platforms, such as digital marketing, radio, and television, to reach consumers who were then staying at home.

At the peak of the lockdown, a major economic backlash was recorded when Coca-Cola Company, a major multinational beverage producer, suspended indefinitely all commercial advertising of its brands.

The company said the initiative became necessary in view of the exigencies and expediencies of the time, adding that it wants to stay focused in ensuring the safety and wellbeing of its people and communities.

Loss of jobs, businesses

While the lockdown continued, panic gripped employees of major outdoor companies and experiential agencies over insecurity of their jobs. In a jiffy, scores of agencies closed shops with many of their employees back in the labour market.

Speaking on the development, the President, Experiential Marketing Agencies of Nigeria (EXMAN), Tade Adekunle, admitted that the industry experienced hardship because clients suspended most of their projects. He however kept silent over the number of people that lost their jobs during the interregnum.

He said: “Unfortunately, the lockdown, as a resort of the global pandemic, had effect on our businesses because almost all projects were suspended. The fact that the year was just about to kick off for most of us when the pandemic started made things worrisome,”

While calling on all to still keep safe and keep hope alive due to the second wave of the pandemic, the EXMAN boss admitted that post COVID-19 would bring its own challenges and that it would certainly not be business as usual.

“No doubt, there are still challenges ahead, especially in our own area of business be it activation or event aspect of it.

“No doubt there will be drastic loss in consumer spending which will affect revenue of most of our clients. To survive in 2021, we need to retool our thinking caps and come up with ingenious ideas for consumers to still experience the brands irrespective of cultural nuances. And the time to start thinking about it is now,” he added.

Another practitioner and the chief executive officer of GDM Experiential Company Limited, Victor Afolabi, expressed fear that if the crisis persists, it may lead to budget spending on marketing being frozen because of the business rejig that would be necessitated by both the pandemic and the recession.

“However, budget spend on marketing as a whole may be frozen as companies are currently struggling with lack of raw materials. Besides, there is slow consumer spend and weak demand. As things are, the problem is not only about experiential agencies but the entire marketing industry, including advertising.

“All the sub-sectors of the marketing communication industry will heavily be impacted at the end if the global problem continues.

“But for experiential, this will be more imparted except agency Managers come up with creative and innovative ways to engage consumers without direct contact,” he stated.

Speaking further, Afolabi predicted that digital would no doubt be a leading channel of engagement in the year 2021, adding that consumers will naturally spend more time consuming social media.
General overview

By and large, the general feeling among practitioners is that the year 2020 was peculiar in the life of many marketing communication agencies and traditional media as many of them reeled under the tough operating environment which saw them redefining their strategies and operating models.

The ugly experience also compelled many business owners to place their workers on half salaries.

Akonte Ekine, CEO of Absolute PR, described 2020 as the year of the unexpected. “Everything that happened in 2020 was not scripted and it went against the norm or the normal”, he said.

Within the year, “the idea of people moving about became dangerous, we adapted to working from remote locations even parties turned to digital activities. It is the year that put the seal on technology as the ultimate need for our collective existence to interact with each other from business to social”.

The Covid-19 pandemic and the EndSARS affected the economy and the fact that marketing communication is a part of the economy; it also determines the level of impact on the subsector, Akonte further said.

“How many companies actively campaigned or engaged with consumers within the year? Aside the techs, financial/banking, most of the companies were very low on marketing activities. COVID-19 shaped and directed behaviour and behavioural conversation in 2020”, said Akonte.

The effects of Covid-19 pandemic and other negative factors such as the EndSARS that defined 2020 changed the earlier optimism curve.

Nigerians entered the year 2020 with great optimism. This was informed by 2.55 per cent growth in GDP in fourth quarter (Q4) of 2019 after sluggish performance of 2.10 per cent, 1.94 per cent and 2.28 per cent growth in the first, second and third quarters of 2019 respectively.

National Bureau of Statistics (NBS) said the growth in Q4 2019 was highest quarterly growth performance since the 2016 recession. The growth was projected to be on upward trend after Nigeria exited economic recession in the second quarter of 2017.

While government and businesses were adjusting, ready to reap from the expected boom in the economy, as 2020 budget was based on ambitious $57 bpd, then came in March 2020 oil price war between Russia and Saudi Arabia over the production, exportation and price of crude oil.

Experts explained that price war is a competitive tactic of purposefully lowering prices with a view to undercutting rival businesses. When this happens, other producers will be forced to lower prices to remain competitive “and the cycle typically continues until the price across the board drops so low as to be unsustainable, thus causing logistical unease to one or more parties,” KVB Prime said.

The price war exacerbated by Covid-19 pandemic saw Nigeria’s oil selling below $30 bp against the projected $57 bpd. This development began to have its negative impact on revenue and the operation of the economy.

Businesses that were heavily affected began to cut marketing communication budgets by almost 50 per cent and this had a reverberating effect on marketing agencies who subsequently either trimmed their workforce or placed some of them on half salaries.

The President of Outdoor Advertising Association of Nigeria, OAAN, Emma Ajufo, earlier in the year admitted that many of the workers in the industry were placed on half salaries which he said was better than throwing the workers in to the labour market especially this difficult economic time. Nigeria’s unemployment rate is about 27.1 percent of the population and there are speculations that this will worsen to 33.5 percent.

Many of the marketing communication agencies, including Public Relations, creative advertising agencies, below the line operators and event planners also witnessed low patronage from clients.

During the months of lockdown, many companies also suspended programmes and product launches in compliance with the rules to slow the spread of Covid-19.

Ajufo, further said outdoor clients, “who rely on eye-balls to place advert materials had to cancel exposures and contracts due to the lockdown occasioned by the Covid-19”. He said the industry lost multi-million naira businesses this year.

2021 and expectations

Though now at crossroads over what the future holds for the industry in 2021 as the nation’s economy falls into a second round of recession in five years, top industry leaders who spoke to THISDAY have cautioned brand owners from doing away with advertising other marketing support services.

Besides, some practitioners have predicted that political activities ahead gubernatorial elections in Anambra 2021, Ekiti, Osun 2022 and 2023 general elections will begin this year to stimulate the market.

“Except that revenues from political activations could go to unregistered agencies, a lot of business will come from that area this year. By March, politicians who will be jostling for governorship slot in Osun, Ekiti and Anambra would have started political marketing. By the last quarter, preparation for 2023 presidential contest would have started also and this will also attract advertising,” Bayo Adeosun, a practitioner stated.

Meanwhile, as practitioners approach 2021, the President Association of Advertising Agencies of Nigeria (AAAN), Steve Babaeko, has urged Marketing Communications practitioners to henceforth adopt the Scout Motto ‘Be Prepared’ in approaching the New Year.

The AAAN President though admitted that navigating through business environment at a time like this may be tough, he is optimistic that brand owners would still work closely with the marketing communications agencies to sustain their businesses.

Registrar, Advertising Practitioners Council of Nigeria (APCON), Dr. Lekan Fadolapo, also agreed that the recession may compel some businesses to cut expenditures, including research and advertising in 2021, but he was quick to add that some smart businesses will leverage on the period to give their brands visibility through advertising, Public Relations and other legs of marketing.

“During an economic downturn, it may seem logical for organisations to cut off expenses because in those times, saving is much more important than spending. But on the other hand, when the companies cut back advertising expenditures, they become less visible to public. Businesses should be aware of the opportunities that a recession can provide.

“Since the rivals reduce marketing efforts, there may be an opportunity for the businesses to come clear on the eyes of its target market by maintaining a strong advertising campaign during a recession. There may not be a better time to advertise than this, since many others’ tendency is to reduce advertising spending. Thus, when advertising aggressively in the economic downturn, an organization might drive and maintain awareness, build a greater market share, with a more solid brand image,” Fadolapo stated.