The ARCON Act has the potential to tackle many of the challenges that beset the industry
For nearly two years now, the relationship between the Advertisers Association of Nigeria (ADVAN) and Advertising Regulatory Council of Nigeria (ARCON) has been quite uneasy. At the heart of the acrimony is a resistance to measures by the regulator to reform and enhance the operating environment for advertising agencies in the country. ADVAN is accusing ARCON of often exceeding its powers, but this is a fight that does no one any good.
The problem started in 2021 when ARCON introduced the Advertising Industry Standard of Practice (AISOP) to guide and regulate the business of advertising in Nigeria in line with its functions. AISOP, as a framework, encompasses agency engagement policy, terms and modes of payment, media rates and commission, disengagement protocol, audience measurement and dispute resolution, among others. But one key area of disagreement is the provision of the 45-day contract payment policy, which replaced the decades-long practice of between 90 and 120 days. In the event that the stipulated payment period is exceeded, as it frequently was, AISOP provides for the payment of a percentage as a default penalty to agencies to enable them to absorb their lenders’ default charges. The previous protracted payment period imposed on agencies the responsibility of reinvoicing when invoices went missing, a common occurrence. This lengthened the waiting period of their own vendors, including media organisations, which are largely dependent on advertising revenues. In such circumstances, agencies were forced to continue enduring indignities for fear of being blacklisted.
Globally, payment cycles are not at the whims of agencies, media, and advertisers, but by the minimum standard prescribed by the industry. In France, Germany, and other European countries, for instance, the payment period is 30 days. In the United States, it is 35 days, while India operates a hybrid of prepaid and balance payment within 30 days. China operates a 30-day duration. Closer home, South Africa, Kenya, and some other African countries have a 45-day payment period. The question therefore is, why should Nigeria be different?
But ADVAN’s anger would grow even more intense, following the signing of the ARCON Act by former President Muhammadu Buhari in July 2022. The law grants ARCON full powers to regulate and control advertisement, ensure the protection of the public and consumers, promote local content, and entrench best international practices. The policy stipulates minimum local content percentage in all advertisements, encouraging all organisations wishing to advertise in the country to use Nigerians as part of the critical element of the advertisement, thereby halting industry job losses as well as the annual revenue losses running into billions of Naira by Nigerian companies.
The Act thus became the extant framework guiding all industry-related transactions, including the act banning the use of foreign voice-over artists and models in advertisements as part of ARCON’s local content policy. ADVAN has taken exception to this ban, stating that Nigeria as a player in the global economy has an expatriate policy which allows for non-Nigerians to be gainfully and legally employed by Nigerian organisations.
But we find the mode of agency disengagement policy prescribed by the ARCON Act as fair. While it concedes to advertisers the power to hire and fire agencies, the policy prescribes that a client terminating a contractual agreement between it and an agency should engage in financial reconciliation and honour outstanding obligations stipulated in the contract before bringing another agency to take over. The ARCON Act contains provisions with enough potential to tackle many of the numerous challenges that have bedevilled the industry since the late 1980s when the previous law came into being.
We believe that the advertising industry will be better served if both ADVAN and ARCON are collaborative rather than adversarial. They should see themselves as partners in progress.
