advertising in Nigeria

The Future of Advertising Business in Nigeria Beyond Recession: A 6 Point Agenda

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June 30, 2019
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Situation analysis/Prognosis: the business landscape has changed

3 C’s:

Client

Recession has heightened the reluctance of client businesses to spend. more on advertising with revenues (billings) being adversely impacted. Clients profitability and cash flow have also been affected and this in turn affects their ability/willingness to pay what they owe.

Capital

Financial: In parallel, Agency costs are going up putting pressure on profitability. Consequently agency cash flow is impacted. Cost-effectiveness is therefore imperative.

Human: Is the advertising industry able to attract the best people with capability (ability and capacity)? How can the industry generate passion amongst coming generation?

Competitive context

The competitive landscape is changing. The digital revolution inspires marketers to introduce new services and experiences powered by Technology. New media means that anyone these days can actually put together communication or creative work from any part of the globe without recourse to local agencies. Advertisers are increasingly looking internally and/or beyond ‘traditional’ modes to produce designs and scripts etc.

Mainstream media did not adequately appreciate how digital media would affect their business with the implication that today, digital advertisement is cheaper and more accessible and therefore more appealing to many MSMEs.

The threat from management consulting firms and technology companies such as Deloitte, Accenture, PWC, KPMG and IBM at a global level is real. According to a Forbes April 2016 article written by Avi Din titled ‘Consultants are eating the Agencies’ three-Martini lunch, many have created advertising agencies in recent years mostly though the acquisition of agencies that have capabilities in user experiences, digital marketing, design, web and mobile. They are challenging traditional agency giants like WPP, Publicis and Omnicon. Deloitte acquired the full advertising agency Heat to create what it refers to as ‘the world’s first creative digital consultancy’. IBM acquired 3 online ad agencies last year to create IBMiX the world’s largest digital agency. Expect this trend to manifest with intensity in Nigeria within the next 3 years, reinforced by emerging brand management consultancies.

The big challenge for Nigeria’s Advertising industry therefore is to be fit-for-purpose in the changing world of business, brands and technology’.

What does the industry need to do to earn greater respect and enhance business profitability?

Here are some further thoughts to build on the foregoing and hopefully stimulate some cutting-edge ideas to slice through existing paradigms:

1.    Client Engagement Model:  From servicing to partnership

Recession or not, Clients want The 3Fs-Faster, Fresher and a Fraction of the Cost- even big advertisers are looking for the best value for the lowest cost (WFA Marketers week; Morocco 2015)

Clients want Agencies to mind their business just as you mind yours. Strive to move from an Agency-Client service model to a business partnership model. There is need to go beyond just ideation and producing creatives. To have increasing impact and earn greater respect, the industry needs to ‘own’ high level business strategy. That is how management consultancies have differentiated themselves, as well as offering creative solutions and analytics. Clients need proactive business advisors not reactive ‘Yes’ men; the industry needs to have big picture mind-set. Clients are looking for the best information and strategies to grow their businesses.

To persuade advertisers to spend, there is need to show increasing value. Clients are more discerning, and the engagement process is central to convince them to spend. Show how communication strategy helps to deliver aligned brand and corporate objectives. Measurability would be critical.

2.    Cultivation of White Space: Growing the Industry via SMEs

According to a 2015 report by SMEDAN (Small and medium Enterprises Development Agency of Nigeria) and the Nigeria Bureau of Statistics, SMEs contribute c49% to GDP (Gross Domestic Product) of Nigeria in nominal terms. Whilst multinational manufacturers, local conglomerates, banks and telcos contribute the bulk of current advertising expenditure, the Industry should begin to tap into the vast opportunity that can be derived from creating specialised, cost-effective advertising for small businesses (this is also a potential mainstream media may want to look at as well: specialised services for SMEs).  

3.    Zero Sum game

Consolidation or Collaboration?

There may be need in the near future for marketing services agencies to consolidate certain services across agencies, especially media and creative; the world has come full circle and the lines between some of these services have blurred, plus many CMOs bemoan the fact that too many agencies give them a headache.

Mergers and Acquisitions should be considered. It’s interesting to note that agencies in Nigeria drive for affiliation or mergers with global agencies but the drive for such locally to exploit synergies is low, if at all existent.

4.    Leverage Technology; drive innovation

Stay on top of technologies and ideas. Seek technology or outsourced solutions to more mundane tasks, e.g. admin.

5.    Build Human capital

Invest in people for future growth. Provide exposure to global trends with local applicability.

‘The more social, intellectual and technical diversity that is cultivated the better’, (Phil Johnson, Advertising Age).

6.    Corporate governance, ethics and Integrity

Ensure highest standards of ethical conduct and integrity.

 PS. These thoughts were first presented on 14th March 2017 at an Association of Advertising Agencies of Nigeria (AAAN) leadership seminar.

Author – Lampe Omoyele

2 Comments

  1. Anuoluwapo Ademuyiwa - July 30, 2019

    Very useful insight! Thanks for sharing Uncle Lamps.

    Reply
    • Lampe Omoyele - July 30, 2019

      Thanks for reading Anu.

      Reply

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