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54 Years After, Marketing Sector Still Experiences Enormous Challenges [analysis](AllAfrica Via Acquire Media NewsEdge) More than five decades after independence, the marketing communication industry is still battling to surmount the various challenges bedeviling its activities, writes Raheem Akingbolu. The Nigerian marketing communications industry has come a long way. It started humbly like many professions, but with little or no regulatory frame work that could guide the conducts and practice of the business. Between then and now, the industry has developed to allow specialisation. Unlike in those days when it was combined in one basket; today, there is Advertising, Public Relations, Out-of-home and Experiential marketing. Over the years, the various sub-sectors have grown by leaps and bounds. Sectoral growth Advertising business for instance, has witnessed tremendous growth especially since the enactment of indegenisation policy of 1972, which lifted a few ambitious local players to assume ownership positions in agencies. Aside the contribution of the promotion decree, the volume of agency billings, proliferation of advertising firms and media houses, also indicate growth in the industry. However, the industry is not without challenges. Aside that weak regulations still stand as barrier, poor entry requirements and proliferation of agencies, are also posing challenges to the growth and development of the marketing communications industry. Stakeholders are still concerned about how the gap between the second generation agencies and the new ones has continued to increase by the day. Record shows that major advertising businesses in the market are still under the control of the top agencies with the smaller ones feeding on the crumbs. The outdoor industry has also grown from the era of pasting posters on the wall and the period of erecting planks along the roads. The trend has now gone digital; with local and international agencies making efforts to catch up with the global phenomenon. Outdoor has become a serious business, contributing massively to the GDP of economies across the nations. One of the surveys carried out by MediaReach OMD revealed that in the year 2010, a whopping N100 billion was spent on outdoor advertising in Nigeria. The figure represented a 7.3 per cent increase over the amount spent in 2009, which saw about N90 billion invested into outdoor advertising, mostly in above the line advertising (ATL) activities. While the revenues at the global level were at the region of $28 billion in 2011, the total spend in Nigeria was put at around N16.2billion. It followed almost the same trend in the year 2012 and 2013. Ironically, the continuous growth has attracted various tiers of government, which on one hand, see the industry as a veritable source of revenue and on the other hand, has developed regulations - some of which operators say are stifling the industry. After years of misconception about public relations and its practitioners, the profession is beginning to earn credibility and attract local and international recognition. As a result of this, hardly there is any company in Nigeria that has no link with one or two PR agencies to manage its affairs. The industry has therefore grown from being a department in organisations to full blown businesses. The establishment of the Nigerian Institute of Public Relations (NIPR) and the Public Relations Consultant Association of Nigeria (PRCAN), can be said to have prepared a good ground for training and regulation in the industry. A major setback in the PR industry is the minimal or even non-utilisation of public relations by political parties and candidates during elections. There were very few structured political communication campaigns properly anchored by recognised agencies under the PRCAN fold. It is believed that trained PR practitioners can help government agencies and politicians communicate their programmes better to the public. A top practitioner and Chief Executive Officer of TPT International told THISDAY that it is high time government and it's agencies saw the need to engage professionals to handle their communications to enhance credibility. Another practitioner, Mr. Ayeni Adekunle, whose agency - Black House Media is taking the lead in the area of digital PR has urged practitioners to up the ante in the area of new media to be able to be at par with global trends. Though activation is not new, especially among the operators in the Fast Moving Consumer Goods (FMCG), sector, who often embark on activation programmes to launch their products, it was not until recently that it was carved out as a separate arm of marketing in Nigeria. Two years ago, the practitioners in the business came together to form an umbrella body called; Experiential Marketers Association of Nigeria, (EXMAN). It is believed in many quarters that beyond the primary function of creating awareness, experiential marketing creates an instant bond between consumers and brands. This explains why many brands now use it more to launch new products or re-introduce existing ones. Billings If considered from the point of view of business billings and proliferation of agencies and media houses, then one can conveniently say the business has witnessed tremendous growth in recent times. In advertising industry for instance, while major players have hit the billions of naira billings mark the collective billing for the industry has since jumped over the N50 billion target of seven years ago. The growth in the entire marketing industry in recent years could be attributed to the recapitalisation exercise by banks, a directive of the apex bank, Central Bank of Nigeria and liberalisation of the telecommunication industry which broke NITEL's monopoly thereby attracting private investments in the industry. The two key economic development engendered tremendous marketing communication activities with agencies raking in millions of naira worth marketing billings. The industry which of course pre-dates Nigeria's independence with the establishment of Lintas, (Then West African Publicity) in 1928, has witnessed significant growth especially in terms of billings and number of agencies. But the sector has also seen many challenging moments from 1960 to date. New agencies Ambition and need for market expansion are among the major factors that have continued to force many practitioners to own personal agencies. Another factor some analysts are quick to refer to is the failure of owners of the leading agencies to cede some of their ownership to loyal employers, who have served them for years. It is believed that if the experienced hands in the agencies have stake in the business, it will be difficult for them to leave and start competing with their former employers. Findings reveal that leading agencies in advertising business since 70s are still the most successful in the industry. The story is however different in other marketing arms, where new ones are struggling hard to outsmart the old ones. A major contributing factor is the evolvement of new media, which has helped the new crop of practitioners to use their digital exposure to play a fast game on older agencies. In advertising, the leading agencies are not only handling the biggest volume of the business, they cut across sectors; banking, telecommunications, oil and gas and manufacturing. In a way, it seems the market leaders have earned the trust of some mega accounts so much that they handle them for decades. For instance, despite the current weak status of Lintas, the agency has remained the agency of choice for Nigerian Breweries for over 50 years. Since DDB won the MTN account many years ago, the account still domicile in the agency, same for SO & U, that has been handling the mouthwatering Guinness Account for years. Other big agencies that are controlling the market are; Insight Communications, Centrespreads, TBWA Concept and Rosabel Leo Burnett. Others are; 141 Worldwide, Noah's Ark, Prima Garnet and STB McCann. Factors militating against growth Unlike what happened in the financial sector a few years ago, when the profile of the so-called new generation banks suddenly moved up and overshadowed some of the old generation banks, new generation ad agencies have not been able to take over from the old ones. The competition between the two divides in the banking and other sectors are far different from what is obtainable in the marketing communication industry. In an interview with THISDAY, a few practitioners unanimously agreed that business management, strategy and strong business connection are major factors that have continued to work for top agencies. The Chief Executive Officer of Mediapro Consulting, Taiwo Osunsanya, described the development as a bad signal to industry growth. While commending the leadership style of the owners of top agencies, he called on owners of new agencies to stick to ethics. "It is worrisome that the old agencies have continued to be at the top but the truth is that they have gotten the strongest hands to work with and they have good strategies in place," Osunsanya said. Also speaking on the issue, the Chief Executive Officer of Media Edge, a public relations firm, Mr. John Ajayi said the older agencies have the strongest ideas and have the needed contacts to survive. Ajayi said. "The old agencies have come a long way and grow with some of the brands in the market. They have worked for multinationals, who have since regarded them as an extension of their business success. Above all, ideas rule the world; the old agencies have ideas and they are using it tio turn thins round. Meanwhile, another analyst, Mr. Gani Olowu, has recommended merger for smaller agencies to be able to compete well in the market. "The truth is that the younger agencies lack the resources to hire the best hands, they don't have the strategies and they lack the contacts. Then the solution would be for them to consolidate. They should merge to form a bigger structure. With that, they will not only compete with the bigger ones but will control the business," Olowu said. Pitch fee The controversy over payment of pitch fees by prospective clients to advertising agencies that take part in brand and media pitches is as old as the advertising industry. It has since become a major problem for stakeholders in the industry to solve. Proponents of the payment of the fee have always argued that if agency pitch fees were a standard procedure, clients would be less likely to drain ideas or abuse advertising agencies without compensation. It was the need to redefine the agency/client relationship to comply with the international standard that informed the decision of the AAAN leadership to direct the attention of members and prospective clients to the payment of pitch fee, which is a mandatory practice in the advanced market of the world. In those markets payment of pitch fee is considered sacrosanct. Until recently, it was being contested in Asia but today, report has it that it has been resolved in favour of creative agencies. In Malaysia, the Advertising Agencies Association hasn't only joined the league become of the country where it is mandatory but has gone further to limit the number of agencies being invited for pitches. Other countries where it has, in recent time become a nonnegotiable industry issue are; Singapore, Taiwan, Korea, India and Japan. The issue is yet to resolve in Nigeria because of desperate attitude of some agency owners who are ready to cringe to win account. Speaking to THISDAY on the development, the Executive Secretary, Association of Advertising Agencies of Nigeria, Mr. Lekan Fadolapo blamed some agency owners, who have, because of survival cheapened themselves before clients. "In all these, our agencies have a lot of blame because of how cheap they have carried themselves, how lily-livered they have accepted anything from their clients and how selfishly and ignorantly they have been by presenting themselves as being inferior to their South African counterparts, even when they have to manage brands they know so much about," he said. However, Fadolapo disagreed that stakeholders have gone to sleep over the issue, stating that APCON has only gone back to the drawing board with the plan to incorporate issues related to pitch fee and hiring of agencies into the ongoing reform. Need for Merger and Acquisition Corporate leaders working to expand their market share or looking to reduce costs often look to mergers and acquisitions. Though the growth strategy has remained a tall dream in Nigeria's marketing industry, it is necessary for the industry regulatory body to give it a priority to strengthen the industry. The scenario in the marketing industry is almost beyond logical reasoning. Unlike other industries where the volume of business naturally dictates the size of operators, Marketing communication agencies have continued to soar while marketing budget is shrinking. Since the economic downturn when most business owners deliberately reduced their advertising budget to prune down costs, pundits in the marketing communication industry have been suggesting the need for mergers and acquisitions. While it succeeds partially in the developed economies, it is still a dream in developing nations. However, the recent failure of the $35 billion plans to merge Public is and Omnicom turned out to be an indication that the challenge is a global threat to advertising growth. Proponents of merger and acquisition believe the strategy could be a way for businesses to bypass the time and resources entailed in achieving organic growth. A former president of the National Institute of Marketing of Nigeria (NIMN), Mr. Lugard Aimiuwu, said: "With mergers and acquisitions, growth occurs by finding complementary alliances among the competition. Although an ample advantage is associated with a successful merger or acquisition, potential risks dictate prudence before companies tie the knot". Despite the position of many experts, who see nothing wrong in M & A, a lot of factors are making it difficult to work in Nigeria and other places. According to Aimiuwu, owners' ego, the culture of building family business and lack of trust among partners are some of the factors affecting mergers and acquisitions in Nigeria. With M&A, it is believed that Nigeria will be able to boast as a stronger communication market that can position her for a leading role among other African countries. Copyright This Day. Distributed by AllAfrica Global Media (allAfrica.com). |