The problem with Nigeria’s advertising industry –Ufot

The problem with Nigeria’s advertising industry –Ufot
By Goddie Ofose on Dec 14 2013  

This article was culled from

What kind of relationship do you have with your partners? Is it correct to say that when company sets up a local brand, the foreign company takes over total control?

It is wrong; it is simply a question of how the relationship is structured. In the first instance, we are a member of the Saatchi and Saatchi global network. We have 154 offices in 84 countries. We are not owned by Saatchi and Saatchi; they are technical partners through an affiliation relationship.  It confers a lot benefits to us in terms of expertise, exposure, support but we control and manage our business. Where we have to jointly manage certain brands, their input is important because they have custodianship of some of those brands. They are held accountable for those brands in Nigeria. So, they have influence but when it comes to the day to day running of our business in Nigeria, like any other agency, we have our own board that the company reports to and all  we have with Saatchi and Saatchi is  a technical partnership. We therefore relate in terms of the work that we do for clients that we jointly manage or for those clients that are locally Nigerian brands when we choose to invite them to support us.

The brand sounds like a luxury brand. In view of the economic realities, a lot of companies are forced to cut down on their budgets. Are you also adapting and adjusting to accommodate people who can afford your services?

Well, we are an agency and beyond our cost which is minimal considering what we deliver, other costs are third party cost like the cost of advertising. The money for advertising does not come to SO&U; we only get a commission. The larger part of advertising cost is not the creative agency’s cost, it is the media cost and there is nothing we can about it. Yes there are clients and there are clients; we are a fairly flexible agency. We have big clients like Guinness, Access Bank, ExxonMobil, Procter and Gamble. But we also have medium sized clients like the Southern Sun Ikoyi Hotels for example but we also have small clients whom we do some great stuff for. The key thing is that the client finds value in what we do and we can put an appropriate team to work on the business.

Sometimes we take on  businesses  because of the  kind of prospects they offer. We may not make money now but we can see that the vigilance of the business has a big picture for the future and we can therefore commit to work with them towards growing that business. For instance right now we are working for a technology company that is involved in e commerce. It is a very entrepreneurial company and we have been working with that client now for eight month without earning a kobo. It is a small business but you can see potential in the growth of that business.  Whatever we are doing with that client right now we see it as an investment. That is how we work. We value long term relationships.  We worked with guarantee Trust Bank for over 12 years before we separated in 2008.

Once we decide to work with a client, we commit fully to that client but as a business, we have bills to pay and we have staff to pay. To retain quality staff you have to pay them well.

Sometimes one sees a bill board that looks too ordinary. How does a bill board look for an ordinary person to look at it and get excited?

There is an art and a science to communication. Unfortunately I can’t get a picture of the particular billboard you are talking about but Arts are created after very exhaustive strategizing. So, what you would see would be a dot and a line on a piece of paper. You would be amazed at the amount and quality of thinking that has gone into arriving at that same dot.  Sometimes if you are not preview to the thinking behind it, you may not be able to interpret it but at the same time the work is not being done for the agency, it is a piece of communication that is intended for the consumer. So, if the consumer sees the ad and fails to connect with it, then there is something wrong with it.

When we create art, we are very clear in our minds. It is not how much we like it; we must like it to do it but the key thing is will the intended audience connect with the communication? Would it motivate them to do what you want them to do? So you can only judge a communication by the impact it has on the intended consumers.

How is advertising faring in the economic realities?

These are tough times; tough for everyone. There are probably a handful of operators who have been extremely lucky to ride the waves of this current situation and I will tell you from my reading of the market that such players can be counted on the fingers of one hand. The majority of the players are struggling; in fact most are barely surviving. It is not far-fetched. The economy is in difficulty, advertisers are few in number, and the few who are there are also struggling. The key driver for advertising in any economy is commerce and that commerce tends to be more from the end of manufacturing. Manufacturing has been having a very rough time because of the way things have been going and so there are few clients who can offer opportunity for agencies to thrive. Where we have been able to see some opportunities have been in the Telecommunications and then of course the banking sector. But how many Telecom operators are there? We are all aware of what the CDMA operators are going through. The real winners in the game of Telecoms are the GSM operators like MTN, Glo, Celtel and Etisalat. There are just four of those. How many of them would go round the agencies? In the financial services sector there are opportunities but they also have their challenges. So what you will find out is that opportunities are quite narrow for agencies and you need business to survive. We only hope that as we look ahead, investors are looking towards Africa for new opportunities because when you look at Europe and America, growth is either non-existent or flat. The one place that marketers feel they can see growth is in Africa and when it concerns the role Nigeria plays in the African economy, we have opportunities. In the last three months or so, we have been opportune to talk to two key clients who are just new entrants to Nigeria. Our hope is that in the near future the challenge we now face would be softened by the entrance of new players and probably also by the reawakening of some of the current players who are facing difficult times

What is your opinion on pitch fees since clients are not ready to comply?

Well, it is a tough one but most people agree that pitch fees are ideal because packaging a pitch is expensive business and at a time like this you give your very best, you proceed and you do so much and you get nothing at the end of the day.  On the other hand, the clients themselves are facing difficulties and they are saying if we have to put our business to pitch and we have to pay the potent rate how are we going to survive? But I think the two players can come up with a consensus situation here. While calling agencies to pitch just an overview of the industry you know who the key players are and you can call for credential presentation to determine the skills of each   and you can say, out of the six I have called let me narrow down to three at the end of the day you will have to pay only two people because one person will win the business two will get the pitch view. Agencies have also been very amenable that when clients are sincere, agencies have been amenable to say okay look let us negotiate the pitch fees. You take some of the cost and we will take some. Let me also make a point clear; those pitch fees do not in any way cover the cost of the pitch. If you even take away the man hours that are committed, in today’s pitch you can spend anything between a million and two million naira consecutively from a pitch. The clients want to see animated films so they can get their idea; they want to see the almost finished layout and all these things cost money.

But even before you get the animated film and layout, you have to do tremendous exploring. I give you an example; we had a pitch a month ago and the communication was to be targeted at Northern Nigeria. We had to mobilize a team and spend three days with them in order to understand the people you would be communicating with. Some people were in Kano while others were in Sokoto. These things don’t come cheap and the client was not paying for them but at the end of the day luckily for us we won the pitch but a huge amount of money had been spent to gather this information to enable us engage in the pitch. If we did not win that pitch it would have been money down the drain.

In past few years, the industry has not shown the kind of spark it was known for. What is responsible for the lull?

You think so? There are some exciting campaigns I have seen of recent. That takes me back to what I said about the economic situation. We don’t pick ads for ourselves we pick ads for clients. If the clients don’t have money to pay for big campaigns, there is not much the agencies can do. I also mentioned the cost of media; they pay for full page of colour advert in paper and also pay for television. Our current economic growth has not impacted on the common man, so consumer purchasing power is still weak. When consumers can make purchases, they can empower manufacturers through patronage; they make money and can produce more. Because they can produce more and make more money, they can do more commercial communication. But if the market is weak, what’s the point in engaging agencies when you know that the purchasing power is not there? So it is a tough one for agencies right now. We are hoping that things would improve.

What issues are most pressing in the industry right now?

We have talked and talked about agency survival. I think a key point of agency survival is patronage; the biggest advertiser anywhere in the world is Government. In the UK, the biggest client of agencies is the British Government, the same thing happens in the USA. But in Nigeria a lot of the Government communications do not go through professional agencies. In fact at best what they tend to do is to go abroad and bring their agencies while local practitioners have no Government. We have to look at ways to get Government to appreciate the value that market communicators can bring to the selling of their policies.  Getting Nigerians to subscribe to government vision and supporting those policies and in so doing, Government wins and by patronizing a section of the business community, we develop the economy and pump money into the system. So, the money goes round. But if you do what Government does by bringing in foreign professionals, the money goes out or if you bring in quacks to do the job the job is not delivered. One of the biggest disasters somebody has had to face is the fuel subsidy problems. The biggest gap in the fuel subsidy saga was communication. Government took Nigerians for granted. They also suffer from hang-over of the Military era.

But they did a lot of advertising.

It was not strategic. You can talk at people, you can talk with people. The communication by Government came in too late, it was not focused, it was not strategic. Elsewhere in the world, the moment the policy was decided upon to withdraw fuel subsidy, minimum six months to that withdrawal, communication could have commenced and it would be structured in layers that would be handled by professionals. The earliest communication that I saw was when it became apparent to Government that Nigerians were going to resist the policy.  Communication became a panic measure, a reaction that was not proactive.

Is it true that local agencies play stooges to their foreign affiliates?

It depends…it is a business and every business manager wants to get the best for his entity. So there can sometimes be tension but once both sides understand the mutuality of the relationship, things can be resolved. No one is playing stooge to anyone; the foreign partners do understand that no one can know the Nigerian more than the Nigerian themselves. For that reason Nigerian agencies are strong and formidable partners with their foreign affiliates and they work together.  The issue is that the local partner must be strong enough to deliver that service.

What is your postulation concerning the industry for the remaining part of the year?

I think that unless the fears being expressed of a decline into recession on account of the oil price drop comes to pass, we might just be able to coast along. We have a fairly resilient economy compared to other economies in the world.  What would support us significantly is the attraction of our economy.  For instance count the measure of the opportunities inherent in our economy. I work for a number of hotels. At any point in time, most of the key hotels in Lagos, even in Abuja are fully booked, not by Nigerians but foreigners coming to explore opportunities.  As I mentioned to you earlier, in the last two months or so, I have been in a discussion with three new entrants into the Nigerian market. There is one multinational organization opening a major new account of their business in the area of food. These are the ones I know. So, my belief is that if things do not go completely out of control on account of the oil dropping beyond manageable level, if also, our security situation does not totally degenerate, what I can see for the rest of the year would be some new entrants coming into the market to help our industries by expanding them. The gains may not be visible this year, the rewards could begin to manifest in few years’ time.
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