Advertisers slow outdoor media investments on rising costs 

Investment in Nigeria’s outdoor advertising platforms by patrons who typically commit over N150 billion annually has slowed considerably, a development which is hitting the operators hard, due to a weak naira and rising cost of doing business.

Poor electricity supply, multiple taxation and other challenges that “out of home” advertising practitioners encounter, in tandem with the pressures on the economy occasioned by low oil price, sliding naira value, restrictions on forex and difficulty to access raw materials for production among others, have coalesced to frustrate businesses, including outdoor media industry, experts say.

A top operator in the Out of Home industry told BusinessDay, yesterday, that business is down by as much as 60 percent due to the pressure on the economy, which is equally affecting advertisers.

Presently, he said, companies are cutting down costs and downsizing workforce due to the state of the economy and this has affected marketing budgets across media platforms.

“With the exchange rate at about N200 at official rate which is difficult to access and about N350 to a dollar at the parallel market, it costs us double to import equipment to service our LED billboard platforms”, the operator, who prefers anonymity said.

According to him, even when outdoor operators did not increase advertising costs on platforms, there were vacant billboards across the country, which suggests the severe effects of the harsh economy on advertisers.

“If advertisers are not able to pay at old rate, then we can’t increase costs,” he quipped.

He said the ability of billboards to promote products, and equally light up the city has become difficult as a result of the impact of the economic situation on the industry.

When contacted on this development, the former president of Outdoor Advertising Association of Nigeria, OAAN, Charles Chijide, agreed that the viable roles the out-of-home businesses play in the overall development of the society as consumer protectors and brand projectors, are being frustrated by the difficult economic situation.

Assessing the low advertising trend on some media platforms, an analyst in the media buying business said, there are a few companies especially some of those operating in the telecommunication and breweries sectors that can afford to spend on Out of Home.

He said the economic situation has pushed firms to seek for cheaper and more innovative ways of reaching their audience, as the struggle to swim against the turbulent economic currents gets underway.

“Firms are asking for value and ROI and ability to measure impact of their advertisement. Also they are looking for cheap methods as investments in Outdoor and some other platforms are experiencing a price surge”, he said.

In the last six years, Out of Home media share has been declining at Compound Annual Growth Rate (CAGR) of 6 percent.

According to research by Media reach OMD, in 2009, OOH recorded $167million, which is 27 percent of the entire $614 million, all media spend.

The following year, the share went up to $188 million representing 29 percent of $642 million of total media spend.

OOH share declined in 2011 to 27 percent of $646 million of entire media spend, it declined further to 19 percent of $589 million in 2012.

In 2013 and 2014, the OOH share remained at 22 percent of $649 million and $514 million, respectively.

This performance is not different in the entire African region as the OOH share declined from 10 percent to 6 percent in 2013.

 

DANIEL OBI AND LOLADE AKINMURELE