Could you assess the ad industry in the first quarter vis-a vis 2012
Yes, 2012 started on a rather rough note with the strike and sit at home against 2013 when we opened the year with stability and with a lot of expectations that things will be much better than the previous year.
In summary, Q1 2013 opened up as brighter year of expectations. It’s the quarter the APCON reform should have taken off. That apart, there is a bit of consolidation of stability of 2012. The later part of 2012 has moved into 2013. For my experience, some clients have opened the year with the intentions and efforts to open up advertising projects. Pitches have been thrown open. In fact, Q 1 has been very active. These activities point to much more prosperous year. Activities will increase and I believe financial performance will improve as we move to the end of the year.
What will inform the increase in activities?
2013 Q1 has started even with a lot of things we can see or call start-ups or beginnings. If you move them to Q2 and Q3, you expect to see consolidation and performance. For example, in Q1 if there were five pitches, and you won, then in Q2 you start the executions and in Q3 or Q4 you are looking at your financials. Then we can look at what in real term influenced the upsurge in activity. I would also think that what has made that happen is increasing competition among clients. What you find today is that competition was hitherto narrowly defined but now is broadly defined. In the past you say to yourself, if you are in any business, you see your competitors as similar businesses, but today the definition of competition has expanded and you see yourself tackle competition in a way that is broader than hitherto.
For instance, you are in land transportation and you don’t want to look away what is happening in air travel and sea travel. Again, if you are in any industry you should not look at competition in that industry but what else will compete with share of the consumers’ pocket. You find out that in real terms there is no economic growth. Theoretically, they will tell you that Nigeria is growing at 7 percent; we are not by economic growth we are by economic development. If there is no development, the purchasing power of the consumer in real terms does not improve. What I see happening is a declining in consumers purchasing power which means that every body producing in this economy must fight and that fight is increasing. The client is looking for more efficiency, more profitable investment in communicating their offering to the consumer.
Are you saying clients’ fight is increasing more business for the ad industry?
Absolutely, and there should be more fight within the market. As they fight locally, foreign investors are coming in, how is this impacting on the industry and how are you prepared for that upsurge.
It is often said that Africa is, perhaps the only growth opportunity globally for multinationals. They tell you that Europe has stabilised or has attained plateau and therefore the rate of increase on returns has declined. It is only Africa they are looking up to for the improvement in profitability. There are a lot of initiatives to grow Africa. Now, they are coming and when this happens they further intensify the competition. They bring in better technology, improve products and other ways of doing things in processes and procedures. If you compete in that environment where your competition is bringing more expertise, you know that you cannot sit down. The guys are coming in even with more money to support marketing communication initiatives. So, the local operators must be on their toes. I see the competition increasing and intensifying and that will further help our business.
Lets look at affiliations between African agencies with their foreign counterparts, will that be redefined?
There are two concepts involved there. Globalisation is one and profitability is another. Globalisation means for example, no country will possibly survive the current operating environment by closing up her doors against foreign investors. So, they have to open up and there are several treaties and pacts several countries have signed. Nigeria has been a key player in many of those pacts and treaties. That means that we are part of the globalisation concept and we are bound to play fair. So, our own doors also within reasonable limits must remain open for investors to come in to any industry.
Now, we are talking about the ad industry. You know what has happened in real sector. The same thing is expected to happen in the ad industry. Now, how is it playing out in our industry. Not that the foreign guys want to affiliate us. Why should they affiliate with us. It will be like a tail wagging dog. That is not the way it is going to be. What they are interested in is push strong presence in Africa. In pushing their profitability objective, they are also looking at Africa where they can get growth. But how will they come, that is issue. They are not coming by affiliating with us, they are the mega agencies and globally they are more recognised in the advertising and that is why we are affiliating with them. How will they come. They have options. First set up on their own, secondly strengthen the existing relationships with agencies that are flying their flags or perhaps pitch tent with another agency. They can say that since growth is coming from Africa, we are interested how the jobs by the agencies representing them do the jobs.
In strengthening the relationship, do you think they will ask for more equity holding?
I think so. It means that they want to have more say in the way the business is run. Hitherto, most affiliations today, either they have minority share or they don’t have any at all. One of the issues we must be realistic about is that the multinationals also prefer multinational agencies. If a multinational is strengthening its own foothold in Africa, the necessary partner should also strengthen its relationship. How do we then work in the market when the partner is not there or not strong on ground or does not in essence lead the agency that is called by its name. You can see the complexity in the relationship.
This takes us to APCON reform. What is your view on it?
My view is that it is right. This is because at the stage of our development, it is okay. Presently, what we find largely is zero percent equity. From this to 25 percent is a very nice way of starting. I think that we need to take things gradually. I believe that you cannot just come from where you have nothing to have everything. I prefer we have a mutual understanding that helps the interest of both parties, even as we develop.
Could you give more explanation?
Imagine agency A affiliated to global network B. The B has a client C. Now, C and A have been working together in a country. Now, B says that because C which is the client is getting stronger that it, as the agency wants to be closer to it. It is talking to A on how it can be stronger. A is requesting for more training and so on, or to increase the returns for B for the fact that it is bringing more business to A. Nigeria is saying that both of them can go ahead and do that but B cannot come and dominate the Nigerian environment now. And we have said you are free to establish your own business if your relationship with A is no more working. But target your market outside Nigeria.
If they must target their messages outside Nigeria, what are they coming here to do then when you have said earlier that we need them to grow sectors?
We are not saying they should not come, but what we are saying is that there is a limit to the takeover they can do at this particular period. Before now, they had nothing and we are saying we are ready to relinquish or allow them up to 25 percent. We have opened up, but to a particular limit which is our prerogative. Which sectors do the foreigners own 100 percent, it doesn’t happen.
Why then does NIPC say that foreigners can own up to 100 percent equity?
I believe that, but if it so said and it is not happening does that tell you that it is realistic. The reform is the fifth of the ad industry since APCON started.
Pitching has been an issue in this market, how is the industry handling it?
It is not exactly a strong element of the reform because there is nothing to review about it. The position on pitch fee has already been there. I think that fair is fair, if you call somebody to attend pitch, he should be paid. The industry is strong on the pitch fee. If it gets to the attention of AAAN and the body alerts members that the client will not perform, and largely most members will comply.
Can you let us into Rosabel and its visions?
We have been operating for 35 years. That makes us first set of really indigenous ad agencies to open shop in Nigeria. We have been the force to reckon with. It is an agency that has contributed so much to the growth of ad industry. So, many great brands have been building from Rosabel and fantastic jingles including First Bank, Tom Tom and Ecobank campaigns. It is an agency that is said to be keeping its own. You will see people who have been here for long. What we are doing now is that we are making the long timers stabilise in the business and bring maturity and also infuse young talents into the system to bring the spark and ensure the future of the organisation. We are benchmarking global standards.
Daniel Obi
