Steve Babaeko is a consummate entrepreneur and astute player in the advertising industry. He is the group chief executive officer of X3M Group, which is made up of X3M Ideas, X3M Music, and Zero Degrees, among others. When he speaks, the industry listens. In an interview in his expansive office in Lagos, he explains that 2019 was a difficult year for businesses in Nigeria but 2020 offers glimmers of hope for Nigerians.
Babaeko has made incursions into several African countries. His Nigerian office accounts for the whole West Africa because the country represents about 75 percent of the entire West African gross domestic product (GDP).
“We are in South Central Africa, operating from Johannesburg, and Zambia covering Malawi, Mozambique and whole of that south central African region. This year, we will have the opportunity to move into East Africa that will cover Kenya, Rwanda and Ethiopia, but for now, let keep our fingers crossed,” he says.
He explains that his expansion into several African countries objective is not basically to make money but to do what other people think is impossible.
The Nigerian economy generally underperformed in 2019 owing to global and local headwinds. Nigeria is world’s poverty capital and unemployment rate is 23.1 percent, according to the National Bureau of Statistics (NBS). These indices weakened the capacity of Nigerian firms which should patronise the advertising industry.
In spite of these, X3M Ideas withstood the storm.
“The number could have been better but we are one of the few agencies you can say survived and withstood them,” he says.
“Again, careful planning, good fiscal policy and cost management drove up productivity of the team. It is not a disastrous year for us, though it could have been better. But again, we are part of the micro economy; whatever happens at the macro economy has a way of trickling down to us,” he explains.
He says what compounded the problem of the advertising industry in 2019 was that most of the usual spending that happened within the political cycle did not go mostly through registered Association of Advertising Agencies of Nigeria (AAAN) agencies.
“I think it is because of lot of backdoor deals. Some foreign PR companies were contracted to the detriment of the local industry. I think it is high time the government looked into this. Each time those activities happened, the local industry is hurt,” he says.
“If this government is serious about promoting the local contents and industries, they must look into the spending that happens during electoral cycles so that registered advertising companies in Nigeria can get the lion’s share of such spending,” he suggests.
Babaeko thinks it is all about taste for the foreign things, which has overtaken Nigerians as a people.
He believes that the closure of Nigeria-Benin border is good as it forces Nigerians to consume local rice and get used to the taste, instead of the obsession for foreign rice and other products.
“It will be a welcome development if they could do the same for advertising and related services,” he recommends.
He points out that border closure is a commendable government policy, but it was misconceived due to poor communication and advertising.
“One thing that affected the consumer confidence late last year was the border closure. For this, the government needs an effective advertising sector. If we look at the goal of the border closure, it is very sound strategy, but if we don’t find a way to communicate it effectively to the people, then we start to have problems. People just think this government is wicked and wants to punish them simply because the communication is poorly handled.
He urges the government to ensure that professional advertisers become part of the policy-making process.
“The advertising industry is being overlooked in this part of the world, but outside, I don’t think there is any year that UK economic case is discussed and somebody like Sir Martin Sorrell opinion is not sought as to the direction the economy will go. This is necessary because we are the people who interact with big players within sectors of the macro economy— from the manufacturing to the farmer, to distributors to Fast Moving Consumer Goods and so on. They are our clients, so the first way to check where the wind of economy is blowing is from the advertising space because we know who is reducing spend, who is increasing spend, so you can use that to build up data to say ‘this is what happened last year, this is what is likely to happen this year.”
He urges the federal government to set up a council for the Advertising Practitioners Council of Nigeria (APCON).
“You cannot leave that sector grounded for three to four years without a council. It makes no sense,” he notes.
“There is a government Act that set up APCON and to see that it is the government itself that is flouting that Act, for me, is bewildering,” he adds.
He says despite the hue and cry about digital advertising, human capacity for creativity is what will sustain the industry. “The new media of today will become the old media of the next three years. Any agency that wants to see its business grow needs to know how to integrate technology into what it does because that is where the budget will continue to go. In Nigeria, because of the peculiarity of our own social economic structure, we probably will get there. However, digital technology and traditional advertising will still remain side by side until we are able to clean up some of the challenges we have in our infrastructure and social space,” he explains.
Babaeko says though this is the period he has seen the highest number of middle-class Nigerians flee the country, he remains confident of Nigeria’s potential .
He has plans to list his business on the Nigerian Stock Exchange in the nearest future.
“Honestly, if I have one last goal in my pocket list, I want to be the first agency that will list in stock exchange. I know it is going to take a bit of some kind of mergers and acquisition. We are really open and ready for some of those conversations. Like I said, we are meeting some potential investors in Switzerland in couple of days. For some of the expansions we are doing now, we require a lot of money. I keep telling people if I have a war chest of N100 million dollars in my pocked today, I will turn Africa upside down as far advertising is concerned. We are looking forward and optimistic, we have built a brand that people will be excited to invest in,” he says.
Babeko is now a farmer. He plans to be part of the contingent that will feed Africans in the near future.
“I have close to 50 hectares with palm trees in Kogi State. By the end of this year, it will be one year, and then we want to start bringing the machines from Malaysia that will be doing the extraction. I am not even pretending that it is easy because I can see the challenges. Now, we are setting up irrigation systems that we got out of Israel. We try to see how we fuse technology into traditional means of farming. We are really excited,” he further says.
