Nigeria’s multi billion naira outdoor advertising industry spend has continued to dip as the industry’s total billings decline by estimated 50 percent in one year, on account of rising rate of vacant billboards nationwide.
Tunde Adedoyin, president, Outdoor Advertising Association of Nigeria (OAAN), told BusinessDay that business for the industry had been very bad this year, saying judging from OAAN members’ indications and complaints, about 50 percent of businesses had been lost in the last one year due to recession, increasing strict government regulations and tariff restrictions.
MediaReach OMD had in a report disclosed that the outdoor media spend, which was N7.4 billion in 2006, enjoyed its peak between 2010 and 2011 when the figure rose to N28.6 billion and N28.1 billion, respectively. The report revealed that the feat declined from N20.5 billion in 2014 to N20.1 billion in 2015, apparently due to economic downturn and government actions.
The 2015 figure represented 21 percent of N97.9 billion total ad spend for above-the-line channels in 2015.
Adedoyin, who is president of about 80 members of OAAN, estimated that the struggling industry had actually recorded further declines in its billings this year on account of cancellation of contracts by ad companies and outright non-patronage resulting in plethora of vacant billboards around major cities in Nigeria.
Adedoyin, who attributed the industry’s ordeal to recession and government policies, which have adversely affected corporate organisations and impacted heavily on their ad structure, expressed worry on the surplus of vacant billboards around the country.
“Recession has led to huge cut in advert budget this year leading to over 50 percent vacant billboards in Lagos, Abuja, Port Harcourt and Kano zones alone, which are our primary markets,” he said, estimating that the industry had lost over 70 percent in secondary markets.
According to Adedoyin, the present administration’s economic policies are not helping issues as these have slowed sales, “ordinarily, companies would find it difficult to increase ad budget if sales are not improving.”
On the surviving strategy for the industry, he said players were cutting cost, laying off staff. “It is a pity we have to do this,” he said. “Because we are losing businesses, our employees are at the verge of also losing their jobs and one of the multiplier effects of the emerging scenario is that the already populated unemployment environment will become more challenged,” he said recently.
Four months after Biodun Shobanjo, chairman of Troyka Group, suggested mergers and acquisition as a rescue mission for the industry in this time of difficult times, the industry is yet to embrace it. But Adedoyin further said, “it will happen. When small firms see that they are not surviving they will seek for mergers. I think it is going to be a gradual development,” he said.
Shobanjo, who spoke at OAAN 10th poster award in Lagos in June this year on ‘Indices of a vibrant economy – Outdoor advertising a catalyst for growth,’ underscored his message 10 years ago at the same industry award when he advised them to be firm in their struggle and also innovate or lose the industry.
He specifically told the operators to form bigger firms by merging in order to withstand storms. “When an entrepreneur owns two billboards, he or she probably feels that it is good for him or her. Imagine if 10 of such people were to merge. They therefore don’t need 10 CEOs. Some of them can go and do something else while they get their dividend every year,” he advised.
Shobanjo believed that it was due to the plethora of one-man business in the outdoor industry that sometimes advertisers feel they were doing the agencies favour, when it should be the other way round.
On various challenges confronting the industry, including state government actions that tend to frustrate the industry, Shobanjo tasked them to rise up and fight their course. “I am amazed to see people who cannot fight for their rights, regretting that OAAN unfortunately belongs in this category,” he said.
Assessing the threats the industry is faced with, Shobanjo wondered how the operators are staying afloat in the troubled waters saying that for the fact that operational challenges remain the same in Nigeria, no global Outdoor firm worth its name will want to practice in this country.
He listed some of the challenges posed in the industry to include revenue loss due to multiple tax by some states, cut throat discount by advertisers, indiscriminate and regulatory taxes and charging by government agencies, charges on unoccupied billboards, delay payment by advertisers and government agents refusal to pay for services.
This is why, according to him, Federation European Publicity Exterior, the international global body representing Outdoor owners and other stakeholders in the industry had in its May report on Africa and Nigeria specifically, wrote that legislation and indebtedness to the industry are killing the industry.
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