Indicators that drive integrated marketing communication (IMC) were lacking in the first quarter of the year (Q1). A lack of private sector participation because of the election made it difficult for the industry to count gains.
Senior Correspondent, GODDIE OFOSE, speaks with highly placed practitioners and highlights what could be done to prevent a recurrence in the 2019 election cycle.
Morning determines the day, and so it is in business, particularly in advertising and communication. The first quarter of 2015 was slow and uninspiring despite the huge volume of political campaigns thrown into the media space.
Analysts blamed the lull in Q1 on the focus on politics instead of business. Outside election years, the first quarter is often promising for new business decisions in subsequent quarters.
By May 2013, the first quarter of Above-the-Line (ATL) advertising expenditure had hit N26.6 billion (26 per cent) of the entire ATL advertising expenditure that year. This figure was driven by private sector initiatives.
But ATL ad expenditure by the end of May 2015 may be less than one-third of the volume two years ago.
Assessing impact of Q1
Advertising Practitioners Council of Nigeria (APCON) Chairman and SO&U Group Managing Director, Udeme Ufot, recalled that excessive focus on politics in Q1, which slowed down advertising activities, affected also other sectors of the economy.
Investors were cautious and adopted a wait and see attitude pending the elections. However, a few marketers remained bullish and continued aggressive campaigns to woo consumers. This was noticeable in telecoms and banking.
For some analysts much of the quarter was uneventful except for political communication guided by politicians and their allies.
Association of Advertising Agencies of Nigeria (AAAN) President and TBWA Concept Managing Director, Kelechi Nwosu, said the main advertising sector adopted a “wait for the elections and see” approach.
The noise and cluster caused by politics were sufficient incentives for real advertisers to hold their fire.
However, Towncrier Managing Director, Kayode Olagesin, explained that the industry was vibrant as a result of political advertising of which the media was the biggest beneficiary.
Creative agencies, production houses, staging companies, and digital agencies also benefited, said Olagesin.
Likewise, experiential marketing benefited but had to compete with politicians who cornered staging and logistics deployment for roadshows and rallies.
IMC as a whole enjoyed a significant boost in Q1 as a result of political spending. The beautiful thing is that it cascaded down the line to even the smallest suppliers.
Despite the lull, especially from the private sector standpoint, Ufot said “it should also be mentioned that some agencies have benefited significantly from the unprecedented spend by political parties and their contestants.
“The biggest winners have been the media some of whom have sold special positions at amazing premiums.”
Challenges that slow down activities
Sources in top multinationals confirmed that marketing campaign budget in Q1 was sliced by over 30 per cent, and this may have impact beyond the quarter.
Though the slow pace in Q1 was largely attributed to political campaigns, Olagesin said the reduced spending was understandable and expected because of the uncertainty surrounding the election.
“Many are pleasantly surprised at the peaceful turn of events as the predictions, going by our antecedent, were for a less than peaceful election. So, most clients played it safe and held on to their monies,” Olagesin added.
He said projection for the year is optimistic, even though the economy is expected to slow down a little; with a population of over 150 million people Nigeria is a big market and various players will want a piece of the action.
Public Relations Consultants Association of Nigeria (PRCAN) Vice President, Muyiwa Akintunde, said politics dominated the period and brands had to be mindful of investment knowing that any campaign would get drowned by political noise.
“Planning also hasn’t been made easy by the delay in passing the federal budget. The crash of the naira has necessitated businesses pruning down on spending, and communication is usually one of the major victims whenever such a situation arises,” he said.
Others cited the poor economy, dropping value of the naira, fear of advertisers being crowded out of media space by political messages, and low purchasing power caused by inflation.
Tale of two halves
The lull in Q1 sent a wrong signal to the industry and some stakeholders remain apprehensive.
Though fears are being allayed by promises made by the incoming administration, a senior practitioner who pleaded anonymity warned that “a promise is only a promise until it is fulfilled. The cost of doing business in Nigeria is too high and going by this the lull may continue.”
Regardless, Ufot insisted that “it would not be out of place to assume that real economic activity would kick off towards the end of the second quarter or beginning of the third quarter.
“It appears to be a year of two halves … one half of low key activity, and the other (hopefully) of frenzied hyperactivity in the bid to catch up on lost opportunities.”
A lot will depend on the economic upturn, Nwosu added, noting that cautious optimism in the stock market indicates a steadily rising and more inclusive economy. “Deploying AAAN agencies by the government will expand our revenue from an industrywide point of view,” he stressed.
Analysts said the environment is a lot more optimistic as the peaceful process ushering a change of guards from an incumbent leader is evidence of Nigeria’s democracy being strengthened.
“This is very good for Nigeria and I expect that clients will want to take advantage and open their wallets. It is difficult to predict but I will err on the side of optimism,” Olagesin said.
For Akintunde, it will be tough for the market to recover from the first quarter setback.
It will be a tough season, he said, but the shape and direction of the new administration will either engender hope or despair. “Real changes for good or for ill are not expected until about the third quarter of the year.”
Buhari boost
A new government is seen a time for positive changes. It is expected that the economy will benefit from the change at the federal level, so businesses are optimistic.
Incoming President Muhammadu Buhari has not made a statement on IMC, but there are plans to grow other economic sectors through policies.
The stock market and even the foreign exchange (forex) market responded positively to the peaceful election. The absence of violence after the ballot inspires confidence, likewise the anti-corruption stance of the new administration.
One can expect that Foreign Direct Investment (FDI) will continue to flow Nigeria’s way as foreign portfolio investors return to the profitable Nigerian Stock Exchange (NSE).
Olagesin said: “All of these will have a positive effect on the economy. If they address the gaps in the ongoing power sector reforms we can expect to start enjoying improved power supply with a significant effect on the cost of production.
“A growing economy will impact advertisers positively and this will cascade to the IMC industry.”
On whether the incoming government would help galvanise the sector, Ufot said: “I am yet to hear any comments or policy pronouncements by the APC (All Progressives Congress) in this regard.
“It is certainly rather early to say. I would, however, assume that a party that has swept into power through a masterful management of the media would have some plans for IMC as a key strategic tool going forward.”
Experts counselled that for Buhari to instill confidence in investors, he should first restore the confidence of the international political and business community in the country.
“I expect the new government to be prudent and have constituted team that will be determined to re-engineer the economy,” Akintunde said.
Role of APCON
Apprehension is high in the industry over the implementation of the new advertising code. Foreign agencies complain about some sections of the 5th code but it has been gazetted, and that means its implementation is inevitable.
APCON is first and foremost a regulator and should therefore ensure that all practitioners operate by the code of practice. APCON is expected to monitor and ensure full compliance and sanction errant practitioners, Ufot assured.
According to him, APCON is aware that the strength of the industry hinges on the prosperity of its stakeholders and would ensure a more rewarding environment.
Olagesin reiterated that Ufot, the new APCON Chairman, is an experienced practitioner and a former President of the AAAN who would bring his experience to bear on APCON.
Ufot has his work cut out, as the recent leadership vacuum in APCON showed what can happen when there is a gap in policing the industry.
There is also the need to continue the good work of his predecessor, Lolu Akinwunmi, in bringing the industry together to forge stronger ties. A lot can be achieved through unity.
One observer said Ufot has earned his rank in advertising, and “given the reforms by the past regimes, he and his team are expected to improve standards and move the sector to greater heights.”