Stakeholders agree that the Nigerian integrated marketing communication industry is the biggest in Africa. Chief Executive Officer of X3M Ideas, Steve Babaeko, differs. He describes it as subsistence compared with the Kenyan and South African markets.
Babaeko, a leading creative director in core advertising, also argues in this interview with Senior Correspondent, Goddie Ofose, that advertising in Nigeria may suffer because of the elections next month.
Factors that shaped the industry in 2014
The advertising industry in 2014 was neither black nor white. It was somewhere in between. One can say that many positive things happened, and some things happened at the macroeconomic level that were not so positive which affected the integrated marketing communication (IMC).
The positive things include the emergence of young agencies. There is no time in our history when you see young people coming up and competing with the more established players. These new agencies include Noah’s Ark, Etuodi, and X3M Ideas.
The new generation agencies came out strong in 2014 and I find this commendable, unlike in the past when it was always the same old players calling the shots all over the industry. This is one of the biggest positives of 2014.
At the macro level, the drop in oil price and its effects on the economy brings about a sagging effect economy and the government is telling us to brace up for a tougher economy. This will definitely affect the whole business climate and of course the advertising segment is not insulated from what happens at the macro level.
Again, politics seemed to gain the loudest share of voice, especially in the last quarter, so it means that if money is not being spent at the centre it means more money is going into politics and political activities.
Therefore, the economy will slow down because everybody is holding unto the cash at hand. These are the two indices I saw both on the negative and positive sides.
New generation agencies and paradigm shift
It is a normal shift, the kind of seismic shift you are seeing in Nigeria is normal everywhere else. If you look at the American, United Kingdom or European markets, there is always a cycle that a new agency emerges – Crispin Porter + Bogusky, Droga 5 and the likes.
There is always the rise of some new agencies that is giving everybody sleepless nights. This business is about regeneration. What the new agencies are doing, which in my own opinion is different right now, is their approach to business.
Though I cannot speak for the other agencies, in 3XM Ideas, the way we look at this business is totally different from what most of these other guys have done in the past.
Let us isolate advertising from the business landscape. We dismantled the business model of advertising in Nigeria and we put it together again. How did we do this? We looked at the big picture.
In creating communication and not just advertising what are the things you need? You need the brain power for strategy, and creative fire power to turn the strategy into workable ideas, you need music and production.
We took this business approach and we set up business units. Usually with normal advertising agencies they only control the strategy and the creative development. We own a record label and production company and some other collaterals that go into developing communication. It is therefore easy for us to be in control of some of the other allied elements in creating communication.
From that basic point of view, we have actually revolutionised this market.
Agency life cycle
The truth is that every brand has a life circle. But what happens is that you need to infuse an element of regeneration in building the brand.
If you are a brand and the bulls-eye of your consumers is 30 years and above, you would be the most foolish brand if you don’t create a pipeline that leads to people who are 18 or thereabouts to begin to build the next wave of consumers for the brand.
When you create the pipeline, you have corrected what would have been an aging crisis for your brand down the line that supplies your main demography. It is the same thing with agencies. Agencies are not about building or structure, it is about people.
Believe me, this business is not for old people, it is for young people. As an agency, if you want to live long, keep regenerating your people, keep the pipeline of young people coming into your agency fluid and open.
An old man can have an agency, yes, that is why we have agencies of 100 years and the like out there, but they keep regenerating their people. If one fails to do this, the agency will die, no two ways to it.
Election year and impact on the economy
In the Western world, election time is always a boost for the advertising industry. Saatchi & Saatchi handles the Labour Party’s multi-million pound campaign in Britain.
In Nigeria, it may not be so, as the bulk of campaigns are run and executed by AAAN (Association of Advertising Agencies of Nigeria) agencies. That is why we see horrible campaigns and terrible posters and election materials.
At the macro level, holding money for elections will impact on the larger economy. Whether the economy captures the money in the hands of politicians or not, it means there is certain money that would have otherwise been injected into the system that would have made the economy more buoyant that is missing.
If it affects the economy it will affect the advertising industry. Advertising is not living in a silo insulated from the larger society. As they said in show business, the show must go on no matter what the economy brings.
Advertising is here and people need advertising, and it is actually when the economy is down that clients need to advertise the more, because people need to be aware of their products and services. This is what has kept the industry going.
Shake up in advertising industry
It probably will happen. Right now, there is a seismic shift happening with younger agencies emerging. The people who were in the fore front are no longer in the driving seat. A new power block is emerging. I will not be surprised if there is more shake up in 2015.
Now, for the first time in a long time, we are seeing mergers and people buying into an existing company in the industry. We are likely to see more of this in 2015.
What we have had were big fishes in small ponds for a long time. People don’t want to be smaller fishes in bigger ponds and that is the kind of arrangement that pays. People like Steve Omojafor have talked about merger but no one was taking him seriously. It is happening now and I think we are going to see more mergers in 2015.
Industry phobia for going public
Even in Kenya, there is an advertising group that is quoted but it has not happened here yet. I will tell you why. What we have done here is subsistence advertising instead “mechanised” advertising. People create business for themselves and their family, unlike the WPPs of this world, which are quoted companies.
However, it takes time to grow above the mentality of ‘small agencies for me and my family’ and say if you really want to play in the big league you can open it up for others to take up shares on the market.
Some don’t even want to give their staff who worked for them up to 15 years any shares not to talk of listing. It is about mind-shift and this needs to happen to the advertising entrepreneurs in Nigeria to get the industry to that place we are talking about.
Reasons for anticipated shift
At some point the economy will open up more. Nigeria is the biggest economy in Africa. Power generation is very abysmal compared with most of others on the continent.
If we are able to get electricity right and the level of output goes up, the economy opens more, then more people will come here to do their business. Already we have vehicle assembly plants and then we will have no choice than to run this business as it should be run.
Now with APCON (Advertising Practitioners Council of Nigeria) reform, there is a limit to which foreigners will buy shares in the advertising industry. Maybe that law will change when the economy opens up. For this to happen, we need a massive amount of capital.
How much is the capital base of most agencies in Nigeria? That is why we gave the example of subsistence and mechanised farming.
APCON perspective
I respect APCON, and there is need to protect the local industry. However, water will find its level. The industry needs to be protected.
I know what the law is trying to say because the outsiders have heavier war chest to run riot over the entire industry, buy up any and kick out the ones they want, and bring in foreigners to work here. Then we might have killed the baby before it has the chance to grow up.
But at some point the baby needs to grow up and stand on its own and it won’t need too much protection. I look forward to that time when we will be able to say “maybe we have outgrown this law and we need to upgrade it.”
Lack of schools to close knowledge gap
Unfortunately, we have not been able to kick off the advertising academy. The AAAN had this vision many years ago, but in fairness to the new administration, they are working so hard to ensure the school gets off the ground.
What I have done in past six to seven years is to go the University of Ibadan (UI) and give lectures and do workshops. There is a young man who now runs a small digital agency who was part of a workshop I did at UI many years ago. I understand the need to create the pipeline that will create talents.
The talent pool is drying up. As an agency today you are looking for copy writers, you are going to look for months. There are no copy writers anywhere and it’s just about the short sightedness of not creating that pipeline that brings young talents into the industry.
What we do is to use the small clout that some of us have to tell young people that there is an industry called advertising in Nigeria that provides employment where you can catch so much fun building brand and you can also earn a decent living from it.
The young ones need see us, look up to us, and get excited wanting to join the business.
Problem with affiliation
Affiliation is like marriage. Nobody will just walk into my agency and take it without showing me what he can offer. I can’t talk to you if you cannot offer me something different that we are not doing.
I have decided that I will take some of the best practices of old agencies to run my business and learn from their mistakes.
What we did wrong in 2014
What we did wrong was that we did not join the bandwagon to do anything for any business. For instance, I cannot join anyone to defraud the citizens. For me to support your business I must believe in what you stand for.
If we had jumped on the bandwagon we probably would have made more money, but it’s all about value and principles.
We must share values. We have dropped accounts either because the value was not just right or the client is not willing to partner. We want to be a partner, we don’t want to be anybody’s donkey.
With the brands we work with now, it’s like equal seat at the table, we are partners. That is why you see the progress in those businesses.
An agency dictated to is like sending a soldier to war with his hands tied behind me. We have been fortunate enough to have found valuable partners to work with. But the ones who would not allow us do what we are trained to do and what we believe in, we gladly resign such businesses instead of roasting in there and saying we’ll manage.
What we did right in 2014
The agency awards and personal awards are probably some of the testimonies. We could not have gotten those awards without having done one or two things right.
Most importantly, when I see the awareness increase and the bottom-line go up on the part of my client, when I see our partners towing the trajectory of growth, I feel happy for the things we have contributed.
There is, however, room for improvement; especially going forward in 2015.