Monday, 18 February 2008

Advertising agencies in search of new business model

By Kabir Alabi Garba

THEY abandoned the comfort of their offices in Lagos and headed to Ijebu-Ode in Ogun State where they spent two days strategising on how to re-position advertising practice in line with trend in the contemporary world.

They called it Business Retreat and in attendance were 76 delegates from member-agencies of the Association of Advertising Agencies of Nigeria (AAAN). Held at the newly built conference hotel, Ijebu-Ode between February 7 and 8, 2008, participants dispersed from the meeting with a resolve to herald a strong re-branding campaign for AAAN.

Such exercise, they argued, is long over due. Their belief was that it would not only enhance professionalism, but also engender better appreciation of the profession, especially by the users of the advertising services.

Another resolution is the need for a virile training academy for the industry to grow talent and capabilities. This is in addition to setting up business support services unit within the AAAN to member-agencies to upscale the practice.

Government was specifically called upon to stimulate growth and development of the advertising industry through the creation of an enabling environment that will protect local agencies and other businesses as a way of staving off foreign competitors. They also agreed to encourage protocol for clients desiring to change agencies including a well defined pitching process.

The business, they submitted, require huge capital base, the association would therefore, set up criteria to be redefined to match what is obtainable in most developed countries. Henceforth, strict enforcement of AAAN Code of Conduct would be pursued. The association is also planning to recommend a fee structure as the preferred mode of agency remuneration by clients.

Above all, part of the new thinking is to foster viable relationship between AAAN and other sectoral bodies such as the Newspaper Proprietors Association of Nigeria (NPAN); Broadcasting Organisation of Nigeria (BON); and Outdoor Advertising Association of Nigeria (OAAN). Others are the Advertisers Association of Nigeria (ADVAN); and the Media Independent Practitioners' Association of Nigeria (MIPAN).

In his opening address, the AAAN President, Lolu Akinwumi, described the retreat as a "follow-up to the various formal and informal discussions we have all had in the last few months and the solemn promise I made during the last presidential campaign on the necessary and very urgent need to take a look at the practice and the association."

According to Akinwumi, "even the most disinterested practitioner has come to the conclusion that our association is not what it used to be and is clearly not what we want it to be. For us to move ahead and make meaningful progress, we need to go through a major review process like this." Also dubbed as extraordinary general meeting, the retreat, he asserted, was the "Executive Board's response to the necessary need to spend time together to review the affairs of the AAAN and advertising in Nigeria."

What pained the AAAN boss who is also Chief Executive Officer, Prima Garnet, was the fact that most of the challenges facing the association, nay the industry had been predicted few years ago, yet nothing seemed to have been done to confront those challenges.

In retrospect, he said, "During the AAAN's 30th anniversary in this same town in 2003, I had in the keynote lecture taken a future position on what I envisaged would be our major challenges within the next few years. I feel unhappy today to admit that prophetically, nearly all those things have either happened or are about to happen. To be sure, some of our challenges are being externally driven, while others can be traced to clear cases of self immolation, relapse and neglect.

"While the ad spend for example appears to have tripled in the last five years, the portion coming to our members in real terms is actually restricted to a few, and some will argue, on the decline, if you consider the activities of our cousins, the media independents, direct marketing companies, client contractors and agencies and the cost of doing this business. Add to this the issues of our relationships. Media contractors have become so hostile, unfairly utilising their ownership of the media to cast this association and profession in the poorest light. Clients have become our strongest competitors ensuring that as little as possible of the ad revenue gets to the agencies. Even prospects are flexing their muscles; they don't want to pay pitch fees!"

Expectedly, the current decision by the leadership of the NPAN to reduce commission rate to 15 per cent did not escape the attention of Akinwumi. He began, "permit me to use this opportunity to speak on the issue of NPAN and its decision to reduce the agency commission from 20 per cent to 15 per cent from January this year."

The unilateral decision, he noted "has been considered unprofessional and against the spirit of mutual cooperation which has guided our relationship over the years." Continuing, he said, "while the NPAN continues to talk about a global practice of 15 per cent commission to agencies, it was silent on the fact that we arrived at the 20 per cent years ago to compensate for the finance charges that agencies have to bear as a result of the introduction of the prepayment regime.

"While NPAN is also quick to quote global 15 per cent agency commission, it has remained silent on the fact that in those same communities, agencies don't prepay; neither has it come up with any appreciable reason, apart from increasing cost, why we continue to pay more when circulation remains on the decline. It is indeed shameful that as at today no Nigerian newspaper circulates 80,000 regularly."

He disclosed that at a meeting with the NPAN executives on February 5, 2008, the matter was raised, but nothing came out of it as the NPAN stood their ground insisting that the new commission rate has come to stay.

Akinwumi however acknowledged the promise of the print media owners to put structures in place to enforce the need to restore discriminatory commission to AAAN members. But the adamant position of the NPAN with respect to reduced commission rate notwithstanding, the issue, Akinwumi promised, would be further examined at the association's AGM as "the exco will advise on the next step to take to protect our members' interest."

He mentioned under capitalization as another challenge confronting the body. "We are grossly undercapitalized," he lamented. "Our business models," he noted, "are outdated and weak; we don't make enough margins; we are not able to compete for good staff with our richer partners and are sometimes not in a strong position to adequately fund good training programmes."

The issue of AAAN relationship within the Advertising Practitioners' Council of Nigeria (APCON) is another matter. He explained, "the unfortunate impression that has been created is that forces within APCON are working very hard to subvert the AAAN and weaken our influence within the body by the sponsorship of clearly anti-AAAN amendments to the APCON Decree.
"While a few portions of the proposed amendment are pragmatic, clearly others are hard to explain within the overall AAAN context. During our business session, the house will debate the proposed amendment and be updated on what our representatives on the council are doing on the matter."

He expressed optimism that the forum would be germane to "address the issue of corporate governance and how best to protect the interests of our members and show in concrete terms the benefits of belonging to this association as well as looking attractive to those who are reluctant to join, well beyond the benefits of cheaper airline tickets and hotel rooms!
"I am also hopeful that sometime and somewhere within the presentations, we will discuss the issue of our presence and influence within government and how we can strengthen this. We also will not leave out the issue of our esprit de corp. While we admit we are competitors, how can we continue to do this without devouring each other?"

In summary, Akinwumi envisaged that the retreat would not only afford "us the opportunity of re-examining ourselves as individual practitioners, our businesses as advertising agencies and our association as a professional body, but will also enable us articulate new and credible positions on the ever-increasing challenges that have been plaguing the advertising practice in particular and our association at large."

He however underscored the limitation of the duration of the retreat as "the two days cannot adequately give us the opportunity to solve and resolve all AAAN and advertising issues.
"I am however confident that we will go a long way in determining the future of the profession during the period as we set new milestones. The sessions offer us an opportunity to receive well-researched papers and even a longer time to discuss the issues associated with each paper. And because this meeting has the status of an AGM, we can also take decisions and if necessary make binding agreements."

He therefore implored members to put behind "all misgivings of the past, the lack of trust and confidence, both at individual and corporate levels, which sadly have sometimes characterised the practice, producing bitterness, unhealthy rivalry, the schism between the so-called big and small agencies and the needless fears of the systematic annihilation of some agencies by others."

Culled from the Guardian, Monday, February 18, 2008

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