Marketing budget cut, low campaigns, Covid-19, others define IMC industry in 2020
Segun McMedal, the Chief Reputation Strategist at Upticomm Marketing Company Limited has rested the firm he incorporated in 2012 to join Mediacraft Associates, a foremost Public Relations consultancy firm and affiliate of the FleishmanHillard global.
“I have rested the firm for now as the market is seriously challenged to combine skills with people of like minds”, McMedal who is also the President of Lagos Chapter of Nigerian Institute of Public Relations told BusinessDay. He is joining MediaCraft on January 4, 2021 as Director of Innovation and Business Development.
This is one of the several effects of the tough business operating environment on the Integrated Marketing Communication, IMC industry, a situation exacerbated by Covid- 19 pandemic, EndSARS protest, bad policies and recession which Nigeria slipped into in Q4. Without holding on to ego, some other operators may follow this route to; first; prioritise and remain relevant in the challenged economy.
This year was peculiar in the life of many marketing communication agencies and traditional media as many of them reeled under the tough ‘weather’ which saw them redefining their strategies and operating models as some workers were placed on half salaries.
Akonte Ekine, CEO of Absolute PR, described 2020 as the year of the unexpected. “Everything that happened in 2020 was not scripted and it went against the norm or the normal”, he said.
Within the year, “the idea of people moving about became dangerous, we adapted to working from remote locations even parties turned to digital activities. It is the year that put the seal on technology as the ultimate need for our collective existence to interact with each other from business to social”.
The Covid-19 pandemic and the EndSARS affected the economy and the fact that marketing communication is a part of the economy; it also determines the level of impact on the subsector, Akonte further said.
“How many companies actively campaigned or engaged with consumers within the year? Aside the techs, financial/banking, most of the companies were very low on marketing activities. COVID-19 shaped and directed behaviour and behavioural conversation in 2020”, said Akonte.
The effects of Covid-19 pandemic and other negative factors such as the EndSARS that defined 2020 changed the earlier optimism curve.
Nigerians entered the year 2020 with great optimism. This was informed by 2.55% growth in GDP in Q4 of 2019 after sluggish performance of 2.10%, 1.94% and 2.28% growth in the first, second and third quarters of 2019 respectively.
National Bureau of Statistics (NBS) said the growth in Q4 2019 was highest quarterly growth performance since the 2016 recession. The growth was projected to be on upward trend after Nigeria exited economic recession in the second quarter of 2017.
While government and businesses were adjusting, ready to reap from the expected boom in the economy, as 2020 budget was based on ambitious $57 bp, then came in March 2020 oil price war between Russia and Saudi Arabia over the production, exportation and price of crude oil.
Experts explained that price war is a competitive tactic of purposefully lowering prices with a view to undercutting rival businesses. When this happens, other producers will be forced to lower prices to remain competitive “and the cycle typically continues until the price across the board drops so low as to be unsustainable, thus causing logistical unease to one or more parties”, says KVB Prime.
The price war exacerbated by Covid-19 pandemic saw Nigeria’s oil selling below $30 bp against the projected $57 bp. This development began to have its negative impact on revenue and the operation of the economy.
Businesses that were heavily affected began to cut marketing communication budgets by almost 50% and this had a reverberating effect on marketing agencies that subsequently either trimmed their workforce or placed some of them on half salaries. Some traditional media organisations sacked while others are owing months of salaries.
The President of Outdoor Advertising Association of Nigeria, OAAN, Emma Ajufo, earlier in the year admitted that many of the workers in the industry were placed on half salaries which he said was better than throwing the workers in to the labour market especially this difficult economic time. Nigeria’s unemployment rate is about 27.1 percent of the population and there are speculations that this will worsen to 33.5 percent.
Many of the marketing communication agencies, including Public Relations, creative advertising agencies, below the line operators and event planners also witnessed low patronage from clients.
During the months of lockdown, many companies also suspended programmes and product launches in compliance with the rules to slow the spread of Covid-19.
Ajufo further said that Outdoor clients “who rely on eye-balls to place advert materials had to cancel exposures and contracts due to the lockdown occasioned by the Covid-19”. He said the industry lost multi-million Naira businesses this year.
Lanre Adisa, the CEO of Noah’s Ark Communication, the agency that has Airtel and others as clients told BusinessDay that “for those in events and activation business, my guess is they could have dropped by about 60% revenue or more. Audio-visual, commercials productions also lost about 50% but for advertising, it could be about 30 % to 40% depending on where you are operating and what you do”.
The year also pushed agencies to re-evaluate their partnerships. One of them is Noah’s Ark which terminated its partnership with Dentsu Aegies. Five years after the relationship “we did a review and we realised that the partnership was not taking us where we expected. All what we set to achieve did not happen as expected”
Chairman of C&F Porter Novelli, Emeka Maduegbuna, mentioned that the challenges facing the industry are further exacerbated by the Covid-19 pandemic. “First are the massive disruptions. These have come in the form of business or income losses – budget cuts, staff lay-offs, salary cuts, remote working and the attendant virtual nature of communication.
Complicating this is the impact of Covid-19 on consumer behavior, preferences, and priorities.
Within the year, however, many companies redirected their Corporate Social Responsibility budget to donations towards ending Covid -19. This includes cash donations, building isolation centers, donation of facemasks, sanitisers and other relief materials massively towards ending Covid-19.
Some campaigns that run were empathy adverts to comfort Nigerians that the trial period will be over.
On whether the marketing communication will survive the turbulent environment, Lanre Adisa who looked at the macroeconomic space hinged this on IMF predictions that Nigeria would exit recession by Q2, 2021.
“ If we are out of it based on that prediction, it means it will impact positively on business. In Q4, 2020, one saw some spike in activities of clients. I want to believe that Q2, 2021, when the economy is expected to be back on stream, advertising will bounce back. But this also depends on who the agencies are dealing with. For instance, multinationals are in a position to survive the recession as they have deep pockets, but local firms tend to freeze or shrink their marketing budgets and this may be challenging to some agencies. To survive the times, agencies need to be at their best at all times, stay focused and stay true to their vision. But ultimately it is about the value the agency adds to the clients’ businesses”, he said.
