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Recession: Are Agencies Feeling the Heat?
- By Ikem Okuhu
- Published July 12th, 2010
- BrandWorld
- Unrated
News that Nigeria’s biggest integrated marketing communications company, Insight is right-sizing is shaking the market and gives indication of the tough battle confronting the Nigerian marketing environment. IKEM OKUHU writes.
“When beggars die, there are no comets seen. The heavens themselves blaze forth the birth of princes” – William Shakespeare.
YOU cannot afford not to remember these eternal words of the world’s greatest writer when you look at what is happening presently in the Nigerian advertising industry. For a long period, players have been mum regarding whether or not the overall strains in the larger economy have affected their businesses. Although it is very clear that the success or otherwise of the marketing communications environment depends on the overall health of the macroeconomic environment, Nigerian businessmen, while reluctantly admitting that the economy is in dire straits, would never own up to how much it directly impacts on their businesses.
But now we know better. The economy is on the edge of the precipice and how best can this be measured than what took place at one of Nigeria’s biggest marketing communications companies, InsightGrey, last month.
As June slumbered its way into history, Insight was also shedding weight. Information available to BusinessWorld stated that over 20 of its workers were asked to leave. It was not for reasons of incompetence. Neither was it for fraud. The men were asked to resign because the agency was finding it hard to balance its huge wage bill with inflow.
The question is, if Insight is facing such a tough time that it has to right-size, then this could be a clear sign of an industry in dire straits. This is an agency that is a clear market leader and has variously been touted to control over 60 to 65 percent of the market with annual billings in their several billions.
We will come back to this later. But to reinforce our belief that Nigerian agencies are not finding the business environment exciting, we will take you back to a story we ran earlier in the year on this segment. There, we pointed at TBWA/Concept Unit, which at the time, lost its juicy Glo account and as a consequence had to fire several of its middle to senior level manpower.
TBWA was sitting pretty on the Glo account which was said to be worth over $250,000 per month. So when Glo pulled its business and moved it to another agency, TBWA/Concept had no choice than to ask some of its people to leave. The tragedy of the sacking of TBWA from the Glo account was that the company was said to be owing the agency and a few others before it several months in retainer. One of those agencies include JWT/LTC, which was said to have been unpaid for about six months. But rather than sit back to lick its wounds, JWT/LTC embarked on a marketing second missionary journey by snapping up the Glo account after TBWA was fired. Glo has a full service media department in-house and that limits the revenue available for its agencies to the hefty $250,000 per month retainer. But to ensure that the top guns at Glo are happy with its services, LTC went on a recruitment drive, gathering some of the best available, including an expatriate, Colin Morris, to enable it stay on top of the hectic Glo account.
It is not yet clear what the role of an expatriate and the creative director will be. However, the new Glo business will serve as another opportunity for the award-winning creative egg head to prove his worth. Morris remains the only expatriate that has worked with three frontline agencies. He berthed in the country, first, at RosabelLeoBurnett and later at LoweLintas before he assumed duty at JWT/LTC.
The fact that TBWA laid off staff after it lost only one account was enough suggestion that the industry was not at optimal financial condition even though players find it tough to accept this. Then JWT/LTC went back for an account it was thrown out of and on which it had an outstanding six months retainer unpaid.
But the story of Insight firing staff is one that should arouse interest industry-wide. As stated earlier, Insight is a clear leader in the industry. The company founded by Biodun Shoabnjo in 1980 had all through the years grown to be a respected leader in a sector hitherto driven by foreign firms. When “Shobby” as he is fondly called, founded Insight, he had in mind an agency that would grow to be a global player. So far, everyone agrees that he has done very well. Insight is number one in billings, number one in process and systems, number one in manpower development and has sprouted several other subsidiaries from media independents, through outdoor companies to security companies.
As at the last check, the company was employing 125 people. As a matter of fact, there is hardly any advertising practitioner in Nigeria worth his salt that had not passed through the Insight creative school. The agency controls some of the most juicy accounts in the industry, including: Amstel Beer, Heineken, BAT, Ecobank Mastercard, UAC, Golden Penny Pasta, Daily Times Group, Tetmosol, Dunlop, Starcomms, Gulder, Legend, Pepsi, 7UP, Mirinda, Amstel Malta, NB Corporate, Indomie Noodles & De-United Corp, Samsung Products, Ignis, Ribena, Andrews Liver Salt, Actifed, Lucozade Boost & Sparkling, Milo, Chocomilo and Bagco.
With all these fat accounts what is the problem that is making Insight fire? The answer might never be found from the communications giant but a look around the market can help put one through. Since October last year when the CBN governor, Lamido Sanusi put the wedge against managers of some of Nigeria’s banks, business has practically stopped.
For one, banks, which were easily the biggest advertisers then (next only to the telcos) cut down their budgets with some of them stopping all forms of advertising.
As a matter of fact, even Insight was hit hard here. Prior to Sanusi’s intervention last year, the agency was making huge money handling the creative and media buying brief of Bank PHB, which at the time was spending several billions in various marketing campaigns that was clearly setting it apart from competition. Whether it was the people that hitherto working on the PHB account that were fired, we cannot say here. Even if that was the case, PHB could not have created the need for as many as 20 workers.
The challenges Insight is facing is an industry-wide one. Although the figures are not readily available, everyone knows marketing has been finding it hard. Those who are looking for figures do not need to search far. This is because although media advertising is not the only indicator, a look at the pages of Nigerian newspapers these days tells the story. Ads are scanty and not as frequent as was the case in the past. Even then Nigeria is not the only country experiencing challenges in its marketing communications environment if information available to us is anything to go by.
In Canada, for example, agencies have not only been laying off staff, they have been closing shop. For instance, Canadian Marketing Communications outfit, Artemis PR and Design, has closed its doors after 15 years with its owners citing economic downturn and a client base heavily weighted with developers hit by the recession.
Several of those developers didn’t pay their bills and that’s left Artemis with creditors of its own including local printers and other businesses. More than a half dozen full service ad agencies have disappeared over the years or merged with larger firms as customers cut back on spending, go with larger firms that undercut locals or take advertising in-house.
“When beggars die, there are no comets seen. The heavens themselves blaze forth the birth of princes” – William Shakespeare.
YOU cannot afford not to remember these eternal words of the world’s greatest writer when you look at what is happening presently in the Nigerian advertising industry. For a long period, players have been mum regarding whether or not the overall strains in the larger economy have affected their businesses. Although it is very clear that the success or otherwise of the marketing communications environment depends on the overall health of the macroeconomic environment, Nigerian businessmen, while reluctantly admitting that the economy is in dire straits, would never own up to how much it directly impacts on their businesses.
But now we know better. The economy is on the edge of the precipice and how best can this be measured than what took place at one of Nigeria’s biggest marketing communications companies, InsightGrey, last month.
As June slumbered its way into history, Insight was also shedding weight. Information available to BusinessWorld stated that over 20 of its workers were asked to leave. It was not for reasons of incompetence. Neither was it for fraud. The men were asked to resign because the agency was finding it hard to balance its huge wage bill with inflow.
The question is, if Insight is facing such a tough time that it has to right-size, then this could be a clear sign of an industry in dire straits. This is an agency that is a clear market leader and has variously been touted to control over 60 to 65 percent of the market with annual billings in their several billions.
We will come back to this later. But to reinforce our belief that Nigerian agencies are not finding the business environment exciting, we will take you back to a story we ran earlier in the year on this segment. There, we pointed at TBWA/Concept Unit, which at the time, lost its juicy Glo account and as a consequence had to fire several of its middle to senior level manpower.
TBWA was sitting pretty on the Glo account which was said to be worth over $250,000 per month. So when Glo pulled its business and moved it to another agency, TBWA/Concept had no choice than to ask some of its people to leave. The tragedy of the sacking of TBWA from the Glo account was that the company was said to be owing the agency and a few others before it several months in retainer. One of those agencies include JWT/LTC, which was said to have been unpaid for about six months. But rather than sit back to lick its wounds, JWT/LTC embarked on a marketing second missionary journey by snapping up the Glo account after TBWA was fired. Glo has a full service media department in-house and that limits the revenue available for its agencies to the hefty $250,000 per month retainer. But to ensure that the top guns at Glo are happy with its services, LTC went on a recruitment drive, gathering some of the best available, including an expatriate, Colin Morris, to enable it stay on top of the hectic Glo account.
It is not yet clear what the role of an expatriate and the creative director will be. However, the new Glo business will serve as another opportunity for the award-winning creative egg head to prove his worth. Morris remains the only expatriate that has worked with three frontline agencies. He berthed in the country, first, at RosabelLeoBurnett and later at LoweLintas before he assumed duty at JWT/LTC.
The fact that TBWA laid off staff after it lost only one account was enough suggestion that the industry was not at optimal financial condition even though players find it tough to accept this. Then JWT/LTC went back for an account it was thrown out of and on which it had an outstanding six months retainer unpaid.
But the story of Insight firing staff is one that should arouse interest industry-wide. As stated earlier, Insight is a clear leader in the industry. The company founded by Biodun Shoabnjo in 1980 had all through the years grown to be a respected leader in a sector hitherto driven by foreign firms. When “Shobby” as he is fondly called, founded Insight, he had in mind an agency that would grow to be a global player. So far, everyone agrees that he has done very well. Insight is number one in billings, number one in process and systems, number one in manpower development and has sprouted several other subsidiaries from media independents, through outdoor companies to security companies.
As at the last check, the company was employing 125 people. As a matter of fact, there is hardly any advertising practitioner in Nigeria worth his salt that had not passed through the Insight creative school. The agency controls some of the most juicy accounts in the industry, including: Amstel Beer, Heineken, BAT, Ecobank Mastercard, UAC, Golden Penny Pasta, Daily Times Group, Tetmosol, Dunlop, Starcomms, Gulder, Legend, Pepsi, 7UP, Mirinda, Amstel Malta, NB Corporate, Indomie Noodles & De-United Corp, Samsung Products, Ignis, Ribena, Andrews Liver Salt, Actifed, Lucozade Boost & Sparkling, Milo, Chocomilo and Bagco.
With all these fat accounts what is the problem that is making Insight fire? The answer might never be found from the communications giant but a look around the market can help put one through. Since October last year when the CBN governor, Lamido Sanusi put the wedge against managers of some of Nigeria’s banks, business has practically stopped.
For one, banks, which were easily the biggest advertisers then (next only to the telcos) cut down their budgets with some of them stopping all forms of advertising.
As a matter of fact, even Insight was hit hard here. Prior to Sanusi’s intervention last year, the agency was making huge money handling the creative and media buying brief of Bank PHB, which at the time was spending several billions in various marketing campaigns that was clearly setting it apart from competition. Whether it was the people that hitherto working on the PHB account that were fired, we cannot say here. Even if that was the case, PHB could not have created the need for as many as 20 workers.
The challenges Insight is facing is an industry-wide one. Although the figures are not readily available, everyone knows marketing has been finding it hard. Those who are looking for figures do not need to search far. This is because although media advertising is not the only indicator, a look at the pages of Nigerian newspapers these days tells the story. Ads are scanty and not as frequent as was the case in the past. Even then Nigeria is not the only country experiencing challenges in its marketing communications environment if information available to us is anything to go by.
In Canada, for example, agencies have not only been laying off staff, they have been closing shop. For instance, Canadian Marketing Communications outfit, Artemis PR and Design, has closed its doors after 15 years with its owners citing economic downturn and a client base heavily weighted with developers hit by the recession.
Several of those developers didn’t pay their bills and that’s left Artemis with creditors of its own including local printers and other businesses. More than a half dozen full service ad agencies have disappeared over the years or merged with larger firms as customers cut back on spending, go with larger firms that undercut locals or take advertising in-house.
