banking sectors

The once boisterous media industry comprising traditional news media and advertising agencies, is now experiencing trying times. This follows reduction in the volume of adverts occasioned by the recession, centralisation of global marketing communication budgets by multinationals and increasing newsprint costs. Some local advertising agencies have become office extensions to global media agencies that control multinationals’ account. Therefore, they now affiliate themselves with international advertising groups that conceptualise the ads from which they make adaptations for the local audience. Effects of recessionInstitutional advertisers, whether local or foreign, regarded as the goose, are traumatised by the hard economic times and therefore have had to cut ad spend. For this reason, the advertising agencies and news media which feed on the golden eggs are facing difficult times. Presently, advertisement placements in mostly the print media have been scaled down by the banking and manufacturing industries that had earlier reviewed their marketing communication budgets downwards as a measure to hedge the global recession. The chief executive of a professional body who prefers anonymity notes that the multinationals who dominate the economy and whose ads spend account for over 60 percent of total ads spend in Nigeria, had recently cut down on their budgets due to the recession. This situation, he says, seriously pushed the media industry into a tight corner. For instance, Lere Alimi of Optimum Exposures confirms that the outdoor advertising business has been tremendously affected, just as the former president of AAAN, Lolu Akinwunmi, agrees that agencies are facing difficult times. Also, the president of Outdoor Advertising Association of Nigeria (OAAN), Kole Ademulegun, recently noted that “most clients are not renewing expired site rental contracts, and when contracts are renewed, some clients are asking for reduction in rates, sometimes by as much as 50 percent.” Wrap around ceasesThe present development is a sharp contrast to the period between 2005 and 2008, when it was calculated by operators in the consulting business that the media industry raked in over N2 billion from wrap around advertisement alone. The wrap around boomed during the consolidation exercise in the banking industry, when companies floated their initial public offers (IPOs), which saw increase in their capitalisation But following the stock market crash late last year, coupled with the global financial meltdown, companies have discontinued to engage in any form of wrap around advert that costs an average of N16 million per newspaper. Companies now rely on conventional ads that cost an average of N300.000 for full page to promote their brands. CBN order on banks to curtail adsBut observers in both advertising agencies and the news media are worried that wrap around appears further nailed, especially from the financial sector following the CBN’s directive late March to banks to curtail their adverts. The CBN had in March this year issued a directive to banks to restrict the publication of their annual reports to just two national dailies of their choice, a policy that the present management of CBN may not review. The restriction further denied the advertising agencies and the traditional news media advert revenues as the media outlets now struggle to find ways to become profitable again. Predictably, the fear of media columnists who drew their sword from the sheath against the CBN governor for giving an order that threatened their livelihood was not allayed as the policy indeed affected the media revenue. Within this period, the weight of global recession set in and forced companies including banks to review downwards their marketing communication budgets, a development that compelled advertising agencies and other media houses to downsize their workforce. As in the western world, observers issued the direst near-term forecast for the advertising industry, warning that the advertising business will shrink this year. For instance, Kunle Alake, the chief operating officer of Dangote Group predicted that some plants would shut down while others would go lean in operations. When this happens, it is expected that advertisement would take back stage. Recent stir in banking sector as another blowForeseeing all the challenges that lay ahead, operators in the media industry who had been holding series of seminars this year to check the effects of slide in volume of business appear further frustrated with the recent stir in the banking industry. The stir has resulted into freezing of credit to the economy by the banking sector, a situation that ultimately will stifle other sectors, especially the manufacturing and SME sector, a development analysts describe as precarious for an economy that is in a hurry for growth. The banking sector had in the face of the situation further scaled down their advertisement in the newspapers, while the advertising agencies who depend on these adverts for survival are not finding this easy, a chief executive of an agency confided in BusinessDay.He agreed that the problem of the five banks had affected the entire economy and worsened the effect of the recession on the advertising and traditional news media industry. Sources in some media houses put the reduction in the volume of advertising to about 30 percent as some of the banks whose credits are trapped with debtors may not want to embark on heavy product advertisement now, as what they needed is confidence build-up which could be achieved through public relations. Ken Egbas of TruContact lent credence to this when he said time of crisis was not the time for advertisement, it was time to use PR.These actions have resulted in adoption of some survival measures among marketing communication agencies and news media, and this includes cutting operational costs.