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Ad industry: Controversies, ripples on N8bn debt, diminishing ad spends

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While the country’s economy can be said to be ‘technically’ out of recession,  at least for now, not a few believe same cannot be said of some sectors of the economy, especially the media and advertising industry, whose fortune seems to be on a free-fall, of late.

For instance, besides the dip in total advertising spend from N91 billion in 2016 to N88 billion in  2017,  representing a drop of  3.3 per cent in the period under review;  a bigger threat  which seems to be giving stakeholders goose pimples is that of the huge media debt that is fast becoming an albatross for this multi-billion naira industry.

Checks within the nation’s  Media and advertising landscape have revealed that a whopping sum of Eight Billion Naira (N8bn) Media debt overhang has continued to generate controversies and ripples in this competitive, but highly fragmented sector.

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Interestingly, this huge media debt profile of client companies, mostly multinational, have been creating some operational challenges to the media, especially those in the out – of – home advertising, electronic and the print media.

More worrisome is the fact that the media debt issue is fast becoming an albatross that has continued to rear its ugly,  despite assurances from relevant  stakeholders, last year, to address the challenge.

Interestingly, the tell-tale signs are there. According to impeccable industry sources,  most  agencies are facing acute liquidity crisis, today,  largely due to the humongous debts being owed by the client -companies known as the advertisers.

For instance, an industry survey and economic intelligence research conducted by a marketing journal, Marketing Edge, recently revealed that over 8 billion naira in unpaid fees by the advertisers, many of whom are multinationals are currently hindering smooth business operations of the media and some agencies.

The survey  further revealed that despite the fact that the agencies and the media have fulfilled their own part of the contractual agreement by executing the contracts, they are now faced with the challenge of getting the clients  to honour their own part of the bargain,  by paying the invoices that have over – stayed agreed working grace period of 45 days.

The delay in payment, it was gathered has been attributed to the sudden twist in the existing payment due date of 45 days by multinational companies,  said to be demanding for 180 days to process media invoices before making payment; a demand many  Nigerian advertising practitioners and media owners have described as outrageous, since it is not in tune with  global standards.

A very senior industry operator and a consultant to a telecom company, who would not want his name in print, would rather see such request as ‘uncharitable’, wondering where on earth such is allowed.

“The request by multinationals to extend 45 days of grace to 180 days before paying their media vendors is uncharitable, unfair and unjust.

How will they justify this request when in actual fact they collect money instantly from consumers of their goods and services? Do they ask consumers to come and pay for their goods after 180 days of purchase”; he queried.

Another practitioner, Mr. James Hector, also shares the same sentiments. For  him, such request can not be justified anywhere in the world.

“It can not just be justified anywhere in the world, not even from where such multi-national companies come from. Besides do companies in their home countries do that for the media? I wonder why such requests should be put forward in the first place,” he stated.

He however stressed the need for stakeholders, especially media owners and the advertising agencies to rally round and  resolve  the issue.

A top official of  Media Independents Association of Nigeria, MIPAN, who would also prefer on the condition of anonymity also decried the undue delay in paying the media.

He argued that  some business terms and agreements  signed  with clients, by some of those agencies may cause delay in payments, while advising  that agencies and media owners should always scrutinize terms before they enter into business terms.

Similarly, President of the Outdoor Advertising Association of Nigeria, (OAAN) Mr. Babatunde Adedoyin said the huge debts being owed its members by the advertisers have almost grounded the operations of all out – of – home companies in Nigeria.

Specially, “he said there appears to be a deliberate attempt by the multinationals to cripple the operations of OOH with the new talk on 180 days”.

Following the huge debt “he stated that his association had written letters of appeals to some of the companies and their agencies all to no avail. He pleaded that ADVAN and relevant stakeholders should help to appeal to the advertisers and their media buying agencies.

It should be noted that outdoor advertising has continued to witness a sharp decline in performance last year, attracting an ad spend of N24.6 billion, as against  N28.8 billion of 2016.

A few years ago, Advertising Practitioners Council of Nigeria (APCON) had intervened in the media debt issue by setting up a Special Committee on Media Debts Issue (ACOMDI). The committee with members drawn from the major sectoral associations, namely ADVAN, AAAN, BON, MIPAN, OAAN and NPAN was chaired by a broadcaster and fellow of Advertising, Alhaji Ayodele Sulaiman met to review and submitted reports on media debts totaling N2 billion as at 2007.

However, the debts have grown over the years especially because of the weak regulatory environment for almost four years now, APCON has operated without its relevant council members in place, a development that s has created a huge gap in meeting its mandatory regulatory tasks. It was gathered that the practice in Nigeria is unlike South Africa where advertisers are made to pay heavy sanction and financial penalty for defaulting on payment.

Contacted on the issue, ADVAN President, Mrs. Folake Ani – Mumunney stated that the association will do everything possible to encourage debtor members to pay but clarified that the ADVAN Charter does not include enforcement or debt monitoring.

Sadly, the multinationals are alleged to be taking undue advantage of the weak regulatory environment in keeping the media in abeyance over payment of their debts. Many industry watchers are miffed that these companies are allowed to carry on with this act of impunity without any check. Mrs. Ani – Mumunney who said that the association is out to promote cordial relations and business growth amongst other stakeholders revealed that some of the allegations on indebtedness and the 180 days request by some advertisers are totally new to her as nobody has ever brought such a thing to her notice.

The post Ad industry: Controversies, ripples on N8bn debt, diminishing ad spends appeared first on Tribune.

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