Industry experts bemoan advertising debts
By Oghale Mafuru
As media organizations continue to grapple with the economic challenges besetting the country, industry experts have affirmed that advertising debts contribute significantly to the inability for the companies to meet up with their financial obligations as it is a major source of revenue.
The experts who acknowledged that there are several other factors responsible for the economic state of most media organizations in the country, stated that if advertising debt is addressed, it will ameliorate the impact of the economic situation.
Speaking to MARKETING EDGE, Mr. Kenny Ogungbe, Chief ExecutiveOfficer, Kennis 104 FM/ TV, who decried the long payment period of advertising debts stated that it is imperative for the advertising industry to curtail it as it is stifling the growth of the industry.
He said: “Industry debt is a major issue. Advertising business in Nigeria is credit, and they still give 90 days in 2022 and that has been the case since 1959 when the stations were owned by the Federal and State government. So, if you join the business from 1959 to 2022. Should it still be 90 days? The answer is no but ADVAN does not agree with the new design that is being done by ARCON. ARCON says credit should be 35 days but ADVAN is not agreeing to that.
“We cannot do business the way we have been doing business.because the State and Federal government gives subvention to buy diesel. We all know the rate of diesel. So, we cannot survive. Advertising debt credit should be 35 days and pay on time. if you don’t pay on time, we charge you interest.So that they won’t be owing media houses a lot of money and that they won’t be able to pay salaries, licensing fees and buy diesel” he added.
For his part, Mr. Lekan Otufodunrin, a renowned broadcast journalist and Executive Director of Media Career Development Network, stated that media debts are suffered by all forms of traditional media and that advertising being a major source of revenue bears a huge chunk of the media debt.
“The debts are part of the challenges that broadcast stations are trying to cope with but the debts are not peculiar to the broadcast stations. Print, broadcast and digital are also experiencing it. Advertising is one source of revenue. What is important is that they need to know that they should sign an agreement. I mean it is a requirement”.
Mr. Lekan Otufodunrin, advised media organizations to restructure their operational models to reduce cost in order to mitigate the economic impact on their businesses and that they should avoid piling up debts.
He said: “It is very crucial. What they need to do is to review their business models but it is also very important that the people that are owing should pay up. That is why in broadcast stations the mode of allowing debts to pile up needs to be reviewed. If they didn’t take the advert in the first place, the debt will not mount to that level but because of trust overtime,they allow it. But I am aware that part of that problem is management. Sometimes, you will discover that some of their marketing people also play pranks with some of those things. So, there are some of them that allow these debts to pile up that much.
“There is a need for the Advertising council to ensure that its members do not default. These people that are owing debts, they get these monies from the organization that gave them the advert. Companies give them money to pay. Even if they don’t give them money to pay, there is an agreement. Sometimes they hold it back to do some other business. That is part of the problem. Some of the companies that are owing, use the money for other business and say the media houses can wait” he concluded.
Femi Adelusi, President of the Media Independent Practitioners Association of Nigeria, MIPAN while affirming that advertising revenue is a main contributor to the revenue of media organizations maintained that there are several issues contributing to the economic challenges of the media companies.
“Advertising revenue is a big part of the income to the stations and it is important that debt issues are resolved. As an industry, we keep on this conversation until these issues are resolved” he said.
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