Adspend will get further cut in 2023 – Oluwasona
By Felicia Nwosu
Following a recent report by World Federation of Advertisers (WFA) and Ebiquity, which suggested an imminent cut of about 74% in the advertising industry budget with world’s biggest advertisers trimming down their 2023 budget due to recession and other economic challenges, Kayode Oluwasona, the CEO of 1201 Brandsway Ltd, has said that the Nigerian advertising industry will also experience a further cut on its budget.
The adman, who made this statement during an exclusive interview with MARKETING EDGE, said as long as Nigeria is a member of the global community, whatever affects the world will likely affect the country. He blamed the negative trend on the country’s over-dependency on importation.
“To be specific, look at even the kind of economy we have, an extremely dependent economy. We import everything from raw material to finished product, even up to distribution, marketing, sales and every other process needed in the whole chain. So, we possibly cannot stand on our own in any situation without being affected or moved significantly by the global economic downturn.
The former president of the Association of Advertising Agencies of Nigeria (AAAN) pointed out that the implication of cutting down adspend would have a ripple effect on consumers, brands and agencies, irrespective of the fact that Nigeria operates in a service environment.
“There are implications even though we are in a service environment as an organisation or industry. Currently, inflation in Nigeria is over 21%, officially. It means your input cost, power supply, working capital and every other factor will go up; the first thing to take a hit is your margin. We are in an environment where we work with clients that are involved in different economic activities such as manufacturing, service providers, and financial technology product marketers.
“Once we have an inflation that is as high as we have it in Nigeria, the same thing that affects the agency affects them because we work in the same ecosystem. They too would not be able to procure raw material cost effectively anymore because consumers complain of the increasing effect. They cannot continue to pass the increasing cost on consumers, because their margins will drop and sales will drop. Even if what they are selling can be classified as essential, it will drop because people will begin to manage the little money they have in their pockets. They will consume less since they would share their meagre income among the different competitive needs that they have,” he said.
The industry creative veteran explained that adspend is always at the receiving end whenever there is an economic downturn.
“When margins go down, traditionally and from experience, the first thing marketers or corporate organisation managers do is to cut marketing budget so that they can add it to the bottom line to boost profitability which can be called margin. In that situation, advertising is the first thing to go. Like I said, this is empirical and from experience.”
The agency boss observed a tremendous change in the Nigerian advertising space over the years, stating that it’s no longer what it used to be in the good old years.
“Let me give you an example; if you review what is happening in the media now, the ads that you see, compared to maybe 3 to 4 years ago, it is no longer the same. In those days, I won’t mention brands, if you picked up a newspaper, the first 7 to 8 pages of a particular paper would be taken over by prepaid advertisements. But today, you can see that those pages are vacant.
He further added: “If you look into the media environment today, you will find out that the kind of advertising that is being done is no longer what it used to be in the past. I am talking especially about the exposure, those brands or companies that you call traditional advertisers, go and check, they have pulled back, both in print and other electronic media. What that tells you is that they are trying to survive. Once they get little awareness that they think they can survive, they go back. What I am saying in essence is that the cost is going up and so the consumer is rationing the expenditure.”
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