IMC practitioners hopeful of business growth despite recession
Against the backdrop of the recent National Bureau of Statistics (NBS) Q3 2020 report, showing a dip of 3.62% in real GDP and indicating that the Nigerian economy has slipped into a second recession in 5 years, stakeholders in the Integrated Marketing Communications (IMC) industry have expressed concerns on the dire economic situation. They are, however, optimistic that innovation will triumph in spite of challenges.
Recall that in July, following the Q2 report by NBS which stated that Nigeria’s inflation would likely make the country slide into recession in Q3, stakeholders in the IMC industry had expressed optimism that the country may not slide into recession after all. However, a few months after that report, a lot has happened to Nigeria’s economy, ranging from the effects of the Covid-19 pandemic, destruction occasioned by the #EndSARS protests and several other negative impacts. With the recent official confirmation by government, the challenge to overcome the recession remains critical for all stakeholders in an economy battling for survival.
Within the IMC industry, agencies are tied to the businesses of the brands. Therefore, agencies’ survival depends on the survival of the brands they manage. In view of these realities, MARKETING EDGE, Nigeria’s leading marketing and agenda setting publication for the IMC industry, explores the effects of the recession on brands, players and agencies across the industry and how agencies and brands can have a better relationship to wriggle out of the economic quagmire.
Commenting on the issue, MD, DKK, Temitope Jemerigbe, noted that there were ominous signs of a recession in the economy that was only made worse by the outbreak of Covid-19. “All the signs were there. COVID-19 only put a steroid on where we were headed. As we all know in economics, a recession is a business cycle contraction where there is general decline in economic activity. Recessions generally occur when there is a widespread drop in spending. The purchasing power of the average Nigerian over time didn’t pack that much of a punch. Even with our population, economic impact based on purchasing power of the individual on the street, is at best, minimal. The implication for us in the IMC industry is quite huge. It’s a different if the purchasing power is there and the people are just not spending for one reason or the other-it’s a different kettle of fish when the people just do not have anything to spend.
According to her, in the first scenario, the IMC industry can become a successful tool in stimulating economic activity, by giving people a reason to go out and spend. “In the second scenario, which is where we are now, the challenges are even more desperate. And with the pandemic still raging across the world, the options open to us are rather few”.
On how the industry can navigate the economic recession, she noted that practitioners need to realise that the world has changed and the old ways will have to give way to new ways of doing business, adding that they may have to come up with creative ways of practicing their trade.
“It might indeed become necessary to find ways of ‘helping’ our clients’ customers to earn more if they are to keep our clients in business. But, that’s our new normal. We must also expand our base of operation by going farther afield to look for new business opportunities. We must re-tool by adapting to the new normal”.
Lanre Ashaolu, MD Four Pulley Limited believes innovation is key for agencies in the IMC industry to navigate and survive the economic recession. In spite of the bleak business climate for the IMC industry, the economist turned outdoor adman is optimistic that the industry can survive the current economic situation. He posited that innovation and superior value offering is what practitioners in the industry need to do and come up with partners to be able to survive the storm. “In July, when the Q2 report was released, I was optimistic that we could wriggle out of the impending recession. I am still optimistic that we can get out of the recession. The reason for this position is that recession does not mean there is a shut down in economic activities. It simply means the rate at which we are supposed to be growing is slower than expected and that the whole trend is on a downward spiral. So, activities need to take place to change the balance of the growth from the negative to positive result.”
Ashaolu believes that this is the time everybody needs to put on their thinking cap to avoid the old ways of doing things. “At this moment everybody has to ensure whatever he is going to put forward is something that has not been done before. That is innovation, improving on already existing things that you meet in your environment. Innovation! Innovation! Innovation! Let every player identify their strengths; let them discover what is best applicable for their client. The clients’ success is also the practitioners’ success”.
In his own contribution, Bolaji Okusaga, Managing Consultant, Precise, a reputation design company, affirmed that the economic recession portends a paradigm shift for client-agency relationship in the IMC industry.
“The game has changed for client/agency relationship given the new realities thrown up by the Covid-19 pandemic especially as regards the terms of engagement and platform selection. We have seen budgets get leaner and platform priorities change with budgets moving more online than offline. We have seen the quest by Clients to get more done using fewer resources and this is certain to continue as the Covid-19 induced recession bites harder.
He continued: “There is a need for a change in the business model from the traditional Agency approach which basically sees the role of Agencies as middlemen rather than co-creators of value within the business ecosystem. Agencies will now have to look beyond pitches and actually go out there with new and novel marketing solutions that are proprietary, scalable, and adaptable to Client realities”
In view of the prevailing circumstances, Okusaga is, however, optimistic of new opportunities for innovative agencies even amid the recession.
“All is not sad and gloomy as a lot of new industries emboldened by the Covid-19 pandemic have also sprouted from E-commerce, the Aggregators, Logistic Platforms, and Tech-enabled business and remote learning platforms. As these new industries consolidate, it will mean a new clientele base and new billing opportunities for Agencies,” he concluded.
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