Out-of-Home is still very relevant to brand owners- Tunde Adedoyin, President, OAAN
The outdoor advertising industry in Nigeria in recent times, has faced a lot of challenges. These challenges have resulted in major loss of revenue on the industry. The current President of OAAN, Mr. Tunde Adedoyin recently spoke with Joseph Ekeng on what is being done to rescue the industry and bring it back to profitability. Excerpts…
Recession hits a lot of sectors and industries, briefly paint a position of OAAN and recession?
One thing that is certain is that recession is not only affecting advertising, it affects across all the sub sectors of the industry. But it is very important to note that in terms of recession there is still need to advertise. Unfortunately, most marketing directors or companies when they have issue of recession like this, the area they first of all look at is media and advertising. That is why in the last two years, it has been very severe on advertising and media placement and buying. As we speak, we cannot say that we are totally out of it.
But we thank God that there is a little bit of progress, we are still in recession, clients are not spending money, some are cutting budget, even the huge spending ones. In our own industry, they use to do media placement for twelve months, but these days, they have come up with all form of tactics, one month, three months in order to save money. And that has been the style in the last three years. But we are very hopeful that things will get better; it is all about managing our economy. But in a nutshell, the economy is improving.
What is your current relationship with outdoor advertising regulators pan Nigeria?
Before now, in this business, we have always been paying to local governments in terms of rate on billboards, but about ten or eleven years ago when we started this political dispensation, it was kick started in Abuja and quickly followed by Lagos State. From there on, all other states followed. It was very unfortunate that by the time they were starting, we were not involved because ordinarily we needed to have an input if there were going to regulate us. But unfortunately, some these people were only looking at the financial aspect of it; how much money they could rake in for the government. Majority of them started rolling out unfriendly rates that were unfriendly to business as well. Of course, in the last ten years we have been battling not only with LASAA but with all other agencies to let them reason with us and look at their rates.
We need a rate that is not only friendly to business but to our clients as well. This money is not our money and at the end of it all everyone will pay for it because if you charge Cadbury or Coca-cola very high on their billboards of course, they are going to spread it on their products and it is the consumer that will eventually buy. So, if government thinks they are making money, the money is coming back to us in a way. What has happened in the last ten years is that they made our medium so expensive that it is only the multinationals that can place adverts or campaigns on billboards. In the past, when we started, we had the likes of barbing salons, tailoring people and people importing products for Christmas who were placing campaigns on billboards because it was reasonable.
Today, you hardly find them on our billboards. So, this has reduced our capacity and even to invest is becoming impossible because, its like you are sharing the profit with the government and the same time clients are running away because they believe that your rates are very high.
How does this actually affect government revenue in a way because the more people come on billboards, the more money that government will make?
That is our own point of argument that look, if the price comes down, you are likely to make more money because you will see more people coming on board. But you see, some of these people that are regulating are civil servants. I am not trying to run anybody down, but they are not commercially oriented, they don’t look at it deeply and some of them cannot face their governors or their boards to present a paper and say, look, let us look at this thing objectively. Ask any of them that how do they arrive at this rates? They cannot tell you the scientific way they have arrived at the rates. They will just say 48 sheets should be this rate, unipole should be this rate.
It doesn’t work that way, there must be facts and figures behind it so that if you are presenting even to your own client, you will have something to show. Unfortunately, some of them are yielding while some are still being difficult but we believe as an association we will continue to engage and to discuss with them to get what we want. Part of the things we are trying to tell them is that whenever they are appointing a DG or managing director for a signage company should be an advertising practitioner because if it is a person that understands the business, when we are talking, we will be on the same page; he will understand what we are saying. As we speak, a lot of the agencies are still charging high but we are consulting. In some states, we have gone to court, in some we are discussing, depending on how the institution is.
Has the issue of payment on vacant billboards been resolved?
In some states, the issue of vacant billboards has been resolved but in Lagos it has not been resolved. At the last meeting we held with LASAA those things still came up and the MD of LASAA promised to look into it by giving some conditions. Like I said earlier, we want to keep engaging we want to keep working on them we expect that very soon.
Don’t you think OAAN as an association needs refocusing comparing the level technology that has come into the business of outdoor advertising?
If we start from the issue of merger and acquisition that we cannot force our members, within the association, it has to come voluntarily. And the economy and times dictate that. As for OAAN, we have been doing series of restructuring that is why we are still surviving because you are that there are other media competing with outdoor now. As we speak, some of our members are dropping their rates as a strategy for survival.
They are reducing their rates, even on Led, in order to survive. We have also told our clients that it is not everybody that must come on unipole or come on a large format. In the past, we had 16 sheets and A4 panels because there were some towns, when you look at the profit margin clients made in these areas, it did not justify putting up a unipole , even a 48 sheet billboard . A4 panel or 16 sheets could be sufficient, so that clients would not be spending more than necessary. But some of the clients have ego, they want to be seen as being big. They want to replicate what they are doing in Lagos and in other parts of the country. And most of the time it doesn’t pay because rather than having five 16 sheets in small community, the rate will not be up to the rate of unipole.
By doing so, clients could still get the same value that a unipole will offer. And this is part of the things we have been saying. It is not about the way marketing managers and marketing directors think these days because some of them get directives from their parent companies abroad, I mean the multinationals, which they may not want to change some of these directives even when you advise them because sometime it is difficult for them to push. Because some of these companies want a uniformed standard in all the countries they operate.
They forget that the economy of each country is different because you cannot import what is applicable in South Africa and force it on Nigeria at times it doesn’t work. These are the problems we are trying to address. Like I said earlier, merger and acquisition will happen voluntarily. When you look at this environment where we operate, most times it doesn’t work. When I merge with you what that simply means is that our inventory will be bigger but that doesn’t guarantee you sell the billboards. The problem we are having is that the clients are pulling away their budgets. Before now billboards are mostly occupied.
If you acquire any company that has ten vacant boards it doesn’t mean because you acquire the company you going to sell the boards, you have only created more problems for yourself because the rates are high. And you as company that have merged cannot tell Coca-cola to spend all their budgets with you alone. The problem is that outdoor advertising is the only marketing communications sector where we have to pay because we are standing on the ground and we pay so much. If we don’t have to pay for vacant billboards or if the rates are low, then everybody will be able to sell.
In specific terms, the challenges that OAAN is going through, what effect does it have on unemployment or revenue to the government?
This is a very straight forward question. When a company is being over taxed and there are multiple taxations because there are some instances that you pay to more than two agencies for one particular site. And of course, you cannot say because you have paid Inland Water Ways Authority or you have paid LASAA or Parks and Gardens as a result you want to increase the rate of your board, it doesn’t work that way is still the same rate, so that is multiple taxation. What we are even saying is that the rates are high and we have always been appealing to government that they should look at those rates again and bring it down. But what is happening in our industry is reduction in employment.
There are two things that are causing unemployment in our industry now, the multiple taxation and the technology. If you are a serious high tech technology company, you hardly need many staff. You outsource your engineers and your technicians and of course, form your office you can control your billboards. But before then, this high rate has put many pressures on so many companies and particularly when you have to pay on vacant boards that you are not making profit you have to let some staff go. I can tell you more than fifty percent of our staff have been retrenched.
In recent times, we have seen media and advertising agencies even PR using data to drive value for their businesses; they use that to persuade their clients, do you think outdoor practitioners should employ this method to drive their businesses?
Well, I don’t disagree with because outdoor knows what its represent. Outdoor remains the only medium you don’t pay for to view or to see. All other media, you have to pay and that is one of the greatest opportunities that we have. For example, if there is an advert in a newspaper, if you don’t buy that newspaper, you cannot view that advert. If there is an advert on radio you must purchase a radio set and put battery before you can hear it and so also television. But outdoor advertising is different because it is there on the street.
Whether you like or not, you will see it. Our clients know that a lot of masses, even the low income earners that they can see these billboards without paying anything for seeing. And that is why they cannot do away from outdoor advertising. And it is not something that lasts for a day or you destroy few minutes and goes off. The billboards are there 24 hours a day and clients have opportunity to change and refresh whatever brand you are putting on it.
On research, as an association, we are working with other industry stakeholders to have an encompassing industry support research. We are on it at the moment. Whatever we are going to come with is going to be accepted by the industry.
There is issue of debt where a Nigerian telecom company has cancelled billboard contracts and is owing a lot of OAAN members, which level are you now in trying to recover the money that is being owned?
On the Glo issue, it is true that, that telecom company is owing some of our members very badly. The promoters cancelled contracts since last year May and up till now have refused to pay those debts. Thereafter, the management made an attempt to start recruiting other new other outdoor companies to start doing business.
As at that point, we had to call an extra ordinary meeting of the association to make a bold decision on this issue. At that meeting, we all agreed that none of us should work for Glo until it pays the debt and this was communicated to the management and Advertising Practitioners Council of Nigeria (APCON) because we got APCON involved in this.
APCON wrote to ask the promoter why is doing that. As we speak, he is still hiding under another legal tussle with another company. But the fact is that we have been able to unite on this and that is why you have not been seeing his campaigns on the street. And when he calls for negotiation, only three of our members went after asking them not to do so though we sanctioned them very badly and they felt very sorry for it. The position we are now is that we want to push APCON and had sent a reminder to Glo.
If Glo refuses to pay this money, APCON should please stop vetting all its materials. If we can achieve that and it is being communicated to the promoters, I am sure the company will do something about the debts.
How much is the debt we are talking about?
I can’t put a figure to it but I am sure it is in several millions. Glo alone is owing our members several millions and we are trying our best to see that we recover these debts.
Your members were owed for carrying APC campaigns during the last general election, how far have you gone in recovering the debt?
We are yet to collect our money but we seriously believe we are going to collect our money. Because we are still talking to government, we have had series of meetings in the last few weeks about it and it has got to the highest level of authority and it looks like we will get the money. We are not relenting on getting that money. I can assure you that it is likely we get that money. The totality if the money is about 1.3 billion naira.
You obviously met a lot of challenges on ground when you assumed office as OAAN President and your tenure will soon come to an end, kindly give us a review of your scorecard.
Thank you for this question because I have been expecting it will come. We came in at a most difficult time in life of OAAN. We met a lot problems on ground which we are to resolve even those that the past executives shied away from to see whether they can get a solution. I would say here that the first thing I think we have achieved is unity among our members. This will be the first executive that will give an order that will say look we don’t have to work for this and we are all together and we are fighting this cause. And even on the APC issue, we are together, we are fighting it and we have remained a very strong body.
That is not the only achievement, in terms of the research we talked about, we have not gotten to the final level but for us to even have the initiative, starting it and getting all the sectoral groups on the table with us, is a very big plus. What it means is that we are going to have a research paper that will be binding by all of us. It will not be that you just sat in a corner of your office you put some figures together, everybody is on the table.
Of course, the research company that is doing it is a very reputable one, so we are putting a lot of money behind it. These are part of the achievements that I will say we have made this year. And of course, even the APC matter, as difficult as it is, we have gone a very long away. We have been to APC secretariat, we have been to Minister for Works, we have been to the state House of Assembly, we have been very rugged in trying to make sure that this money comes back. I can tell you that unity is our strength and that is what we are enjoying.
One of the things that we can say you have not achieved is that there won’t be poster awards this year, , can you tell us why the poster awards is not held this year?
Poster awards is the only major event that we do but when you don’t have finance, because we have a standard in OAAN and anything we want to do we do it as world standard. All the poster awards that we have done in the past were world class; we kept improving year after year. But last year was a very bad business year for everybody; a lot of our members even found it difficult to even pay their subscriptions.
Most importantly, we have decided that we are not going to beg for sponsors. We started sponsoring our event by ourselves. So, if our companies are not doing very well, particularly last year, there is no point. We don’t want to do a shoddy poster awards that is why we say this year we are not going do poster awards. Hopefully next year we are going to have a very good poster awards rather than just putting people under one house and do something shoddy. That is the reason why we did not do poster awards this year.
You have seen it all in outdoor advertising business, in your suggestions, what are the ways you think you can move OAAN forward?
We have been trying to coordinate and looking at those areas that our members are not doing very well. We are trying to talk to members, government to help us to reposition this business because we are the only one that have our structures on the streets which run into millions . So, government has to come to aid for us to be able to invest furthermore, our rates have to come down, multiple taxation has to stop and of course, training, research which we have been doing must go on . For instance, sometimes ago, we went to America to train our members and this is part of forward looking programmes.
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