Outlook on 2020 adspend
By Felicia Nwosu
There is no gainsaying the fact that the COVID-19 pandemic brutally left a negative mark on various brands advertising spends from the first to second quarter of 2020. Although there was a positive business outlook at the beginning of 2020 as digital adspend significantly increased worldwide prompting the projection that the industry will gloss $58.6b. This positive projection was, however, knocked out by the pandemic. The mandatory lockdown and paralysed business activities worsened the hit and therefore led to an abrupt drop in revenues. This development led many businesses to cut their advertising budgets, as they strove to cut costs in order to remain operational.
Warc, the international marketing intelligence service carried out a study on the Global Advertising Trends for 2020 where it found that advertising spend on e-commerce platforms would sharply rise despite the global recession. Warc said ad spend will reach a total of $58.5bn, as brands look to capitalise on the boom in online shopping as a result of the global pandemic.
According to the report, advertising investment across e-commerce sites such as Amazon, Tmall and Rakuten; Omnichannel retailers such as Walmart and Carrefour, and social commerce on platforms such as Pinduoduo and TikTok is set to increase 18.3% worldwide, growing 30 times faster than the wider online ad market and in stark contrast to a forecast fall of -8.1% for the total advertising industry this year.
In Nigeria, the total advertising expenditure in the country was put at over N162 billion annually. This, according to industry stakeholders, does not represent the potentials of the industry. They are of the opinion that the industry’s contribution to the nation’s gross domestic product has yet to reflect its image as the biggest economy in the Sub-Saharan Africa.
Akachi Ngwu, Executive Director/Chief Operating Officer at Luzo Digital Network and Media Limited while giving a breakdown of the industry performance, noted that out of the N162b, the Out-of-Home sub-sector accounted for N4.5b.
He added that, going by the records, television and video were the only traditional media that surpassed out-of-home advertising spend. “The picture is not as bad as it looks as out-of-home advertising has been performing reasonably well across other traditional media. In developed economies, the internet is the medium driving media consumption and spends.”
Ade Akinde, another Out-of-Home advertising industry specialist, also explained that overall billing in outdoor sector of Nigeria’s Integrated Marketing Communications (IMC) industry hit the N47.2 billion mark by end of the business year 2020.
Mr. Akinde disclosed further that the outdoor advertising sector alone accounted for about N45 billion of the total advertising industry billings in Nigeria which was estimated at N162 billion in 2019. The figure, representing conservatively 27.8 percent of the total advertising expenditure, excluded branding, marketing and promotional activities in the course of the period under review.
Idu Raphael, the Chief Executive Officer of Poke Ltd, said the contribution of Nigeria’s advertising industry to the nation’s gross domestic product is not yet a reflection of its image as the biggest economy in the Sub-Saharan Africa. He also decried a lack of balance between Nigeria’s advertising ecosystem and that of other African countries.
He noted that there has been an increasing transition from traditional media to technologically driven media which makes internet accessibility very vital for industry growth. He said: “Access to the internet would propel a lot of businesses in Nigeria which will then lead to a lot of investments in advertising. Maybe not traditional advertising but if you check around the world, a lot of economies are moving from traditional and spending a lot of their budget on digital and on social space.”
According to Mr. Raphael, the advertising industry contributes about two billion dollars to South Africa’s economy, while that of Africa’s leading economy, Nigeria, sits at less than five hundred million dollars. This, he said, was an indication that Nigeria’s advertising sub-sector still requires a lot of reforms to fully exploit the inherent potentials.
Expressing his view on adspend in Nigeria, Femi Adelusi, President, Media Independent Practitioners Association of Nigeria (MIPAN), said there is significant increment in 2019 when compared to 2020 when the pandemic started.
“From the data we are seeing and from the feedback that we are getting from our sister agencies from the top-line and bottom-line, the number has begun to grow and improve. I think we are quickly circling out the pandemic, the advertisers are becoming much more willing and open because if you take out-of-home that suffered the most during the lockdown, for example, now the vacancy level in agencies has significantly reduced and they are developing and growing on a continuous basis,” he said.
Mr. Adelusi further said that internet advertising revenue in Nigeria has shown significant improvement in the last years, and is projected to continue to rise. “There is a lot of growth in online or digital marketing because of the nature of contemporary consumer, as he wants to know what is happening in real time, so investment in digital advertising is growing. When you look at it in terms of total spends, other channels like TV and OOH even still commands much bigger spend.”
According to the information made available by Statista.com, between 2018 and 2020 the majority of advertising dollars in Nigeria were devoted to TV and video promotion. The report equally added that, in developed markets, internet advertising expenditures are expected to surpass TV; however, in Nigeria TV advertising is and will remain strong in the near future. The second most popular ad medium in the country is out-of-home, which is also projected to grow in the next three years. Internet is ranked third based on advertising spending. With the available information from the calculations, total internet advertising revenue in Nigeria grew from 73 million U.S. dollars in 2018 to 133 million in 2020.
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