The incursion of consultancy firms and tech companies on advertising dominates AAAN AGM

All over the world, the advertising industry is embarking on a necessary journey of soul-searching, trying to figure out what had gone wrong with an industry that is fast losing its charm and appeal and what ways to fix the problem. Operators are worried that on a regular basis, ad agencies are losing their territory as advertisers are finding alternatives to traditional advertising models. These new advertising channels, which are mostly tech companies are seen by clients to be more affordable, precise and even faster and they are now gradually relegating agencies to spectators on their own very turf.

This was one of the narratives that dominated the recently concluded Cannes Lions Festival of Creativity held in Cannes, France, where the tech companies like SnapChat, Google, YouTube, Facebook became stars of the event, and advertising agencies became fringe players. And here in Nigeria, the conversation is no less intense. The signs of gloom is even more damming in Nigeria where only about 20 percent or even less of the advertising agencies are said to be robust, according to industry analysts, other are barely surviving.

The situation is so dire, that it dominated the Annual General Meeting (AGM) of the Association of Advertising Agencies of Nigeria (AAAN) held over the weekend in Lagos. It was obvious from the meeting that the industry has been pinned to a bad corner and they needed to find a way out of the quagmire which though has existed for long but has been made even worse by the economic recession. Some of the stakeholders feared that the industry has very limited options as it must either innovate or die.
Steve Babaeko, CEO of X3M Ideas, suggested that the industry must begin to look more seriously into mergers and acquisition, Kelechi Nwosu, CEO TBWA Concept stressed on the need for rebundling, adding that the present business model was not working. DrOlaniya, CEO Advantage warned that the industry needed to warehouse knowledge-based creative thinkers and also focus more on growth, if it must check the rampaging incursion of consultancy firms into advertising.

Kelechi Nwosu, CEO TBWA/Concept
There is a disruption of the traditional agencies model, but unlikely that we’ll all perish as an industry. It’s very unlikely, if we do what we are supposed to do. Also we need to rebundle, but we must do it in a much more efficient manner. Which means shared resources, shared value. How can you have a solution that makes sense and its integrated but do not rest under your roof? Another though is that we need to look at other offerings and different markets. At TBWA we have talked about SME shops. There is enough to chew for more than 200 percent of the current agencies. But for us to go into that world, we have to change our current mindset. What they are asking of us is actually consultancy.

Tope Jemerigbe, CEO DKK
Sometimes fresh thinking is thinking back. We need to ask ourselves what are the low hanging fruits that we can latch on to that will help reposition ourselves. We need to rethink the nomenclature of our agencies, that is one of the thinking that is killing us. I remember when I started my career, we were taught everything. Yes, we went by the name advertising agencies, but we were holistic in our thinking. But within a short period of my experience, fragmentation started and everybody started specializing. When you over specialize, you eventually have nothing left. We need to think back and not allow the consultants take or jobs. Before now all they did was come up with those big words and big ideas and hand them over to clients, but today they are into execution. They are acquiring advertising companies.

Steve Babaeko, CEO X3M Ideas

What we are witnessing is something that have been keeping a lot of us awake at night anyway. I just came back from Cannes where a huge agency group like Publicis came up to say they were not going to attend Cannes for 2018 and I believe what may have instigated that decision (I am not sure) was that Cannes, though an advertising agency event, for the first time, the tech companies dominated the advertising agencies. The first thing that assaults your presence when you get to the event was this huge canary yellow merry-go-round that you see installed by Snapchat. And all of the beachfronts that used to be the properties of ad agencies were dominated by Google, Facebook, YouTube etc. So for the first time advertising agencies became spectators at their own event. These kinds of events poses challenges at us as a group of entrepreneurs. I think consolidation might just be the saving grace. We need to find a way to network. In Nigeria it becomes even more worrisome because the clients we are serving are closing shop because of the economy, but more advertising companies are opening shop. That inverted pyramid I think is very frightening.

Bayo Adekanbi, MTN
I think there is hope. But the fact is that there must be a deliberate effort to package and build ourselves to the level of respect. There is a lot of capacity in the industry but we must make a deliberate effort to build the practice. A lot has to do with the agency leaders. I am going to give a classical example, when I was an Executive Director at DDB, we had a session where I needed to do a presentation, I am bringing to the agency, Engineers, first class scientists, physics graduates. It didn’t make sense, but I give all the kudos to my Chairman, Mr. EnyiOdigbo, who said ‘Bayo whatever need to do go and do it.’

Then we recruited lot of first class guys. We built the first data base of historical advertising, PR analytics. As an agency in 2008, what did that do for us is, it did not bring money, but it made clients to respect us. We sent detailed report to clients free of charge and they were impressed. There must be a deliberate effort to invest in things that will count for the future even when it does not make money now. At least, it will earn us the reputation and respect of the industry.

Tunji Olugbodi, Executive Vice Chairman of Verdant Zeal Group
We have to create our own narrative by coming together and becoming more cohesive in our approach. This my Mercedes is bigger than yours mentality won’t help because we have markets that are being eroded everyday, but you can create new markets and horn-in on your own comparative advantage when you work together as a cluster. We also need to understand that Lagos is not the only market.

Dr. Rotimi Olaniyan, CEO Advantage/EXMAN President
The reason why marketing communication is dying is because of one truth- what is the question that we answer when we go to meet the client? The consultant answered one of the most important question that operates at the CEO level or indeed the board level- and that is growth. Because they go in with that answer, they will always be on the pecking order ahead of us that go in to answer questions about brands. If we want to move our value up, we have to step further up. A lot of people in our industry are seen as tactician and not truly strategists. The truth is that the strategy has been done in London or US or even Johannesburg. What they tell us to do here is adapt strategy. That is not strategy, that is tactical. If you truly want to be strategic, you actually have to question the fundamental basis of their business in the first place at the level of the business model. Therefore there is a need for us to have knowledge based creative thinkers in all our agencies.

The history of marketing communication in this country is the history of entrepreneur who slaved to build their businesses and with it they have attachments to their businesses. But the future of this industry is going to be about institutional ownership. We therefore can’t run away from mergers for value. The sooner we answered that question the better for all of us.




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