EXP Nigeria Chief Executive Officer, Wole Olagundoye, who runs the biggest experiential marketing outfit in Nigeria, speaks to GODDIE OFOSE on the challenges of practitioners, brand activation segment of advertising. He argues that payment by multinationals corporations, which takes between 60 and 100 days, threatens the business and wants stakeholders to stand up and protect the industry.
Your assessment of experiential marketing in the first half of 2014
It has been very interesting, challenging and inspiring as well. There have been insurgencies and insecurities, especially in the Northern part of the country, but we have carved out two battle states and carried on with our activations in most areas.
The point I am trying to make is that despite this seemingly unfortunate situation, we still witness a steady flow of business.
Things have improved, in my view. We see our clients doing much more, especially those in the fast moving consumer goods (FMCG) segment of the market.
But we have seen a bit of a slowdown in telecoms primarily because the networks are almost at par with pricing and their infrastructure, almost the same in terms of offering. These people are basically trying to keep their engine rolling.
So, we have seen a little bit of slowdown in terms of activations by telecommunication companies. Consumer goods have picked up because there is a renewed focus on Nigeria now, especially with the new rebasing of our economy. That has really gingered up FMCG.
Apart from FCMG, there is retail that has come through in the last two or three years but it’s gaining solidity and becoming stabilised in terms of what is happening in retail space. We have also started thinking of new ways of harnessing the potential in retails, both formal and informal.
So, generally, in the last six months, it hasn’t been bad, given the supposed insecurity we have in the polity. Things have remained fairly calm and business is picking up.
The only other thing is that clients have tried to control remuneration to agencies. There is a wild wind going through the industry where we see a 10 per cent agency fee regime across the board. Prior to this period, we used to operate within 15 per cent, but now we have seen a reduction from 15 per cent to 10 per cent and also the clients want more for less.
They keep putting a lot of strain on agencies in terms of delivery and it’s increasingly impossible for agencies to deliver as per the current remuneration regime in the industry.
What the association is doing to overcome challenges
We are still carrying on in spite of challenges but we haven’t really organised ourselves to become a solid force. Our association is still fledging and young and trying to find its feet to defend the industry.
Until we get there individuals will continue to fend for themselves because nobody wants to be singled out and get hammered. Basically, that is what we have seen in the polity so far, and I don’t see it slowing down, moving into the end of the year.
Half year 2 (H2) will not be slower than H1 because things are going to pick up. There are people who want to work towards getting their brands entrenched before the yuletide season, so I see things really bubbling up.
Comparing current statistics with last year’s
There is no trend that things done last year are not being done this year. This is an enormously elastic market, it can take a lot of activities. We are talking about a nation that has over 170 million people, that is an enormous market.
Any business that can gain at least 10 per cent of that number will be seating pretty well, so there is enormous capacity across the country in terms of what can be done.
I haven’t seen any trend that suggests that things that happened last year haven’t happened this year for security reasons, if it is not happening then it will be for financial reasons, and there are very few.
How the industry avoids unnecessary pitch competition
Speaking specifically in respect to experiential marketing, the honest truth is that we haven’t done too much in that regard. As I said, our association will be a year old in July; we are still in our feeding stages and also forming the right blocks to stabilise ourselves so we can forge ahead with the aim of reinforcing the industry.
Therefore, we haven’t had an articulated front to present a client with the interest of the industry. It is something that the clients are taking advantage of and I believe that until such a time when we begin to speak with one voice like advertising. Clients will continue to take advantage of that weakness.
The other part of the situation is this, you will see the trend clearly; spend a shifting from ‘Above the Line’ (ATL) to ‘Below the Line’ (BTL) It is clear and you will also find out that the clients are a bit worried and want to be sure that they are getting value for money, which is why this reduction of remuneration is coming in.
Also, we haven’t done enough in terms of measurement to show clients that this is the value you are getting for doing business with us. We haven’t been thorough in doing what we need to show up on. For us in experiential marketing, that is what we are really focused on, being able to measure the impact of our activities in respect of what clients are doing so they can see and know that these people are actually adding value.
When a client sees you as value adding then remuneration goes up because you can clearly show what value you have added to that business, giving the activities that you have done for them. If it is more or less like guess work, for which it is now then, it puts us on unstable ground.
It is something we need to work on. We have a lot of work to do, because it is this same industry where clients pay pitch fees and in that same space others are not getting them.
We need to pick up the mantle and do the necessary things to reinforce our industry, which we are not doing right now. Those are the things that the Experiential Marketers Association of Nigeria (EXMAN) needs to implement.
How the association is addressing the lack of data to measure performance
Unfortunately we are still a subset of the larger society and the industry. We have a poor data management culture in Nigeria and it is affecting our industry as well.
Right now, ATL has a better management culture than BTL. BTL needs to rise to the occasion and collate and manage data properly to show the value it is adding.
That is something we have started to think about and there are various initiatives that have come up to harness data properly and manage it, because it is those statistics we can show to clients that this is what is happening, and also they are for the use of the industry.
Anybody that understands what needs to be done can go there and get data. As we move on it is going to be even more important that we are able to get data, there is no better way to go because it has become a necessity that must happen.
The more we try to organise ourselves the more I see the need for data gathering and management to be a central focus because it has an impact with measurement.
If you don’t properly organise data then you will be short changing yourself. One of the reasons you have it so organised in ATL is because they need to use it to show clients all what they are doing. That is why that data management is more robust, so it must be the same way for use in BTL.
The industry is battling with the credit policy of multinationals. Is this a legal document that controls payment?
I don’t know about legal but I know that it is something that our clients are enforcing, and if we want to do business they tell us these are their terms. For agencies, it is a take it or leave it situation and it is putting enormous pressure on the capacity of agencies to deliver satisfactorily to clients.
There is the burden of going to the bank to raise capital and you know our interest rate is not friendly. Interest rate is in double digits, unlike the other climes where you have it in single digits while some loans are interest free.
Even the supposed agreed payment declined. What you have is over exposure of your facilities in the bank, and before you even get paid bank interest has over eroded all the profit margin made on the business.
It is a serious issue the industry needs to stand up and challenge because, in no time, it will kill our industry. It affects talent, it affects infrastructure and the ability to develop new innovation, and also the whole drive to have ourselves compared to global counterparts. So, it is a major hindrance to development in the industry and it is something that needs to be addressed immediately.
Impact of 70% mobilisation fee multinationals pay agencies in South Africa but not in Nigeria
It is a huge impact, because it means you must have a huge cash outlay to work with all the multinationals and for them it is a rule. There is no upfront payment, agency must raise the cash to get the job done and we wait anywhere from 45 to 90 days to get paid.
That is the biggest demotivation to the industry and I see it subsuming agencies. We need to get legislation to prevent that from happening because most of this multinationals do not give any credit facilities to consumers.
They get paid upfront but here they get you to do a job for them and don’t get to pay you until the job is completed. The major bedrock of that is that they are trying to say because of the way we are in Nigeria, if you believe you can do something then do it, once we see that it is done we will pay you.
They believe it is the way to ensure that service is delivered as agreed, but you need to look for professional agencies that can deliver and ensure that they get remunerated appropriately, and on time, so that they can keep the right talent and that talent can blossom to even give more to the client.
What you find now is the minute you have an outstanding talent on the agency side, there is pressure on the talent to join the client because the payment structures are completely different and this comes from the remuneration that the agency is getting.
You keep demanding exceptional thinking and innovations from agencies and they are not able to maintain such talent because the minute somebody grows to a certain level then they feel they need more, and of course truly because we all work and live in the same market they get to move to other industries where they feel they will get more.
Need for intervention of Trade Ministry and Investment
Simple, this should be regulated. I don’t think it is right for agencies to have a payment structure from clients that exceeds a 30 days payment circle. It should be looked into, especially when it involves the big multinationals. Small companies pay upfront but they don’t have the capacity to do the kind of volumes big ones are doing. I understand the need to manage cash flow but to exceed 30 days is to do a disservice to the agency.
The Ministry of Trade and Investment must get involved in this case, we must lobby and pressure them to make sure that this is sorted out and implemented in the industry.
Those are the kinds of things we are looking at doing with EXMAN in the next one or two years.
Contribution of experiential marketing to employment
It is huge. You cannot count the number of events that happens across this country every day. Of all the industries and subsectors in the integrated marketing communication subset, experiential activities hire the most hands because you are doing physical activities. Irrespective of the technology that you use, people are involved.
We employ numerous brand ambassadors to engage with consumers in many types of activities, we employ musical artistes, actors and all sorts of people in order to deliver to our clients. This happens on a regular basis.
The government should do everything in its might to support this industry so that we can keep creating jobs and keep ensuring employment and also affect the economy in such a robust way that you can only have positivity coming out of that.
Industry contribution to economy apart from employment
With the recent rebasing of our economy, all of a sudden Nigeria has become a beautiful bride that multinationals and business oriented individuals want to make their destination. But business needs a lot of things to grow.
You can’t start up a business and not create awareness for it. You would try and create some sort of engagement for the brand that people can understand what it stands for, understand the essence and core of that brand to patronise it. Experiential marketing plays a very strategic role in economic growth, especially as it affects foreign direct investment, because it needs to reach a certain target and you need experiential to create that impactful engagement with that target.
We have experiential marketing everywhere; we are doing something where we are going to launch a mall in Abuja, it is coming up in a very short while, so we need to go and create the awareness so that people will understand that a new mall is coming up, a new business in that area.
For the period of time we are going to be there, the number of people we are going to employ in that vicinity cannot be fewer than 100 directly or indirectly.
You see this happening all over the place. It is very key and strategic, so the government should pay particular notice and focus on it because it can only blossom to become a beautiful thing in terms of how it moves into the future.