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AFFILIATIONS: Bitter pill for advertising, bait for public relations

by Goddie Ofose
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Goddie Ofose and Bidemi Bakare x-ray the affiliation bandwagon among the Nigerian advertising agencies in the 1990s and early 2000 and the reasons behind the sudden backtrack by the agencies, while public relations agencies have adopted the business relationship the former have discarded.  

Between the late 1990 and 2010, the advertising industry witnessed a preponderance of affiliations of indigenous agencies with their foreign counterparts. However, few years after this remarkable development, the story became different as some of the affiliations have now surprisingly gone under.

Prior to the enactment of the Indigenization Decree in 1974, advertising had been the exclusive preserve of the foreign agencies as exemplified by the incorporation in London of West Africa Publicity Limited, the first ever advertising agency in Nigeria, which later metamorphosed into Lintas Lowe offering marketing support for the growing products line of its parent company, United Africa Company (UAC).

But by the time the act took its root and had firm grip, indigenous participation had grown tremendously offering advertising services to a wide range of clients that cut across manufacturing, construction, banking and telecommunications. At the last count, there were over 130 ad agencies registered with the Association of Advertising Agencies of Nigeria (AAAN).

While the upsurge in local participation was rife, there was, however, an interesting development as some of these indigenous players welcomed partnerships with foreign agencies to further boost their credibility, capability and potential in advertising.

The development in the late 1990s, therefore, saw local agencies including Insight Communications, Center Spread, Rosabel, Cosse, DDB, SO&U and Prima Garnet getting affiliated to Grey International, FCB, Leo Burnett, Bate, Saatchi & Saatchi and Ogilvy respectively.      

For these local players, the motivating factor for this romance was the need to acquire considerable capacity through knowledge transfer as the immense clout to pitch for the accounts of big multinational companies in the country.

But, while this honeymoon lasted, some of these affiliationsfew years after started suffering bad pitches and eventually closed shop fuelling suspicion that the interests of these local players were not well protected.

Besides the second generation agencies’ fortress on affiliation, some new generation advertising businesses such as Noah’s Ark, Novelpotta Y&R and others also pondered over the idea. Noah’s Ark tested the waters with Dentsu, but failed.

Dr. Celey Okogun’s Novelpotta may have dropped theY&R name since much has not been heard about it in recent times. It was also gathered that Steve Babaeko had travelled to the United States to seal an affiliation deal for X3M Ideas, but the attempt reportedly did not fall through.

For instance, Rosabel has not recorded since its affiliation with Leo Burnett crashed. Rosabel’s misfortune happened when Publicis, at the global level, acquired Leo Burnett and decided to buy stake in Insight Communications. That relationship was automatically transferred to Insight Redefini.

Others operating are, however, now doing so on their own having severed relationships with their foreign partners who have since then relocated and returned to their former bases.

Meanwhile, investigations by The Industry revealed that a lot of unresolved issues, chief among which is the limit of 25 percent stake in ownership of a local agency by a foreign partner as contained in the review of the Advertising Practitioners Council of Nigeria (APCON) Act 2005, may actually have been responsible for the fate which these local agencies suffered

Speaking to our correspondent on the issue, Mr. Kayode Oluwasona, Managing Director/Chief Executive Officer, 1201 Brandsway, a fully integrated marketing communication company, said a lot of issues could have happened to affect those affiliations that went awry.

Oluwasona, a former AAAN’s president, said the issue at hand can be better situated if one considers the objective for which the affiliation took place in the first place.   

“A lot of issues could have happened and a lot of issues are still happening that are affecting affiliations. The first thing to consider is the objective for which the affiliation took place. One needs to know what the reason for the affiliationwas. If there is a reason for the affiliation, then, the question is, has the reason been achieved or is being achieved? If the answer is yes,that is fine. If it had failed to do so, then, one can now begin to ask what went wrong. The truth is, at the very beginning the foreign guys were not particularly interested in affiliation for commercial reasons. They were comfortable with just having their names on the signage. It was just to show they were present and that they had affiliates in these places.

But later in some cases, you had a case of some foreign guys who wanted to be involved in the business and be part of the operations to make it profitable to be able to make something out of it. So, in the event of the failure of these businesses to achieve this objective for which they went into affiliation, there was the possibility of going for somebody else that can get them what they want. Before then, not many affiliations were based on profitability because I know that not many people cared about what was in the affiliation for them”, he said”.

The advertising guru said another reason why an affiliation could breakdown is the change of vision of the local business, adding that insincerity on the part of the local agency could also sound a death knell to affiliation.

He said, “If, for instance, the local business at the beginning was satisfied with just being an appendage by looking at affiliation as a means of getting business. If after being affiliated to this foreign agency to have an opportunity to have businesses and clients locally and internationally and those businesses are not forthcoming, the local agency may say, “let me re-strategise by dropping this affiliation and go for the one that can pay me better” There is also the issue of greed; for example, there is insincerity on the part of the local agency as it fails to declare business information openly and transparently. By the time this is discovered, the affiliation will breakdown. If, for example, an agency is making money but failsto tell the partner the financial returns or fails to give correct information about operations, there is bound to be problem. Of course, the foreign guys would be wondering what is happening. Don’t forget that you may not be the only affiliated outpost they have. They may have in Nigeria, South Africa, Ghana and Kenya. If the other ones are putting up a particular level of performance with transparency, but you are not forthcoming, they would be discouraged and dissatisfied and may want to change or remove you as an affiliate”.

 On his part, an advertising expert, Dr. Taiwo Akindele, said the breakdown of the affiliations may not be connected with the review of the APCON Act as being speculated or insinuated in some quarters which is said not to have gone down well with the foreign agencies. The review stipulates that foreign agencies can only own 25 per cent stake in local agencies.

He said, “I don’t think the review of the APCON Act has anything to do with this. Firstly, I think the Nigerian business environment is very attractive to them. It is attractive enough for them to want to comply with whatever regulation that our authority stipulates .There is nowhere in the world they will go to that they will not meet one form of regulation or the other .The question to ask is, since after this APCON’s reform have they pulled out? Can you tell me which foreign agency has pulled out just because of that? I don’t think so, as I can’t think of any“.

Akindele, a lecturer at the Lagos State University, Ojo, said most of the foreign agencies that disengaged from one local agency may have subsequently engaged another, adding that the attractiveness of affiliation for them far outweighs the challenges.

“One fact we must admit is that most of these foreign agencies that disengage from a local agency may not be out of the country entirely. They leave one agency and go somewhere else. They do not leave Nigeria on the account of any policy. And then again, I want to believe that whatever the issue is, policies are always evolving .Before the reform, there was no 25 per cent and for whatever reason, the government felt 25 per cent was appropriate .We must realize that over time, things can also happen to cause a change and that was what happened. And even if they don’t like it or is it of concern to them, the attractiveness is higher than the challenge that they will suffer. So, I don’t think that the review of the APCON Act was the problem. Most of them never had a stake before, not even 5 per cent. They were only comfortable with just being around the country’s advertising space.

And mind you, affiliation does not necessarily mean you must own equity. I can be affiliated to you and the terms of engagement may not involve that you own any part of my business. It could just be administrative, it could also just be technical”, he said

Akindele noted that affiliations have done more to help advertising in Nigeria grow beyond expectation, stressing that the development of the sector could have been slower without it. 

“To be sincere, affiliation has been a huge benefit to the Nigerian advertising industry. First and foremost, this is a practice that originated from the western world or the more advanced world and they are coming to partner with us in such an arrangement. These affiliations have exposed us and made us see what it is. They made us learn the ropes. They actually developed us. So, technically, they brought knowledge, awareness and exposure. And, then, the affiliated businesses are the lucky ones as they were provided with the opportunity to attract world class global multinational businesses and clients. For example, one hears that a particular international brand has a particular network as his agency. If you are affiliated, it opens you up and you can be the agency that would work on the business. That helps to develop your capacity. It also helps our people in training. It helps our people in tools including creative evaluation tools and proprietary tools that have already been developed in those advanced countries which were brought on the account of the affiliation. Without affiliation, we wouldn’t have had it. Even the management skills too, including the structure and the organization and the way advertising agencies are managed .The truth is, we lean on these foreign agencies to make sure that we learn a lot from them. Now we can confidently say we are better off because we have been exposed and can possibly go the whole hog by doing it alone. But from the very beginning without affiliation things could have been slower”, he concluded.

Advertising industry reform that changes everything:

Governing Council of APCON at its 132nd session held on September 26, 2012 approved the new advertising industry reform proclamation. The new APCON proclamation, which redefines the practice and business of advertising, took effect from January 1, 2013.

License Regime: All categories of advertising organizations as listed in the APCON Code that engage in the business and practice of advertising for the purpose of gains/project shall be licensed by APCON (with the exclusion of Advertisers). All agencies will have to apply for and obtain practice license from APCON to legalise the operations of the advertising agency/organization. Without the license, the business of the agency will become illegal. The license shall be renewable every three years.

Each agency/organisation shall have its area of specialization defined, which shall be the basis and scope of license granted to such agency/organization. Media independence agencies will be granted licensefor media planning and buying only. Outdoor agency will be granted license to own and manage outdoor sites, while full fledge agencies will be granted license for media planning and buying, creative and brand management. Licensed agency must operate within the scope of license granted to such organization.

Where a firm decides to operate outside its licensed area of specialization, the concerned organization shall be required to set up a new firm and register the new firm that is intended to operate and offer the new designated, i.e. if an advertising agency intends to conduct the business of outdoor agency, such advertising agency must set up a new outdoor agency and obtain an outdoor business license from APCON to legally practice the outdoor business. If client/advertiser XYZ Limited intends to buy media or own an in-house agency, such advertiser must set up an independent organization for the specialized business either, Media planning & buying, full fledge agency/or outdoor business and obtain license for the operation of the newly set up organization. Operating advertising services functions without corporate license will become illegal with effect from January 1, 2013.

 Advertising organizations are now classified as follows:

    (i) National Agency

    (ii) Foreign Agency

    Any shareholding of 74.9% and above (up to 100%) by Nigerians qualify an agency as a National Agency, while 25.1% and above (up to 100%) by foreigners qualify an agency as a Foreign Agency. Foreign Agency shall practise advertising business targeted at a market outside the shores of Nigeria.

The advertising reform of 2012 championed by the then APCOPN’s chairman, Lolu Akinwunmi, may have given credence to why affiliation with the creative advertising industry in Nigeria is less attractive today.

Industry watchers believe that the public relations industry in the country, that is largely unstructured, may continue with the trend since there are no stated rules and regulations that guide their operations and foreign incursion in the industry.

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