Bad season for outdoor advertising

• Practitioners at loggerheads with Lagos State Government

This is certainly not the best of times for the outdoor advertising industry. Asides shrinking economy, government activities through legislation and indebtedness to the industry are crippling the business.

Despite a debt totalling about N1b from Buhari/Ambode campaigns during the last general election, outdoor advertisers are being slammed with high charges by the Lagos State Signage and Advertising Agency (LASAA), which is even collecting charges from empty billboards.

This development has pitched practitioners against government, as they insist on not paying for empty billboards that are not generating income. They also refute government claims that practitioners owe on billboard location, saying such demands could drive them out of business.

According to the advertising practitioners, the increased charges by LASAA comes on the heels of cut in advertising budget by companies in response to a recessing economy. These challenges are becoming obvious in the industry. Today, a trip round major cities reveals that many of the billboards, including the electrically propelled ones are empty. Nothing is being displayed on them, a sure sign of changing times for the industry.

Interestingly, all this is coming at a time, when there is agitation for the state to defray its debt, incurred during the last election to advertising practitioners.

Findings revealed that operators in the sector are aggrieved that the Lagos State Government is not willing to pay the debt it incurred through one of its agencies— the Lagos State Signage and Advertising Agency (LASAA).

Most of the practitioners, who spoke with The Guardian, said they are unable to meet basic running cost, including staff salaries, because of the debt.

Investigations revealed that part of the agreement between both parties included defraying the cost incurred by each of the operators on the usage of their sites for Buhari/Ambode campaign. To do this, it was learnt that the erstwhile Managing Director of the state advertising agency raised a media order on behalf of the party; assuring outdoor billboard owners that whatever cost incurred by each campaigner would be used to offset previous debts owed it.

It was gathered that no fewer than 50 outdoor agencies were affected in the deal and each provided a minimum of three major sites for the campaigns. While the operators are laying claim to the debt, the regulator is asking the practitioners to pay the levies for outdoor sites approved by it.

It was also learnt that the agencies are now more aggressive about the debt because businesses generally are on the downturn, making many companies to cut their marketing communication spending, which is robbing negatively on outdoor agencies.

A survey undertaken by The Guardian revealed that many of the LED billboards have just one or at most three adverts running, a break away from the past, when minimum of five adverts were run. Also, many of the static boards are empty, while some of the LED billboards are now operating as static billboards.

President of Outdoor Advertising Agency of Nigeria (OAAN), Mr Babatunde Adedoyin said it wouldn’t be out of place to say the economy is in a total recession, and that in such situation, there is no way it would not affect his industry. According to him, the first quarter of the year was not rosy, because clients are cutting budget, as they are unsure of what steps to take in the year. Many can’t even access foreign exchange to import raw materials.

Said he: “Since they do not have raw materials, they can’t produce, hence they can’t advertise. The problems are there and we are hoping that next quarter would be better. But for the first quarter of this year, as we speak, there are no media orders from most companies, as some of them are still trying to put it together because of the uncertainty we are facing now. That is the basic truth and I can’t start mentioning these organisations. Some are even owing the last two quarters of last year and I am talking of multinationals.”

He lamented that in spite of the harsh economy, it is unfortunate that the regulators only care about generating and improving on internally generated revenue for the state.

“Primarily, it is about money for them and that is why now that they are not getting much money from the federal allocation, their governors and finance department are looking inward and they are putting more pressure not only on our members but other people,” he said. “If you are a landlord in Lagos, you will understand what I am talking about. It has been all kinds of charges from tenement rate to ground rate.

“Unfortunately, those of us they are trying to get the money from are having the same problem. Our clients are not doing well; they are not giving new orders, neither are they paying for old ones.”

Continuing, he said the drive to generate more income “is not peculiar to Lagos. As we speak, our boards are being pulled down in Kaduna, Rivers and Abuja. We have been to all these places and the story is the same, except that charges in Lagos are higher, maybe because they are the pioneer of these agencies.”

Adedoyin also explained that OAAN is unhappy that its members are being compelled by LASAA to pay for vacant billboards that are not generating income. He said not less than 70 per cent of the out-of-home boards are vacant across the country. This, to him, is the major reason his members owe state regulating agencies, including LASAA, because the regulatory agencies are expecting payment for vacant boards, which are not generating revenue for the owners.

“Whatever money we spend comes from advertisers. Yet, the regulators still insist that we must pay the same amount that we paid, when the billboards were occupied. Where do they expect us to get the money? What is actually the cost of the debt they say we owe? It is impossible for us not to owe because we can’t walk into the bank and take a loan to pay for vacant billboards. Yes, we owe LASAA and the debt is a result of charges on vacant billboards.”

Speaking more specifically on the debt being owed outdoor practitioners and the position of the new LASAA management, Adedoyin said, “We are saying to Lagos State regulatory agency that we did a job and we had an agreement with people that gave us the job. But LASAA is saying it does not know about that agreement and we believe that government is a continuum; very soon this present management will be a thing of the past.

“People don’t learn from the past. I don’t know how OAAN will enter into an agreement with somebody and when that leadership departed and another came in, it would begin to deny knowing anything about such agreement.

“We believe regulators should understand the environment, where they operate and they must also know that a percentage of what we give to them comes from advertisers, who have the right to take their money anywhere they like. We are here today talking of rates that are too high and we are asking them to bring it down so that we pay as we receive, but they say no. Even though the billboards are vacant, we must still pay the same N3million that we paid when occupied. It is something every other state has copied. It all started from Lagos and anywhere you go now, they tell you they are paying in Lagos.”

The Vice President of the association, Emmanuel Ajofu, said the rate being charged by state regulatory agencies has since gone up by over 1000 per cent since the inception of LASAA in Lagos State.

“The regulators want to make money, but like we keep telling them, today Nigeria has oil, but we don’t have anywhere to sell it. Lagos State government can only collect allocations from the Federal Government to the extent of what the latter has. So, we are also telling them to allow us pay to the extent that we have received, but they are not reasoning along that line and we must get them to understand that. If they can take only what has been generated, then they should also allow us to pay what we have also received.”

The Managing Director of Optimum Exposures, an Out-of-Homes company, Mr Bayo Adio, listed some of the outdoor advertising challenges as taxation, multiple levies and over regulations.

In his view, if the state regulatory agencies are demanding for fees on unpaid exposures, invariably that will make operators to give discount on some of those platforms in order to break even.

On her part, the Chief Executive Officer of Executive Options, an advertising firm, Mrs. Maureen Umanah said that appointing people with no understanding of the advertising industry as head in Out-of-Home regulatory agencies is killing the business. She said the factors militating against the practice of outdoor advertising in Nigeria include lack of support from government.

“Most of the time, the people that oversee the affairs of these government agencies don’t know anything about the business. That is why when they come on board they just kill the business. We need people with deep knowledge of the business and the industry; people who know how payments are done among other things.

“Business has not been rosy in recent times and despite the growth orchestrated by the deployment of innovative boards and platforms that have added aesthetics to the environment, corporate organisations are cutting down on budgets every year. In such cases, there is definitely no way we can begin to talk of enhanced revenue for practitioners.

“It is so bad that sometimes they call us in the middle of the year for meetings for re-negotiations, where decisions to cut down an already agreed rate are taken. Sometimes, despite the fact that there is an existing contract, some clients still insist they want further discount, and you are left with no choice than to accede to some of these requests, not because they are good, but because you want to survive. That is what we have been experiencing. We have a lot of revenue cut in terms of overall budget and rates,” she said.

Before the birth of state regulatory agencies in the outdoor advertising industry, Advertising Practitioners Council of Nigeria (APCON) was the sole regulatory agency. And on the board of APCON were practitioners, who are tested hands. Ironically, state agencies are managed allegedly by people with no background in marketing communication; neither are practitioners admitted into the boards of the states regulating agencies.

It was, however, gathered that the Lagos State House of Assembly has set up a committee to look into the issues raised the by Outdoor Advertising Agency of Nigeria (OAAN) following a letter sent to the Assembly by the association.

Attempts to speak with both the immediate past MD of LASAA and the incumbent did not yield fruit. They neither replied the text messages sent to them, nor picked or returned the calls.