Revisiting media debt… a bling in 2016
For a long time now, the problem of media debt has been a topical issue in the country’s marketing communications industry. A huge sum of money running into millions of naira, is owed by the buying agencies.
While media outfits are quick to accuse the buying agencies of shortchanging them by not making payments at all, or as at when due, the buying agencies, however, often lay the blame for spiraling debt at the doorstep of their clients. This may not be far from the truth as media buying agencies are themselves victims of client debt.
A leading indigenous telecommunications company in the country with footprints on the continent had to wind down a Pan-Nigerian campaign some years back over unpaid debt, which had nearly ruined the industry’s entire value chain comprising media buying agencies, production outfits, independent producers, print and electronic media.
A new twist, which has added to the industry’s woe is the huge debt, estimated at N1billion, being owed the outdoor sub-sector of the industry in Lagos State by its regulator, the Lagos State Signage and Advertisement Agency (LASAA).
Outdoor operators and LASAA are engaged in a battle of wits over the N1bn billings accrued from sites allotted to President Muhammadu Buhari and Governor Akinwunmi Ambode 2015 electioneering campaign.
Unresolved though, this imbroglio allegedly claimed the immediate past Chief Executive Officer of LASAA, George Noah, as its first casualty. Next in line are outdoor operators, now closing shop, because they are unable to meet their obligations in a period of dire economic decline.
In economically challenged industry value chain, the popular refrain for is that “Media buying agencies are killing the media” through sharp practices.
The words on the street is that the media does not get paid by the buying agencies after receiving full payment from client.
During his tenure as President of Association of Advertising Agencies of Nigeria (AAAN), Lolu Akinwunmi once challenged the media houses to come forward with genuine claims of debt owed by members of AAAN.
He threw down the gauntlet while presenting a paper titled, “Who is Killing Advertising: the Advertiser, the Agency, the Media or the regulator?” presented at a public forum organised by the Advertising Practitioners Council of Nigeria (APCON).
Akinwunmi said, “we have more than ample proof that some of the claims are a product of unprofessional collusion between greedy media personnel and agency staff. When challenged, media houses are often unable to produce genuine documentation to back these insertions or spots because often, none is issued.”
He cited a personal experience, saying that someone from a newspaper house once approached him with a proposal offering to run a full page advert of defunct Crystal Bank campaign for 50Percent of the actual cost in cash and off record. He, however, added: “In spite of the attractiveness of the offer, I thankfully declined.”
Unfortunately, the media debt crisis fuelled by mutual suspicion has been on for years without any concrete solution advocated or provided. A number of media, companies, have closed down, while stakeholders in the industry have initiated moves to see that this troubling matter is resolved but to no avail.
As far back as 2010, APCON, the regulatory body of advertising in Nigeria set up a special committee to look at the media debt issue in Nigeria.
The then Chairman of APCON, Chris Doghudje, said the findings of the APCON Special Committee on Media Debt Issues (ASCOMDI) revealed that the industry debt as at 2006 was a whopping N83. 2 millionHe further added that the committee clearly established that the high percentage of the debts did not emanate from the Association of Advertising Agencies of Nigeria (AAAN) and Media Independent Association of Nigeria (MIPAN), rather, were traced to Independent Producers/Marketers and Direct Media Buyers.
Fast forward to 2016 and the issue of media debt has, instead of abating, escalated to greater unproportionate heights. Media agencies, acting as supreme lords, still renege on their financial obligations to independent producers and production outfits, at the palpable resentment and detriment to the production companies.
Ironically, one case which best exemplifies the uneasy dichotomy between media buying agencies and production companies is that of an outfit owned by a former chairman of APCON. Reputed to be one of the leading media buying agencies in the country, where it appears to have lost its self-esteem is on the issue of payment of monies to production outfits. It has also been locked in a dispute with a production company, since last year over its refusal to pay the production company the sum of N11.199 million owed them.
Following the company’s failure to reimburse the amount mentioned, the latter decided to institute a court case against the former.
This amount, it was reliably gathered, was the amount incurred by for handling the advertising services of three major clients of Nestle, DStv, and Airtel between March 18, 2010 to December 14, 2013. The services rendered were said to have been for some major projects, which were deployed on major TV stations, include; DStv alternative Payment on NTA network, Airtel Club 10 on NTA and Nestle H1 Strength 15” animation, which was also aired on NTA network.
The refusal of the company to pay is nothing short but puzzling, especially, after investigations revealed that these companies, have since fulfilled their financial obligations to the agency.
When the matter of non-payment started brewing, there were contentions by both parties over the amount to be paid. The total amount initially bandied around was about N15 million, but after rounds of dialogue between, both parties accepted the sum of N12, 288,008.39 as the outstanding amount to be paid.
At a meeting held on February 11, 2015, both parties signed the ensuing document stipulating the amount to be paid and promised to abide by the terms of the document.
The entire conciliation process seemed to be on the right track, as the buying agency had agreed to pay a monthly instalment of N1, 088,212.50 to Primedia after a meeting on June 2, 2015. However, after a lone payment of the instalment with payment voucher no: 10253334, the buying company decided decided to renege on its financial commitment and no word has been heard from them since then.
Consequently, the law court was approached late last year to mandate the management of the buying agency to fulfil its financial obligations.
Many still wonder why the CEO who was hailed as a ‘reformer’ of the advertising industry in Nigeria as a result of his numerous policies and actions he enforced as APCON chairman, would allow his agency to be embroiled in such a messy scandal.
Another poignant reason as to why the situation is befuddling to stakeholders and analysts is that media debt was an issue he tackled head on as the henchman of APCON.