ARCON moves to strengthen advertising practice with N1bn indemnity insurance, other policies

Dr. Lekan Fadolapo

The Advertising Regulatory Council of Nigeria (ARCON), has announced a mandatory N1b group professional indemnity insurance for advertising agencies under sectoral bodies like; the Association of Advertising Agencies of Nigeria (AAAN), Experiential Marketing Association of Nigeria (EXMAN) and Outdoor Advertising Association of Nigeria (OAAN).

Addressing the media on the development, the Director General of ARCON, Dr. Lekan Fadolapo said; “As part of the ongoing advertising industry reform and the need to strengthen advertising agencies service delivery, build capacity as well ensure long-term stability in the industry, each sectoral group, is to provide N1b (One billion naira) professional industry insurance cover for its members. This covers professional indemnity for members of their association as part of the corporate license requirements.”

Fadolapo, who described it as part of corporate licensing requirements coming into effect on April 1, 2024, also announced sweeping reforms aimed at repositioning the Nigerian advertising industry for growth and development.

He said a series of measures to strengthen regulation, build capacity, ensure financial stability and promote the use of local talent and resources within the sector are underway. He further said that ARCON is also reviewing minimum capital and working capital thresholds for agencies in consultation with industry stakeholders.

“There is an urgent need to review the capital structure and working capital requirement of the advertisement agencies in line with economic realities and capacity building programmes of ARCON. ARCON is currently in talk with the Heads of Advertising Sectoral Groups (HASG) and other relevant stakeholders on the minimum capital requirement for registration and license as an advertisement agency. Regulatory guidelines will be issued as soon a position is taken on this.”

To enforce some of its new policies, Fadolapo said that ARCON will collaborate with the EFCC, NBC and others to implement a maximum 45-day payment cycle for advertising services.

He disclosed: “Any organisation that offered payment threshold outside 45 credit policy will be tagged as economic saboteur of the Nigeria advertising industry. Such organisation will be flagged and reported to other government agencies for further investigation and necessary punitive actions,” he warned.

Restricting the use of foreign talent models and voices in adverts targeting Nigerians except where absolutely essential after securing ARCON approval is another reform. The ARCON chief emphasized that Nigerian advertising should primarily utilize local professionals. “ARCON will continue to insist that Nigerians should be considered as primary in all advertisement targeted at the Nigerian market.

“Use of foreign models and voices are banned except where it is inevitable. In this case, application for variation should be formally addressed to the Director General with detailed explanation of the rationale for the use of the foreign talent. Approval is not automatic. If you are selling your product to Nigerians, use Nigerians in your advertisement,” he said.

Other reforms include the following: creating a data bank for agencies, where ARCON is conducting a nationwide audit of advertising agencies to build a comprehensive data bank. Fadolapo announced that only licensed agencies will be engaged, and a directory will be published after the audit.

Media rates deregulation is yet another reform as rates are now fully deregulated. He explained that Nigerian media houses are to be accorded the same business respect as foreign entities.

Another reform is the engagement and disengagement procedures outlined in the Advertising Industry Standard of Practice (AISOP). “All stakeholders are requested to adhere to the engagement and disengagement procedure as stated in the Advertising Industry Standard of Practice (AISOP). ARCON has commenced full implementation of the AISOP framework. Where an agency is disengaged without proper reconciliation of financial matters before engaging another agency on the same account, and ARCON is petitioned, the new agency and engaging organisation will be investigated, and where they are found culpable, they will be sanctioned.”

ARCON revealed that it will also soon publish a register of approved advertising practitioners after completing a membership review. “ARCON has been battling with issues of exposure of unapproved advertisement, illegal advertising practices, damaging actions of unregistered persons claiming to be advertising practitioners among other challenges. Sequel to the above, ARCON would publish its membership register as soon as the ongoing membership review exercise is concluded. A notice has been issued in this regard by the Registration Directorate of ARCON.”

Also disclosed was the composition of a national workshop and committee to develop a regulatory framework for the out-of-home advertising sector in collaboration with stakeholders.