opinionBy Rotimi Olaniyan
A lot has been said by industry watchers in recent times about the declining fortunes of the marketing communications services profession and industry, occasioned perhaps by the global economic downturn.
It is a fact that the marketing spend of several of the world's best known brands is on the decline and the Nigerian scenario is no exception. Marketing budgets, particularly those dedicated to advertising have long been seen as an expense line rather than an investment and duly suffer when general managers edged on by their finance directors begin the search for cost savings.
These are indeed challenging times for the several who make their living serving brand owners. In offering my thoughts on the subject area, I argue, however that the IMC marketing is not declining but rather changing rapidly and that to survive, the IMC professional has to recognise the changing trends and align himself accordingly.
The Emerging Trends
Perhaps one of the most significant trends in recent times is the rise of the procurement department. The marketing department is fast losing power to the procurement department in the pitch process, which unfortunately is shifting the basis of selection from qualitative to more quantitative measures.
For agencies which have long been accustomed to competing for business on the strength of creativity and insight driven ideas, the reality that clients are now demanding stronger business case justifications, and the use of more stringent campaign evaluation methods, might indeed be discomforting.
The reality however is that creative directors and not just account directors need to connect to clients' balance sheet realities, in conceptualising the big idea. In other words agencies need to realise that creativity which I define loosely as 'a fresh perspective' will no longer be enough to win the client, but rather innovation, which I define as creativity with a market impact.
Supplier relationship management in the Nigerian creative industry tends to be a difficult construct with agencies being either ill structured or ill equipped to deal with highly trained and motivated buyers particularly, in the larger MNCs.
Agency heads must realise that negotiation skills and cost and management accounting proficiencies have become ever more important, for today's account handlers than just understanding marketing plans, or how to distil marketing briefs.
The intensity of rivalry occasioned by receding entry barriers and a preponderance of substitute specialist services, means that the industry is gradually commoditising creativity. We are already witnessing fragmentation and information asymmetries, which further place the balance of power in the clients favour.
It seems to me that players will find it increasingly difficult to compete using the traditional cost rich business models. The current movement towards lean, and thin client organisational architectures might offer a way forward, which is indeed why we are currently also witnessing the rise of independents, freelancers, boutiques and hotshops all over the world.
They come with their unorthodoxy as well as important cost and time advantages but lack the strategic core and gravitas to be significant players. Yet the plethora of their contending forces places an interesting dimension to the way the industry might seek to redefine itself.
Several western countries realising the potential that such emergent players promise, for instance, have long articulated special development and support programs targeted at creative entrepreneurs, just as venture capital firms bet on the next big thing from within their ranks.
Another interesting trend is the retreat of global networks from 'fringe' markets to consolidate their faltering positions at home. The scale and ubiquitous advantages of the global network agency is a receding appeal in my view, more so for African businesses with their unusual peculiarities, such as the nature of our retail for instance.
The current economic crisis has made it increasingly obvious that local markets require local solutions and universal brand names do not necessarily translate into trans-national success stories. What is required are those pragmatic or perhaps humble enough to try new formats, irrespective of proprietary methodologies they subscribe to by reason of their membership of 'international coffee clubs'.
Then there is the ascendency of women within the IMC industry. They currently are the face and future talent power base of the industry in Europe and increasingly within Nigeria. Recent studies suggest that women being more loyal to their employers, constitute the majority of the middle cadre of the workforce and a stabilising factor in an otherwise turbulent and highly volatile talent market.
Some have even suggested that their nurturing instinct makes them more suited to nurturing brands, which any brand manager will tell you is similar in several respects to looking after children!
Bucking the Emerging Trends
The IMC industry in my view is ripe for some radical discontinuities, that require equally radical paradigm shifts in the way industry practitioners as well as industry players define, structure and deploy themselves.
If we are to survive, we must look to the skies in search of meteorites, but to thrive we must look into ourselves in search of blue oceans. I have a few ideas to help us;
The first point is to realise that natural laws of physics also hold true in understanding our industry; Physics tells us that matter is not created nor destroyed but merely transferred. And that is exactly what we must understand about the marketing spend; it shifts.
Most times staying within the marketing value chain, but in times of economic turbulence moving away from that value chain altogether and closer towards supply side disintermediation activities and demand side franchise building activities such as retail drives.
If I were to use consumer behavioural economics as my basis of reasoning, I would say that marketing directors are forced at such times to view consumers less as a media audience and more as 'promiscuous shoppers'.
If we manage that harsh shift in thinking, it starts to reason why the emphasis in terms of services that the industry offers brand owners must become more direct and consumption building in focus.
That doesn't suggest the death of advertising, but it should suggest the decline of their reverent type of communication in favour of more pragmatic and economic campaign propositions, in the agency service offering. Re-articulating propositions on behalf of brands after all is something agencies are supposed to be good at, yet sadly might have not realised we need to do for ourselves.
The second point is the urgent need to restructure and re-capitalize the industry properly by making it more attractive to the capital market. To do this, marketing services firms must re-structure how they create, store and report economic value, and perhaps more importantly their philosophy of ownership.
The era of the talented craftsman and owner manager is over globally and it has no business being the same here. Crafts men create great work, but it requires business leaders with market value responsibility to create great industry players.
The truth is that to achieve this very important transition, the marketing communications industry will need the help of forward thinking equity fund managers and venture capitalists. The challenge they will face in the short term is how to structure mezzanine type financing to help build strong balance sheet profiles for what are otherwise professional service firms and where to get great commercial leadership to steer the vehicles. The attendant rewards are however plentiful.
An immediate consequence of attracting capital into a fragmented market such as ours today, will be the drive towards consolidation. Mergers and Acquisitions, as well as strategic alliances have served as effective inorganic strategies for maintaining the longevity of industries through downward economic cycles for the last 40 years.
The Nigerian Marketing communications industry needs this more than ever today. The reason is simple: the market is small and not growing fast enough to sustain the influx of new entrants. The total market size is unofficially placed at just over N100 billion ($700 million), which is less than the annual marketing spend of Wal-Mart in the US.
This suggests that the national per capita communications spend is just slightly under N700 or 0.20 per cent of the national per capital income of $2400. The reality that such analysis points to, is the fact that the industry for branded communications in whatever form, is currently an insignificant contributor to the gross domestic product, and perhaps over populated with non value adding players that can be snapped up cheaply and quickly.
Yet it also reveals the tremendous growth potential possible if a few well capitalised industry players are able to help the nation create a greater consumer economy driven by brands and proprietary propositions targeted at the emerging middle class.
If we are to unlock that potential and grow the industry value, then lean thinking is required to sustain the management of current cost structures. This might suggest exploring virtualisation as an operating process. It would certainly mean the redesign of agency talent networks to incorporate constructs such as artiste management and creative portals as Just in time delivery platforms.
However, only radical entrepreneurial thinking will guarantee the future. It will mean that those agency groups that consolidate will have to redefine their businesses, markets and business models, away from that which currently asks the question 'who needs creative communication ?', to that which asks 'who needs market innovation ?'
It is market innovation after all that creates new propositions, new categories, new products and ultimately new brands, which then need creative communications. In an industry that is universally fuelled by the expansion of consumer brands and not necessarily economic activity, the dearth of brands will always weigh down on potential as an albatross to growth.
New product development and marketing has traditionally been the preserve of the larger western multi-nationals, but that is changing fast, as we witness more Asian companies stake their claim to the African market.
The reality however is that they bring their low cost strategy and supplier networks along with them, which locks out several agencies as currently structured, and which might suggest why so many commercials are being shot in Delhi these days. The Nigerian agency has no right to complain about that. It is simply a fact of the new global world.
The only way that you can fight globalisation is not by nationalisation, but niche playing locally; using deep local understanding of consumer habits and tastes to create intimately differentiated niche propositions that remain unattractive to global players.
In other words creating unique Nigerian brands. Here the Chinese, Indians and Malaysian have a lot to teach us in how they built huge local consumer markets for their own brands that tapped into the natural advantage of large homogenous local populations.
In conclusion I ask the most important question; "where are the Nigerian brands", which ultimately will be the most important factor to guarantee the sustainable and transformative growth of the Nigerian marketing communications industry into the future.
The answer to that is perhaps subject matter for another thesis; one which recognises the need for a re-articulated national strategy on innovation and entrepreneurship development which harnesses the abundant creative energy to be found in Nigeria's thriving creative services industry, of which the marketing communications industry players must see themselves as a critical part.
* Olaniyan, CEO, Proximity Communications Limited, wrote in from Lagos