Agencies to face pressure over clients’ expected marketing budget cut

Expected marketing communication budget cut by advertisers in the face of difficult time resulting from political and economic decisions largely occasioned by the slump in the international oil price is likely to put pressure on media agencies to innovate, deliver and survive the time.

The growing challenges in the Nigerian economy resulting from sliding oil prices, ever rising dollar, free falling Naira, greater competitive pressure and poor governance have placed enormous pressures on businesses in Nigeria. So cost cutting for most businesses is now non- negotiable, says Phil Osagie, the global strategist for Jsp Communications.

Marketing operators however believe that the cost cut by clients will not make clients to lower quality. Osagie reiterated that “desire for the greatest value and highest quality of work at the lowest possible price, is not limited to companies in Nigeria alone. It is a universal business inclination”

Osagie said that though companies are desperate to cut costs, they are also in perpetual search for quality work and they will always be willing to pay for it. “The challenge for the PR and communications business in Nigeria is to offer services to clients that are way beyond the conventional and enable clients achieve their strategic goals. This is the difference between a commodity and a brand”, he said.

Similarly, the COO of Insight Communications, Feyi Olubodun told BusinessDay that already, companies in various sectors are getting a firmer grasp of the challenging economic situation and are adjusting accordingly.

It is expected that “when environment becomes uncertain, businesses become conservative, he said.  He predicted that the early part of the year will be tough for industries including the marketing communication sector as clients will engage in tougher negotiations, trim marketing communication budgets and demand that agencies justify every fee charged.

According to him the tough time will require the operators in the IMC to innovate as the operators would not service clients the same way. “We cannot bring the same offering and thinking and perspectives to clients business as before because the consumer is adapting and changing in their ways”

He further predicted that premium brands in all categories will come under intensive challenge in 2016 to justify their premium position particularly brands in the FMCG. “It will be a year when the core fundamentals of marketing discipline will be tested”, he said.

Also reacting to the predicted tough time this year, John Ehiguese, the CEO of MediaCraft, a top PR agency based in Lagos said it is obvious that the macroeconomic environment will not be favourable early in part of this year, partly, due to low oil price and serious restraint on forex which is hitting firms hard.

Ehiguese who is the president of Public Relations Consultants Association of Nigeria, PRCAN, said when companies are in tough time, the first area they unfortunate visit for adjustment is the marketing communication budget.  “The environment generally will be a little bit tough in the first half of the year but on the fillip side, there are still a number of organizations and companies that will either come in to take positions or move up and for those kinds of organizations there will be opportunities for the IMC”

To obviate the tough time in the meantime, he said there will be a couple of hard choices by companies including  IMC operators including shedding overhead,  review the cost profile and some other adjustments to remain afloat this year.

Unfortunately, the tough time will likely wipe the gains achieved by some of the operators during the 2015 presidential and gubernatorial elections.

Chris­tine Lagarde, the IMF President was in Nigeria last week on a four-day official visit to discuss with Nigerian authorities on ways to tackle various economic challenges facing the nation including monetary and fis­cal policies to stimulate economic growth and boost forex.

Daniel Obi