‘Emergence of young creative agencies will stir Ad industry’

Steve Babaeko is the CEO of 3XM Ideas who has won several creative awards under the two years of existence of the firm. In this interview with Daniel Obi, he sees a probable shake up in the advertising industry due to emergence of young agencies. Excerpts

What are those factors that shaped the industry in 2014?
The performance of advertising industry in 2014 is somewhere gray in the middle. It is either black or white. To that extent, so many positive things happened, and some things happened at the macroeconomic level that was not so positive which affected the Integrated Marketing Communication industry.

I will start with the positive side. Part of the positive things that happened to advertising in Nigeria in 2014 include the emergence of young agencies. I think there is no any time in our history where you see a couple of younger agencies rearing their heads and competing with the big boys. The new generation agencies came out strong in 2014, which I find commendable.

At the macro level, there is drop in oil price and the economy beginning to be dull a little bit and the government is telling us to brace up for tougher economy. This is will affect the whole business climate and advertising industry is not insulated. Again politics seemed to gain loudest share of voice especially in the last quarter, so it means that if money is not being spend at the centre it means more money is going into politics. Therefore, the economy will slow down because everybody is holding the available cash.

What is actually pushing and energising the new generation agencies?
It is a normal shift and normal everywhere else. Even in other climes, there is always the rise of some new agencies that is giving everybody sleepless night. This business is about regeneration. What the new agencies are doing, which is different is the new approach to business.

For 3XM, the way we look at this business is different from others. We dismantled the business model of advertising in Nigeria and we put it together again. How did we do this, we looked at the big picture. In creating communication and not just advertising the things you need. You need the brain power for strategy, and creative power to turn the strategy into workable ideas. You need music and production.

We took this business approach and we set up business units, usually with normal advertising agencies they only control the strategy and the creative department. But we own a record label and production company and other collateral that go into developing communication. It is easy for us to be in control of some of the other allied elements in creating communication. From that basic point of view, we revolutionsed the market.

When you said it was normal for new agencies to come in and shake the industry, are you saying that agencies get old?
The truth is that every brand has a life circle. But what happens is that you need to infuse an element of regeneration in building the brand. If you are selling products to people of 30 years and above, you would be the most thoughtless brand if you don’t create a pipeline that leads to people who are 18 and above to begin to build the next wave of consumers.

When you create the pipeline, you have corrected what would have been an aging crisis for your brand. This is the same thing with agencies. Agencies are not about building or structuring, it is about people. This business is not for old people. As an agency, if you want to leave young, keep regenerating your people. An old man can have an agency but keep young people.

You also predicted downsides for the economy as politicians will hold money for elections…
At macro level, this issue of holding money for elections will impact on the larger economy. Whether the economy captures the money in the hands of politicians or not, it means that there are certain money that would have been otherwise been injected into the system that would have made the economy more buoyant that is missing. If it affects the economy it will affect the advertising industry.

Then, what kept the advertising industry strong in 2014?
Like they said in show business, the show must go on no matter what the economy brings. Advertising is here and people need advertising and it is actually when the economy is down that clients need to advertise the more because people need to be aware of products.

With all the vagaries in our faces, do you see shake up in the advertising industry in 2015?
It probably would happen. Right now, there is a sizeable shift happening with younger agencies emerging. The people who were in the fore front are no longer in the driving seat. A new power blog is emerging. I will not be surprised if there is more shake up in 2015.

Now, for the first time in a long time, we are seeing merger in the industry. We are likely to see more of it in 2015. What we had was big fishes in little pond for a long time. People don’t want to be smaller fishes in a bigger pond. We will see more mergers in 2015.

Again, the advertising industry is not going public, what is the industry afraid of?
Even in Kenya, there is advertising group that is quoted but it has not happened here yet. What we have done here is subsistence advertising instead mechanised advertising. People create business for themselves and their family. Unlike the WPP of this world, which are quoted. However, it takes time to grow above the mentality of small agencies for me and my family. Some don’t even want to give their staff who worked for them up to 15 years any shares not to talk of listing. It is about mind-shift and this needs to happen for progress.

What will cause that mind-shift?
At some point, the economy will open up more. Nigeria is the biggest economy in Africa. If we are able to get electricity right and the level of production goes up, the economy opens more, then more people will come here to do their business and we will have no choice than to run this business as it should be run.

Now with APCON reform, there is a limit to which foreigners will buy shares in advertising industry. May be that law will change when the economy opens up. For this to happen, we need massive amount of capital.

When you talked about regeneration to keep the industry, where are the schools to close this gap?
Unfortunately, we have not been able to kick off the advertising academy. The AAAN had this vision many years ago, but in fairness to the new administration, they are working so hard to ensure the school gets off the ground. But what I have done in past years is to go the universities and give lectures. I understand the need to create the pipeline that will create talents. The talents pool is drying up. Some young ones are excited about the lectures.

3XM is not affiliated; do you see anything wrong with affiliation?
Affiliation is like marriage. Nobody will just walk into my agency and take it without showing me what you can offer. I can’t talk to you if you cannot offer me something different that we are not doing. I have decided that I will take some of the best practices of old agencies to run my business and learn from their mistakes.

In 2014, what did you do right or wrong?
What we did wrong was that we did not join the bandwagon to do anything for any business. For me to support your business I must believe in what you stand for. We must share values. We dropped account because the value was not just right or the client is not willing to partner. We want to be partner.

For our clients, we are partners and that is why you see the progress. It is like you are sending me to work and my hands are tied if you say be my agency but you dictate to me. We have been fortunate that we find valuable partners in our clients.

On what we did well, all the awards are manifestation of what we did well. We are driven by discipline, focus. We move as a team. We take clients’ job very personal knowing that if this client continues to do well that is the only reason we can find relevance.