To survive the new reality of advertising budget cuts by both local and multinational companies, Nigerian marketing communication firms are equally cutting their contract agreement charges for their clients.
This new move, according to a source, is to give the agencies that are desperately looking for businesses opportunity to be attractive to the budget-friendly clients.
“Though it is tight, but agencies are accepting to manage clients’ advert budgets at low figures”, the source said.
This is not new in Nigeria as report from India showed that big agencies are also towing the line of “betting big on creating strong ideas which require less production costs and media spends to grab eyeballs”.
As business also shifts to below the line marketing, some other agencies are plotting to launch experiential marketing arm as a way for survival.
Recently, the CEO of 3TM Ideas, Steve Babaeko, told BusinessDay that what has happened is that the business landscape has changed a bit because of the budget cuts.
“Clients have become wiser; the budget has reduced yet they want more impact. Clients are now asking agencies to do a rethink and it is not about been able to spend big budget but with the little budget what can the agencies do for them?”
According to him, agencies that used to do pretty good in the past because they had big budgets to manage, now find it difficult because the client is demanding so much with little budget.
“You have to be more strategic and think outside the box. In fact, these days there are no boxes anywhere.
Agencies that cannot adapt to the new reality of the day will definitely feel the negative impact of the new reality”, he said.
Recently, business reported that the first half of 2013 was challenging for marketing communication agencies in Nigeria due to a combination of advertising budget cuts by organisations, elongated payment for jobs executed, insecurity and other mix of infrastructural difficulties.
Some professionals in the industry, who confirmed to BusinessDay the difficult first half year, said that feedbacks on operational performance from a lot of operators within the industry is not encouraging as advertisers who pay the agencies’ bill embarked on marketing communication budget cuts due to low sales.
“The economy was a bit slow in terms of giving every marketing communication industry the kind of leverage it could have had. The year started with lull of business activity”, Bunmi Oke, the managing director of 141 Worldwide, who is the president of Association of Advertising Agencies of Nigeria (AAAN), was quoted to have said.