Akachi Ngwu, Founder/CEO, Consumer Scores International Limited

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Driving growth in Nigerian outdoor advertising through competition 20 Nov 2017


Increasing competition in the Nigerian out-of-home (OOH) advertising sector is necessary to drive performance and innovation among the practitioners, and give advertisers value for their money. As a dominant sector of the country's advertising industry, OOH can be a frontier in technology adoption and innovation. It can also play a significant role in the success of brands. To play this role effectively, and boost the growth of marketing communication, the level of competition has to be higher.  
     
In my article published in the December 2016 edition of Financial Nigeria, I had argued for the need to consolidate the mostly sole proprietorship or family-owned outdoor advertising companies in Nigeria as a strategy to engender best practice, deepen portfolio offerings, amongst other growth-promoting factors. The extant corporate structure has hampered the rapid growth expected in an industry that is almost 90-years-old. The West African Publicity Limited, which later morphed into Afromedia, Nigeria's pioneer out-of-home media services provider, was established back in 1928.
    
Nevertheless, we have seen an expansion of the OOH industry in terms of the number of companies and outdoor structures. The Nigerian Media Advertising Guide (NMAG) 2017/2018 edition shows that there are 165 registered out-of-home advertising companies in Nigeria, managing about 21,000 billboards across the country. The NMAG is an annual compendium of global and local marketing research data. It is a useful tool for marketing communication professionals in the country as it provides information on investment trends and media consumption behaviour across major Nigerian cities and demographics. The latest report – which shows that television, radio and outdoor remained the dominant media platforms over the last four years – was released in September 2017 by Media Perspectives, a leading media communications agency.   

One thing is certain: The future of outdoor advertising in Nigeria will be driven by intense competition, diversified portfolio offerings, technology, human capital, and responsive regulation. It is no longer news that the world's leading outdoor advertising firm, JCDecaux, has commenced operations in Nigeria, with Lagos as its base. Understandably, Lagos controls over 52 percent of the total advertising spend in the country. JCDecaux, based in France, operates in more than 75 countries, across 4,280 cities, with 1,117,890 advertising panels. The firm reported 3,393 million euros in revenues in 2016. JCDecaux's out-of-home advertising cutting-edge is in street furniture, transit furniture, and billboards.

According to the U.S.-based Global Industry Analysts Inc, which released the "Outdoor Advertising: A Global Strategic Business Report" in September 2017, JCDecaux, along with APG/SGA, Focus Media, Pattison Outdoor, Lamar Advertising and Clear Channel Outdoor, are the key industry players to drive future global growth.

By the way, the report shows that the value of global outdoor advertising will grow to $44.7 billion by 2024, driven by retail boom, and development of transport networks and other public infrastructure. Other factors to underpin the growth include the increasing amount of time spent outdoors, and the adoption of digital signage systems.  

Although South Africa is the only African economy mentioned among the major geographic markets in the GIA report, Nigeria is a strategic emerging economy in Sub-Saharan Africa, with a huge demographic advantage. The entrance of JCDecaux in the Nigerian market will soon bring the country into global reckoning in the global OOH market. Indeed, the Lagos market has positioned itself to benefit from the expected surge in OOH media utilization through the various infrastructural developments in and across the city. For instance, malls as well as transportation networks being developed will increase the supply of OOH platforms.

There are five forces that determine the attractiveness and competitive intensity of a market, according to Porter's Five Forces of Competitive Position Analysis. They are: threat of new entrant, intensity of rivalry, availability of substitutes, buyer power, and supplier power. Developed by Michael Porter of Harvard Business School in 1979, the framework is used for analysing and evaluating the competitive strength and position of an organisation. It helps organisations to understand the competitiveness of their business environment and identify the potential profitability of their strategies.  

When you have many competitors but they are offering undifferentiated products and services, it reduces the attractiveness of the market. As a global player and a new entrant into the Nigerian OOH space, JCDecaux will increase the competition and attractiveness of the domestic market.  

Also, several industry norms, which have remained largely unchallenged for decades, will be dislodged. For instance, traditional billboards, with a few digital variants, have remained the dominant product offering in the Nigerian outdoor advertising industry. There has been little incentive to diversify the portfolios of service providers. But JCDecaux is likely to spearhead growth in transit and street outdoor advertising, two outdoor formats that contribute over 85 percent of the company's revenue.

Scenario planning by organisations in the wake of JCDecaux will help them to position and compete for the future. Organisations that identify changes in macro-environment are able to differentiate themselves from the competition, creating a competitive advantage for themselves. In this regard, PESTEL (which represents Political, Economic, Social, Technological, Environmental, Legal) needs to be applied in the expected scenario planning. PESTEL is an analytical framework used to identify the macro-environmental factors that can have an impact on the organisation.  

Technology has led to disruptions in sectors like banking, retail and transportation. Nigeria's social landscape is also fast-evolving, with increased urbanisation, expanding middle class, and the youth bulge. These evolutions are not without implications for businesses and organisations. Therefore, understanding the macro forces that organisations face and developing the appropriate competences to utilize the insights generated by that knowledge are imperatives for today's out-of-home advertising practice.

Competition is what drives industries to be more productive and benefit society. It also comes with consequences for the companies that are unprepared. In the weeks and months ahead, the out-of-home advertising industry will experience changes in the areas of product offerings, cost determination, selling approach and strategies, among other areas. Now may be the time for players in the OOH industry to think strategically in terms of being national or regional outdoor advertising practitioners and giving customers a bang for the buck.


Akachi Ngwu is the Founder/CEO of Consumer Scores International Limited, a Lagos-based in–store advertising solutions provider. He is an alumnus of the Business Leadership Programme of Leap Africa. Email: akachi.ngwu@csinichead-ng.com