How Bad Is It?
In case you don't know, Nigeria's Out-of-Home (OOH) media market is in recession. The impact of this crash is so bad that many OOH suppliers and owners are over-leveraged and could go under. In its bid to save itself from crashing with the market, the Lagos State Signage & Advertisement Agency (LASAA) recently executed a stop loss action by shutting down major LED hoardings indebted to the agency. Major boards in the mainland and Islands of the city are pitch-black. The situation is grim.
TMKG, an OOH audit and consulting firm, posited that while Q1 to Q3 gross sales was estimated at N30.7 billion, 57% of the market's inventory estimated at N20.9 billion were unsold within the same review period. As at early November, about than 70% of all LED boards in the city of Lagos were 'foreclosed' by the Lagos State Signage & Advertisement Agency (LASAA) due to prolonged indebtedness. Many sought after static boards are vacant with no hope of occupancy as uncertainty beclouds the market.
Time to Take Stock
In context, over 70% of total OOH YTD sales were made during the recently concluded general election. A boom period for the Nigerian advertising scene that generated over N61.2 billion in advertising revenue.
Analysts argued that the unprecedented revenue generated during the last presidential and general elections ought to sustain OOH players beyond any recession no matter what. Brenda Nwachukwu, Systems Quality Control at SBI Media concedes that prudent management of funds and sound corporate governance is needed in the OOH business as there are question marks on what major market players did with their 2015 general elections 'windfall'
Who Reaps from the Weeping?
The traditional economics of demand and supply should have immediately applied to the OOH market but it is the other way round. OOH companies are mostly leverage-dependent. The high OPEX, tax and management costs compounds their woes, many would rather have a blank board than sell an impression for half of the price.
Moreover, OOH market is the bastion of an opaque pricing system in a convoluted advertising industry. While some companies might discretely crash their rates to get something, the absence of a real-time and publicly-accessible trading information system makes it nearly impossible to track deflation in OOH media rates.
It is worthy to note that the current recession in the OOH market was cultured by a combination of a self-inflicted problems, systemic and macro-economic risks. However, unless proper introspection and review is done by the industry's superstructure (MIPAN, OAAN ADVAN and perhaps LASAA), the market will not save itself from itself. Advertisers who must do OOH advertising will continue to pay more with less budget while some will boycott OOH from their media mix , in turn LASAA (and other states' agencies) will continue to lose revenue. Many OOH companies would be declared bankrupt. In summary.. the crash of OOH market is bad for everyone.
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