Fresh Facts Emerge On Media Debt As Multinationals Plan 180-Day Payment Cycle
Fresh facts are beginning to emerge on the ageless advertising and media debt which has created serious disagreement among advertising agencies, media and the advertisers who are multinationals.
Findings by Intelligent Unit of Brand Communicator magazine revealed that delay in media debt which has increased from N2billion as at 2007 to N8billion in 2018 is traceable to poor job execution which practitioners may not be aware of. Speaking on the matter, Femi Adelusi, Vice President of Media Independents Association of Nigeria, MIPAN, and Managing Director of BrandEye Media, said media debt is as a result of poor job execution or disagreement or failure in full and agreed implementation on media contract.
Adelusi said business terms and agreements jointly agreed with clients may also cause a delay in payments. He advised that agencies and media owners should always scrutinize terms before they enter into business agreements.
Brand Communicator also gathered that lack of unity among practitioners in the Integrated Marketing Communications, IMC, has also caused their predicament. There is serious competition in the industry, a factor which the multinationals have capitalized on in the process of negotiating terms of agreement and payment.
Charles Imuzeze, MD, Great Measure Media Ltd said, “We go round in cycle. Because we are not united even though there are different sectoral groups, there is delay payment everywhere.”
Apart from that, industry watchers have also faulted the way some of these businesses were awarded to the agencies and the media. They said until practitioners jettison man-know-man syndrome which is pronounced in the industry, there will always be a crisis which may eventually cripple the industry if proper care is not taken. They are of the opinion that quite a number of businesses have been awarded based on that and have turned sour among the agencies, media and multinationals.
Sadly, industry sources have revealed that the rising profile of media debt owed by multinational advertisers has led to acute liquidity crisis in the industry. This has also created some operational challenges. The hard-hit are those in the electronic and the print media, Out–of–Home advertising without sparing advertising agencies.
While the agencies and the media were believed to have fulfilled their own part of the contractual agreement by executing the contracts, they are now faced with the challenge of getting the clients to honour their own part of the bargain by paying the invoices that have overstayed agreed working grace period of 45 days.
To add salt to injury, advertisers are now demanding for 180-day payment cycle. According to people who have knowledge of the new development, this request will enable multinational advertisers to process their invoices before payment is made.
When contacted, Mr Yinka Adebayo, Publicity Secretary, MIPAN and Executive Director, Media Investment, MediaReach OMD said, “I am not aware of such demand from multinationals.” Also, Adelusi, said he has yet to know about the 180-day payment request, but nonetheless, decried the undue delay in paying the media.
Meanwhile, many practitioners have decried the 180-day payment cycle, Mr Kola Ayanwale, a senior advertising professional and Group Managing Director of CenterspreadGrey said the media debt challenge which has been a major crisis in the industry is now taking a new dimension if clients now demand for 180 days to pay. He said such demand is uncalled for, especially when the multinationals cannot propose such request in their respective countries.
He, however, advised media owners, the advertising agencies and other stakeholders to be determined in resolving the ever-rising media debt.
In his own contribution, Mr. Babatunde Adedoyin, President of the Outdoor Advertising Association of Nigeria, OAAN, said, in spite of huge media debts being owed its members which have almost grounded the operations of all Out-of-Home companies in the country, the 180-day payment request to him is seen as a grand design by the multinationals to cripple the operations of OOH.
Similarly, Sir Steve Omojafor, chairman of STB McCann, condemned the idea of a 180-day request by some multinationals, saying that this new development is capable of sending media houses out of business if care is not taken. He canvassed a joint industry effort to resolve some of these lingering issues as the industry today is confronted with a plethora of challenges.
An industry operator, Mr Sola Bamgbose, described as uncharitable the request by the multi-nationals asking for 180 days of grace to settle the media debt. He added that such a request in this modern day and time negates the true spirit of fairness and justice, as some of these companies do not ask consumers of their goods, products and services to come and pay them after 180 days of consumption.
According to him, “The request by multinationals to extend 45 days of grace to 180 days before paying their media vendors is uncharitable, unfair and unjust. How will they justify this request when in actual fact they collect money instantly from the consumers of their goods and services. Do they ask consumers to come and pay for their goods after 180 days of purchase,” he queried.
Speaking on the matter, Mrs Folake Ani – Mumunney, ADVAN President, said 180-day request by some advertisers are totally new to her as nobody has ever brought such a thing to her notice. She added that the association will do its utmost to encourage debtor members to pay but clarified that the ADVAN Charter does not include enforcement or debt monitoring.
It will be recalled that many efforts had been taken over the years to find amicable solutions to the problem of media debt. According to Adedoyin, his association, OAAN has written letters of appeals to some of the companies and their agencies with no success. Also, a few years ago, Advertising Practitioners Council of Nigeria intervened in the media debt by setting up a Special Committee on Media Debts Issue (ACOMDI). The committee with members drawn from the major sectoral associations, namely BON, MIPAN, ADVAN, AAAN, OAAN and NPAN was chaired by Alhaji Ayodele Sulaiman, a broadcaster and fellow of Advertising and met to review and submitted reports on media debts totalling N2billion as at 2007.
In spite of all these efforts, therefore, it is pertinent to know that media debts have continued to grow because of the lack of commitment to pay, and the weak regulatory environment in the industry. APCON which is the regulator of the industry has operated without its relevant council members in place, a situation which has affected the body to perform its mandatory regulatory tasks.