Inflation: How Agencies Can Survive Current Economic Realities
17th century French mystic, Nostradamus is famously known as ‘The Man Who Saw Tomorrow’ for his many predictions about the future. Sherif Akinpelu, a Deputy Director of Strategy & Planning for SPV Communications may also be called the advertising industry’s Nostradamus especially since he had clamoured for remote working in 2018, months before the reality of the new normal forced its adoption with the reign of COVID-19 in 2020. In this new piece, Akinpelu looks at how agencies can weather the storm of inflation in the sea of Nigeria’s economic uncertainties.
It is no longer news that most countries in the world are dealing with some sort of crisis either political or economic. It is mainly economical, though. This is a result of the offshoot of the effect of the COVID-19 Pandemic and the ongoing war between Russia and Ukraine.
These significant global events affect us in Nigeria too. However, we are more affected by bad leadership and corruption, which is more dangerous than the two major highlighted global events. All these factors combined are responsible for the high inflation rate in the country, increase in prices of goods and services, insecurity, low disposable income, high level of unemployment and underemployment, and high dependency ratio among other economic woes. To sum it all up, everything is so expensive that it looks more like the vast majority of Nigerians are only working just to make ends meet rather than live comfortable lives.
Bringing it home, this begs the question: how can advertising agencies survive these economic woes? It is by being open-minded, empathetic, brave, and collaborative.
What do I mean?
By being open-minded and empathetic, agencies need to agree that coming to work five days a week isn’t going to help anybody. It only increases running costs like diesel, internet, fuel for generator and pool cars, and toiletries among others.
Instead of spending this much, agencies should embrace coming to the office three times a week and working remotely for the remaining two days. Better still, they can embrace a four-day work week. This will help both business owners and employees save costs.
Even employees can take a part of their day to work on personal projects that they will make money from or make them happy or both. This doesn’t mean they will abandon their full-time job, it only shows understanding. This is why many designers and copywriters are resigning so they can do freelance jobs instead of the regular 9-5.
In my ‘constituency’, strategists are moving to tech where they will do less than 20% of what they are doing in an agency and still earn 30-400% or more.
When we went remote before and during the COVID-19 lockdown, agency business thrived. We can do a hybrid version of that now to save cost.With this, even employees will be able to save money on transport fares aside from the mental relaxation they get from not going to work every day or by taking a particular day off every week. For instance, asides from the increase in the prices of goods and services in Nigeria, in Lagos, where most agencies are located, the state government is currently constructing roads at the same time in locations like Ojodu, WEMCO road, Oshodi Agege expressway, etc. Asides from the now badly congested roads, transport fare has also increased by over 200%. It also takes me almost four hours to commute to and fro work daily within the same local government (Ikeja).
By being brave, agencies should not hesitate to ask their clients for more money. This is because most brands increase their prices during inflation or reduce the content of their product to increase their profit margin, which leads to Stagflation. The client’s excuse for increasing the costs of their goods and services is inflation.
Agencies also have the right to raise their prices, citing inflation also as a reason. It is no news that most agencies now send employees home very early, hoping to reduce costs by all means necessary. This is why promotion is no longer as rampant as it used to be in the industry.
It is also not a wonder why we are losing our best hands to the tech industry while those who have not “Japa” are preparing to do so. It is also one of the reasons why the youths do not find our industry attractive anymore.
Another blue ocean tactic that agencies can explore is by either building and owning platforms or altering their services to suit the need of the booming super-fast tech ecosystem in Nigeria.
Agencies can also re-invest or divest their profit into other businesses. I will share more on this in another article much later.
In collaboration, agencies need to partner with other ecosystems to drive profitability. One of them will be integrating other marketing communications branches-digital, media, experiential, and PR-to set up an integrated agency that will deliver top-notch solutions for clients’ through-the-line.
The second one is to partner with the tech industry to develop locally relevant marketing technologies that will jump-start the rise of local marketing technologies in the country. There are many industry verticals that we can partner with. For instance, companies like CCHUB, Terragon, and other tech companies.
I know this list is by no means exhaustive but let’s start with these few pointers. I am sure it will lead us to a journey of profitability and many more sweet things will come our way in due time.
Sherif Lanre Akinpelu is the Deputy Director, Strategy & Planning for SPV Communications Solutions Founder, Strategy Trybe