If Nigerian Ad Agencies Are to Merge, What Should The Mergers Be Based On?

Ikechi Odigbo

The truth of the matter is, nobody knows. Yet, at every forum where people rack their brains about how to sanitise the industry, as more and more ad agencies spring up in backpacks across Nigeria, people keep bringing up the idea of mergers and acquisitions.

Some think it’s the final solution– the best way to stop the bull (of oversupply) from running amok in our china shop: our fragile marketing communications market.

Others think it’s just basic decency, a way for us to respect ourselves (not just one another) as professionals. In short,  mergers may be how ad agencies eventually build colossal corporations with the capacity and deep pockets to compete with worldwide juggernauts such as Accenture and Deloitte. It this is how clients end up putting some respect in their agency’s names, that’s all good, too.

Speaking of bigger firms, there’s a general understanding that in the said mergers,  companies with clout will probably take over the smaller ones. “In every merger, there’s an acquisition,” said Tope Jemerigbe, CEO of DKK Nigeria. “Though every acquisition doesn’t always involve a merger.” 

Ain’t that true? 

Mobile ad agency

But perhaps one reason the merger and acquisition talk has been mostly that—talk, is that people haven’t figured out how to actually pull them off. For example, what would make any agency want to get into bed with another?

We can answer that if we can find what makes one agency different from another. As they say in business, by all means start a partnership but make sure the partners complement each other. If the agencies look like clones of one another, why should you even bother to make the introduction, let alone speak of courtship? 

You may also say, maybe the point of the affair would be to bring financial resources together so the new unit can survive the 90-day payment period without having to go begging. But where are the big briefs these days? On paper it looks like the industry has grown a bit over the past five years but word on the street is that, that growth barely shows. It’s feels more like the market is shrinking. The big spenders are few: telecoms, banks and FMCGs. But as Steve Babaeko said to me the other day, even in those sectors, there are not many individual clients to go round. 

Whatever juicy accounts are available, only a few agencies are tall enough to snatch them from the reach of others. It’s a short roll call: Insight Publicis, DDB Lagos, X3M Ideas, SO&U, Noah’s Ark, and TBWA.  The 10,000 other agencies scramble for the bits and pieces those ones leave behind. So, again, do we merge to compete with these? Perhaps. 

Maybe the ultimate reason to merge would be expertise. If an agency is known for, say, Digital Marketing it may find itself in the mood to sell itself to a legacy agency that’s trying to develop that capacity. Or if one agency is great at government communications, it may merge with another that’s great at behavioural change campaigns. As the marriage brings talent together, it should also remarkably grow the billing. 

Does it matter who’s marrying whom?

Remember how Droga 5 sold itself to Accenture Interactive for $475 million. Or why Publicis Groupe bought Epsilon for $4.4 billion.

Now, if we finally figure out why we want our agencies to tie the knot via some old school romantic mergers and acquisitions, the lovers will need to invite some courage to the party. Even if AAAN (Advertising Agencies Association of Nigeria) still provides moral support from the sidelines, the courage to let go of bloated egos will be more important than anything else.

However pinchy the shoes may feel now for marketing consultatants, the future of the business is still bright. Aside from the PwC projection in 2017 that Nigeria would be the fastest growing E&M (Entertainment & Media) market in the world through 2021, tech businesses are finding investors and are setting up all over the place.

As new markets dry up, new ones may be opening around the corner. They’ll all need a logo, won’t they? Good. You know what they say: From the tiny acorn, grows the mighty oak.

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