Nigerian companies are overburdened by the difficult operating environment occasioned by poor infrastructure and unfriendly government policies that have eroded consumer demand as well as their margins.
This has forced the companies to rejig their marketing strategies by cutting down on social spending and other marketing platforms, including reality TV shows.
No fewer than 18 reality and talent hunt shows have been suspended since 2015 as many companies, including those who put up these shows, battle with huge operating expenses arising from the high cost of doing business in Africa’s largest economy, BusinessDay checks show.
Some of the TV reality shows, largely sponsored by multinational organisations, that have been laid to rest include MTN Project Fame, Who Wants to be a Millionaire, Star Trek, Nigerian Idol, Maltina Dance All, Gulder Ultimate Search, Malta Guinness Street Jams, X Factor, Amstel Malta Street Jams, Nigeria Got Talent, Star Quest, The Voice, African Diva, Next Movie Star, Knorr Taste Quest, Nigeria’s Top Model, among others.
“The harsh economic environment could be a major factor leading to the discontinuation of these reality TV shows,” said Bolaji Abimbola, CEO of Indigo, a Lagos-based marketing communication consultancy.
Reality TV shows are supposed to deliver value to the companies sponsoring them, Abimbola said, but this has not been the case for most companies as such programmes contribute to ballooning expenses with little or no return on every kobo spent.
“The programmes may seem popular but if they are not impacting the organisation’s bottom-line, naturally the companies will cease to sponsor them,” he noted.
Companies in Africa’s biggest oil producer suffered greatly from a recession that occurred in 2016 owing to a global collapse in oil prices. The fall in the oil prices caused a huge dollar shortage for the oil-dependent nation which gets 90 percent of its foreign earnings from oil.
The dollar shortage caused the Central Bank of Nigeria (CBN) to devalue the naira, which dealt a deeper blow to most manufacturing companies and sponsors of these reality TV shows since most of their raw materials and machinery are sourced abroad. The situation seems to have worsened for most companies, especially given the high inflation environment that has eaten deep into consumers’ purse.
Data from the National Bureau of Statistics (NBS) on goods and services produced calculated using the Income and Expenditure approach at 2010 purchaser’s values show that consumption expenditure of households has been declining at varying degrees since it rose by 1.5 percent in 2015. This has a far-reaching implication for these companies since the money needed (money spent on these shows is recouped from sales) to sponsor these shows depends on their sales on products.
Final consumption of households has declined by 8 percent from N43.1 trillion in 2014 to N39.66 trillion in 2018. Although the figures provided for 2018 by the state-funded data agency were limited to Q2 2018, BusinessDay arrived at a full-year estimated on an annualised basis.
On a year-on-year basis, the household spending rose 1.45 percent to N43.7 trillion in 2015 but as Nigeria entered its first recession in more than two decades, household spending fell 5.74 percent to N41 trillion in 2016. While the rate of decline slowed in 2017 as households spent N40.78 trillion, the estimates for 2018 suggest a plunge up to 2.75 percent.
Prior to 2015, Nigerians enjoyed the thrilling moments emanating from these shows. Similarly many artistes rose to stardom through the TV shows. Notable artistes like Dare Art Alade, Iyanya, Omawunmi, Uti Nwachukwu, among others, earned their way to fame through such programmes as they leveraged the platforms to launch themselves into the limelight.
But companies have in the last few years become extremely cautious in marketing spend and sponsorships as Nigeria’s economy continues to witness slow growth, resulting in dwindling consumer spend and decreasing companies’ turnover and profit.
Abimbola said marketing strategy is not cast in stone, adding that if organisations don’t realise their objectives in a particular programme, which include engagement with the consumers, they would like to discontinue with such programme instead of being wasteful with funds they could apply somewhere else.
Akonte Ekine, CEO, Absolute PR, while agreeing that the harsh economic environment has dealt a blow to companies, said from a business strategy perspective, it is also a function of market insight on consumer behaviour.
“It is important to note that the audience evolution circle is not static and what shapes behaviour changes and media consumption patterns are also evolving. It will therefore not be strange that such decisions to discontinue reality TV shows are taken within the marketing department for the organisation. In addition, we must also understand that the product life cycle is also a factor that shapes marketing programmes and initiatives,” said Ekine, who consults for top brands in Nigeria.
“We can contend with assumptions that economic challenges affected some activities, but it is also the beauty of market and marketing challenges to dissolve and evolve within the ecosystem in order to win the consumers with strategies that are apt, functional and impactful,” he said.
He said the stoppage of some reality TV shows is a function of new research findings in the market that throws up better opportunities that deliver value at probably relatively lower cost.
Kelechi Nwosu, former president, Association of Advertising Agencies of Nigeria (AAAN), said most companies’ income dropped due to economic hardship and recession which affected them. Under this scenario, it will be survival first for these organisations before embarking on such marketing programmes.
Nwosu, who is the CEO of TBWA, an integrated marketing communication agency, said perhaps the organisations were not deriving enough value compared to the sponsorship funds. According to him, another reason that could inform the discontinuation of the shows was change in marketing strategy by company managers.