As is the case in different parts of the world, billboard advertising has for long been an integral aspect of the marketing process in Nigeria. Driving along the Third Mainland Bridge in Lagos for instance, an imposing, gigantic billboard greets you. This electronic billboard is so big such that it extends from one end of the 10km bridge to the other, facing commuters descending the Oworonshoki end of the popular bridge. The colourful displays of ads on the billboard and many others like it come at a cost, with companies paying between N15 million and 120 million per annum just to display brands. These millions of naira typically go into the coffers of outdoor advertising companies such as Afromedia Plc.
Lately, Afromedia Plc hasn’t been getting as much of those advertising revenues as it used to. Instead, the company which used to be the leading outdoor advertising firms in Nigeria, has recently been struggling to maintain the glory of its former days. This, therefore, begs the question as to what factors could be responsible for the slowed growth. Can the company ever overcome its current challenges?
For this week’s Nairametrics‘ company focus, we will closely examine these important questions and more. As is the tradition on this column, we will also avail you of the opportunity to know more about this company, its business structure, history, ownership, troubles, financial performance, and prospects.
Corporate overview of Afromedia Plc
The Lagos-based media solutions provider was incorporated as a limited liability company on October 28th, 1959—approximately one year before Nigeria’s independence. Prior to this time, the company was a part of West Africa Publicity, which was a subsidiary of United Africa Company Limited.
The company, which since 1959 has been fully engaged in outdoors advertising, received approval from Nigeria’s Corporate Affairs Commission to become a public company in 1972. This is the same year the the corporate entity was completely acquired by its new Nigerian owners. And then thirty seven (37) years later, the company was listed on the Nigerian Stock Exchange in 2009. Today, it has a market capitalisation of N2.2 billion and a share price of 50 kobo.
The company’s products and services
Afromedia Plc currently offers the following services:
1. Roadside structure/billboards
2. Airport displays
3. Destination branding
4. Customer support
5. Press releases, etc.
A look at the company’s target market
As one of Nigeria’s foremost media solutions providers, specifically in the outdoor advertising space, Afromedia Plc targets companies which are ever in constant need to create awareness for their products and services. Such companies range from consumer goods manufacturers like Nestle Nigeria Plc, to industrial goods makers like Dangote Cement Plc. They also offer services to individuals like politicians, as well as other PR firms.
Afromedia’s board of directors
Just last week, the company announced a change in the composition of its board of directors with the appointment of Mr Femi Olaiya as the new Group Chief Executive Officer. Mr Olaiya took over from Mr Akinlola Ojewunmi Olapade.
Prior to his current appointment, he was the company’s Deputy Managing Director. He has also served as an associate director of sales and marketing, as well as Chief Operating fficer.
Other members of the company’s board of directors are:
1. Ibrahim Isiayaku who is the Chairman,
2. Mrs Agatha Okpagu, Direction and
3. Mrs Osen Odeyemi, the Executive Director in charge of the company’s shared services.
The company’s competition
Although Afromedia undoubtedly pioneered the outdoor advertising service industry in Nigeria, other operators in the sub sector have emerged over the years. As a matter of fact, there are about 120 registered outdoors advertising firms across Nigeria. As expected, the emergence of the competitors went a long way in threatening Afromedia’s dominance in the space. Examples of some of the popular outdoors advertisers in Nigeria include:
- Kontactpoint Limited
- Invent Medusa
- Displayhub Concepts Limited
- Promoworld Limited
- SINAT Advertising, etc.
How digital advertising poses a threat
Meanwhile, another major source of competition for the company (asides the newspaper, magazine, radio and TV) are online advertisements. Much like every other aspect of our lives, the digital disruption also occurred in the advertising industry, with more and more companies continually choosing to diversify their advertising portfolios.
Recently, Nairametrics sat down with the company’s Head of Sales and Marketing, Mr Adesina Oluwole, and asked him how the new source of competition is affecting their business operations. In response, he said digital advertising is not really a threat to Afromedia Plc. According to him, no right-thinking company would completely do away with outdoor advertising, seeing as it is one of the most effective ways to reach customers by the millions.
He, however, admitted that outdoor advertising can be quite expensive, which may be why some companies are shifting to digital advertising, thereby leaving some billboards empty. He also cited the unfavourable business environment, specifically the recent economic recession, as the reason why many companies are choosing “cheaper” means of advertising.
“I will not agree with you that digital advertising is threatening to put us out of business. But I wouldn’t say it is not a serious competition, because it is. Yet, outdoor advertising is indispensable. No company that wants to maximise profit would ever want to do away with traditional advertising, particularly outdoor advertising such as billboards.” -Oluwole.
Meanwhile, the company is struggling
It is no secret that Afromedia Plc has been struggling to maintain profitability for a while now. The difficult time experienced by the company is reflective in its recently released management report for the 2017 financial period. According to the report, the company made a turnover of N436.7 million and a loss after tax of N609 million. The result is no better than the preceding 2016 financial report which shows a turnover of N494 million and a loss after tax of N1.7 billion.
Afromedia Plc has also been having corporate governance issues, with the Nigerian Stock Exchange penalising it several times for failure to release its financial reports as at when due.
Whether or not Afromedia’s difficult time is causes by growing competition or even political factors as some are wont to imply, one thing both investors and management are interested in is how to revive it.
And it appears the company is making some efforts to this effect. According to Mr Oluwole, Afromedia is deploying new means of survival, even though none of these involve online advertising. Instead, the company is focusing more on other types of outdoor-related adverting, including bus branding, airport advertising, gantries, etc.
We would be watching to see if this new path would help it shore up profits.