- The top ten adverts in Nigeria were compiled using three main yardsticks.
- Has your decision to purchase anything been influenced by these ads?
Ever since she became self-aware, Ngozi has always been fascinated by advertisements. As a teenager, she knew all the radio jingles by heart and could analyse the adverts on TV much better than she could analyse Nollywood movies. This level of interest has continued until today, and it doesn’t come as a surprise that every product/service she purchases is partly influenced by how much she likes the adverts marketing them.
Nairametrics has teamed up with her to analyse some of the best adverts so far this year. But before we get right into it, let us briefly examine the importance of marketing communication.
Adverts: Why they’re important
Across the world, manufacturers and service providers typically operate in saturated markets where competition is rife. The situation is not any different in Nigeria. To stand out, it is not enough for companies to offer high-quality products and services; they must also be able to adequately communicate the benefits of their products and services to customers in order to attract their patronage. This is the whole essence of marketing communication.
Top Adverts in Nigeria
So far in 2019, a lot of companies have done the most in this regard. We have seen some of the most creative advertisements in the forms of radio jingles, TV adverts, newspaper adverts, social media campaigns, web banners, etc., but are all of them having quite the impact?
Note that for the sake of this ranking, we have chosen to focus only on video adverts. Specifically, we are examining companies’ 2019 adverts on YouTube by using such yardsticks as creativity, total views, and viewers’ engagement to analyse them. We will also be looking at how these adverts have reflected on the companies’ bottom lines. That said, below are the top ten adverts in Nigeria, in no particular order. Enjoy.
1. Vex Money by Stanbic IBTC
Let us begin with one of the trendiest video adverts in Nigeria this year —Vex Money. There are so many reasons why we like the advert, including the fact that it is hilarious of course. Imagine that you (as a young female professional) are on a date with a prospective lover. The restaurant is fanciful and all the meals on the menu appear delicious. You are both conversing while waiting for the food to arrive, then your date tells you that you’d be heading straight home with him after he pays for the meal!
Agreed, some people may not be offended by this, but the female character in this advert, who is apparently an independent woman, is quite pissed off. Not only can she afford to pay for the meal, she also has her Stanbic IBTC card. So, she “vexes”, whips out her Stanbic IBTC card, pays for the expensive meal, and walks away.
As expected, this ad resonated with a lot of Nigerian women, some of whom might have found themselves in similar situations. Ngozi was particularly proud of this one; she had to open a Stanbic IBTC account after watching it. Many other women like her flooded the comment section of Stanbic IBTC’s YouTube page with remarks like, “This ad was made for us!!!!!! Yesssss girl!!!!”
It should be noted that the Vex Money ad has garnered over 1.1 million views since it was published on May 26th, 2019.
2. Family Benefit Plan plus by Leadway Assurance
This is another advert we really like here at Nairametrics. It tells the story of a financially handicapped middle-aged man who is running around to raise the funding needed for his mother in-law’s burial. All the relatives he goes to for help ridicule him whilst offering no help. This experience teaches him an important lesson. He also discovers the Leadway Assurance Family Benefit Plus which is a special kind of insurance package that takes care of burials.
Fast-forward to one year later, the man’s father is dead, and his relatives are grumbling that he would come again to ask for money. Instead, he surprises them by simply inviting them for the burial. Apparently, the insurance package has taken care of all the expenses.
With this ad, Leadway Assurance hopes to teach Nigerians the importance of taking charge of personal finance by way of insurance coverage. Sadly, the ad has received a rather lukewarm reception by Nigerians who have only viewed it 288,162 times since it was published on the 21st of March 2019.
3. Seize the moment with your UBA Cards by UBA
If there is anything we know for a fact here at Nairametrics, it is the fact that United Bank for Africa Plc does not joke around when it comes to its advertising budgets. The company goes all the way to endear itself to customers because it understands the importance of advertising in the marketing mix.
Needless to note that UBA adverts are always top-notch. A case in view is the latest advert for UBA cards. In the minute-long clip, the company successfully portrays the cards as must-haves, especially for sophisticated single Nigerians hoping to mingle.
The ad was published on August 8th and it has already garnered 275,309 views in less than a month.
4. 4G-Blender by Airtel
There is no gainsaying the fact that Airtel has successfully mastered the art of marketing communication. Its video adverts are always on genius levels and quite relatable. In this particular ad for its 4G product, the service provider continues with its long-running series depicting the “bad blood” between the mothers of a newly-wedded couple. While one of the mothers is old school and prefers to perform chores manually, the other one knows how to use home appliances to fast-track her chores.
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With this funny advert, the company is trying to inform its loyalists and prospective customers that 3G networks may be working for them, but 4G is better. And based on the fact that more than 2.3 million people have viewed the ad since January, it is best to assume that the message has been successfully passed. A customer who watched the video said, “You guys have the best and entertaining advert… I never skip it before the actual video. Kudos to the brains behind.”
5. More than a tag by Access Bank Plc
This advert by Access Bank is simply heart-felt in that it seeks to uplift low-income earners who typically comprise the bulk of bank customers across the banking sector. In the ad, the bank portrays a wide range of low-income earners such as a petty trader, a physically-challenged girl, a bus driver and others, telling them that they matter because they are more than their present situations. In other words, Access Bank knows that low-income earners can become so much more in the future, and this is why the bank cares.
The video has been viewed 609,265 times since it was published on YouTube on April 2nd of this year. Olufemi Ogunpehin wrote that it is a beautiful ad that has “…struck a note in me.”
6. Zero Account Opening Requirement by Zenith Bank
This feel-good advert with its catchy chorus is really one of the trendiest Nigerian adverts so far this year. Thanks to the agency that developed it and, of course, the creative genius of comedian Emma Oh My God, the video has generated quite a buzz; it has been viewed 632,756 times since it was published on July 19th, 2019. One of the commentators on the ad wrote, “This is the only ad I’ve watched to the end on YouTube.”
The message is simple — prospective Zenith Bank customers can now easily open zero balance bank accounts by simply dialing *966*0#.
7. Signature Jollof by Nestle
Nestle Nigeria Plc is yet another company that is known for its very creative advertisements, especially as it relates to Maggi brand.
This particular advert is simple and brief, with a soothing Nigerian song, telling viewers about the newly-launched seasoning cube, its basic ingredients, and its qualities.
As at the time of compiling this report, a total of 794, 187 people had viewed the ad on YouTube, barely two months after it was published on June 17th, 2019.
8. Own your Journey by Nigerian Breweries Plc
Nigerian Breweries Plc is currently the largest brewer in the country, based on its earning power in H1 2019. Now, one of the main movers of the company’s market share is its Gulder brand. It is, therefore, not surprising that the company puts down cool cash for the development of the right marketing campaigns that will endear the product to consumers.
In this latest ad, the company is simply telling young entrepreneurs to relax, take a bottle of Gulder, and then re-strategise for greater outcome, especially when faced with doubt.
It was published on June 7th and has been viewed 311,679 times.
9. Jumia Anniversary Sale by Jumia
This advert, which was published on June 19, has received a total of 955,511 views on YouTube. The views are still counting. Upon watching the 30 seconds-long clip, it becomes unsurprising to see why it has garnered so many views – Nigerians like free things and the advert is promising how customers can buy products at very subsidized rates.
10. This is Showmax by Showmax Nigeria
Showmax Nigeria’s 30 minutes-long introductory adverts have garnered over 1.2 million views on YouTube. It is safe to say that even though the advert is interesting enough, most of those who watched it only did so out of curiosity. Somebody wrote “I saw Dwayne Johnson so I clicked,” while someone else observed that Showmax is late to the show because “there’s this awesome thing called Netflix though…”
From this end, we wish the company all the best of luck nonetheless.
In conclusion, advertisements are inevitable in the world of business. For this reason, companies are ever willing to expend billions of naira per year for the development and dissemination of befitting ads. So far this year, the ads highlighted above are the ones that really caught our attention. Have you been influenced by them to purchase?
Why Insurance firms are selling off their PFAs
It has not been uncommon over the years to have insurance companies with pension subsidiaries.
The idea of mitigating risks and curtailing losses at the bare minimum begins from the insurance industry and only crosses into the pension space with the need for retirement planning. For this reason, it has not been uncommon over the years to have insurance companies with pension subsidiaries. However, controlling the wealth of people is no easy feat – and crossover companies are beginning to think it might not be worth it competing with the big guns; that is, the pension fund administrators (PFAs) that already cater to the majority of Nigerians.
A few months ago, AXA Mansard Insurance Plc announced that its shareholders have approved the company’s plan to sell its pension management subsidiary, AXA Mansard Pensions Ltd, as well as a few undisclosed real estate investments. It did not provide any reason for the divestment. More recently, AIICO Insurance Plc also let go of majority ownership in its pension arm, AIICO Pension Managers Ltd. FCMB Pensions Ltd announced its plans to acquire 70% stakes in the pension company, while also acquiring an additional 26% stake held by other shareholders, ultimately bringing the proposed acquisition to a 96% stake in AIICO Pension. The reason for the sell-off by AIICO does not also appear to be attributed to poor performance as the group’s profit in 2019 had soared by 88% driven by growth across all lines of business within the group.
So why are they selling them off?
Pension Fund Administration is, no doubt, a competitive landscape. Asides the wealth of the over N10 trillion industry, there is also the overarching advantage that pension contributors do not change PFAs regularly. Therefore, making it hard to compete against the big names and industry leaders that have been in the game for decades – the kinds of Stanbic IBTC, ARM, Premium Pension, Sigma, and FCMB. Of course, the fact that PFAs also make their money through fees means the bigger the size, the more money you make. With pressure to capitalize mounting, insurance firms will most likely spin off as they just don’t have the right focus, skills, and talents to compete.
The recent occurrence of PENCOM giving contributors the opportunity to switch from one PFA to another might have seemed like the perfect opportunity for the smaller pension companies to increase their market shares by offering better returns. More so, with the introduction of more aggrieved portfolios in the multi-fund structure comprising of RSA funds 1, 2, & 3, PFAs can invest in riskier securities and enhance their returns. However, the reality of things is that the smaller PFAs don’t have what it takes to effectively market to that effect. With the gains being made from the sector not particularly extraordinary, it is easier for them to employ their available resources into expanding their core business. There is also the fact that their focus now rests on meeting the new capital requirements laced by NAICOM. Like Monopoly, the next smart move is to sell underperforming assets just to keep their head above water.
Olasiji Omotayo, Head of Risk in a leading pension fund administrator, explained that “Most insurance businesses selling their pension subsidiaries may be doing so to raise funds. Recapitalization is a major challenge now for the insurance sector and the Nigerian Capital Market may not welcome any public offer at the moment. Consequently, selling their pension business may be their lifeline at the moment. Also, some may be selling for strategic reasons as it’s a business of scale. You have a lot of fixed costs due to regulatory requirements and you need a good size to be profitable. If you can’t scale up, you can also sell if you get a good offer.”
What the future holds
With the smaller PFAs spinning off, the Pension industry is about to witness the birth of an oligopoly like the Tier 1 players in the Banking sector. Interestingly, the same will also happen with Insurance. The only real issue is that we will now have limited choices. In truth, we don’t necessarily need many of them as long all firms remain competitive. But there is the risk that the companies just get comfortable with their population growth-induced expansion while simply focusing on low-yielding investments. The existence of the pandemic as well as the really low rates in the fixed-income market is, however, expected to propel companies to seek out creative ways to at least keep up with the constantly rising rate of inflation.
Nigerian Banks expected to write off 12% of its loans in 2020
The Nigerian banking system has been through two major asset quality crisis.
The Nigerian Banking Sector has witnessed a number of asset management challenges owing largely to macroeconomic shocks and, sometimes, its operational inefficiencies in how loans are disbursed. Rising default rates over time have led to periodic spikes in the non-performing loans (NPLs) of these institutions and it is in an attempt to curtail these challenges that changes have been made in the acceptable Loan to Deposit (LDR) ratios, amongst others, by the apex regulatory body, CBN.
Projections by EFG Hermes in a recent research report reveal that as a result of the current economic challenges as well as what it calls “CBN’s erratic and unorthodox policies over the past five years,” banks are expected to write off around 12.3% of their loan books in constant currency terms between 2020 and 2022, the highest of all the previous NPL crisis faced by financial institutions within the nation.
Note that Access Bank, FBN Holdings, Guaranty Trust Bank, Stanbic IBTC, United Bank for Africa and Zenith Bank were used to form the universe of Nigerian banks by EFG Hermes.
Over the past twelve years, the Nigerian banking system has been through two major asset quality crisis. The first is the 2009 to 2012 margin loan crisis and the other is the 2014 to 2018 oil price crash crisis.
The 2008-2012 margin loan crisis was born out of the lending institutions giving out cheap and readily-available credit for investments, focusing on probable compensation incentives over prudent credit underwriting strategies and stern risk management systems. The result had been a spike in NPL ratio from 6.3% in 2008 to 27.6% in 2009. The same crash in NPL ratio was witnessed in 2014 as well as a result of the oil price crash of the period which had crashed the Naira and sent investors packing. The oil price crash had resulted in the NPL ratio spiking from 2.3% in 2014 to 14.0% in 2016.
Using its universe of banks, the NPL ratio spiked from an average of 6.1% in 2008 to 10.8% in 2009 and from 2.6% in 2014 to 9.1% in 2016. During both cycles, EFG Hermes estimated that the banks wrote-off between 10-12% of their loan book in constant currency terms.
The current situation
Given the potential macro-economic shock with real GDP expected to contract by 4%, the Naira-Dollar exchange rate expected to devalue to a range of 420-450, oil export revenue expected to drop by as much as 50% in 2020 and the weak balance sheet positions of the regulator and AMCON, the risk of another significant NPL cycle is high. In order to effectively assess the impact of these on financial institutions, EFG Hermes modelled three different asset-quality scenarios for the banks all of which have their different implications for banks’ capital adequacy, growth rates and profitability. These cases are the base case, lower case, and upper case.
Base Case: The company’s base case scenario, which they assigned a 55% probability, the average NPL ratio and cost of risk was projected to increase from an average of 6.4% and 1.0% in 2019 to 7.6% and 5.3% in 2020 and 6.4% and 4.7% in 20201, before declining to 4.9% and 1.0% in 2024, respectively. Based on its assumptions, they expect banks to write-off around 12.3% of their loan books in constant currency terms between 2020 and 2022, a rate that is marginally higher than the average of 11.3% written-off during the previous two NPL cycles. Under this scenario, estimated ROE is expected to plunge from an average of 21.8% in 2019 to 7.9% in 2020 and 7.7% in 2021 before recovering to 18.1% in 2024.
Lower or Pessimistic Case: In its pessimistic scenario which has a 40% chance of occurrence, the company projects that the average NPL ratio will rise from 6.4% in 2019 to 11.8% in 2020 and 10.0% in 2021 before moderating to 4.9% by 2024. It also estimates that the average cost of risk for its banks will peak at 10% in 2020 and 2021, fall to 5.0% in 2022, before moderating from 2023 onwards. Under this scenario, banks are expected to write off around as much as 26.6% of their loan books in constant currency terms over the next three years. Average ROE of the banks here is expected to drop to -8.8% in 2020, -21.4% in 2021 and -2.9% in 2022, before increasing to 19.7% in 2024.
Upper or optimistic case: In a situation where the pandemic ebbs away and macro-economic activity rebounds quickly, the optimistic or upper case will hold. This, however, has just a 5% chance of occurrence. In this scenario, the company assumes that the average NPL ratio of the banks would increase from 6.4% in 2019 to 6.8% in 2020 and moderate to 4.8% by 2024. Average cost of risk will also spike to 4.2% in 2020 before easing to 2.4% in 2021 and average 0.9% thereafter through the rest of our forecast period. Finally, average ROE will drop to 11.6% in 2020 before recovering to 14.4% in 2021 and 19.0% in 2024.
With the highest probabilities ascribed to both the base case and the pessimistic scenario, the company has gone ahead to downgrade the rating of the entire sector to ‘Neutral’ with a probability-weighted average ROE (market cap-weighted) of 13.7% 2020 and 2024. The implication of the reduced earnings and the new losses from written-off loans could impact the short to medium term growth or value of banking stocks. However, in the long term, the sector will revert to the norm as they always do.
Even with a 939% jump in H1 Profit, Neimeth still needs to build consistency
Neimeth has been one of the better performers in the stock market in the last one year.
Neimeth’s profit after tax for H1 2020 might have jumped by 939% from H1 2019, but there’s still so much the company needs to do to remain in the game.
For the first time in years, Pharmaceutical companies across the globe are in the spotlight for a good reason. As the COVID-19 pandemic rages on, the world waits patiently for this industry to produce a vaccine that can once again lead us back to the lives we all missed. Nigeria is also not an exception, it seems. One of Nigeria’s oldest pharmaceutical companies, Neimeth, has been one of the better performers in the stock market in the last one year. However, there is still so much the company needs to do to earn profits consistently.
Neimeth’s recently released H1 2020 results show a jump of 19.4% in revenue from ₦976 million earned in H1 2019 to ₦1.165 billion in H1 2020. While this is impressive, its comparative Q2 results (Jan-March ‘ 20) show a drop in revenue of 25.4% from ₦748.8 million earned in Q2 2019, to the ₦568.7 million revenue in Q2 2020. In similar vein, while its profit-after-tax soared by 939% from ₦5.447 million in H1 2019 to ₦56.596 million in H1 2020, its quarter-by-quarter results show a drop of 118%. While there is a truth that some months are better performers than others, Neimeth’s extreme profit jump in the half-year results juxtaposed with the more-than-100% drop in the first quarter of this year, reveal wide-gap volatility in its earning potential. Its revenue breakdown attributes the quarter-by-quarter drop in revenue to a comparative drop in its ‘Animal Health’ product line by a whopping 897.42%. The ‘Pharmaceuticals’ line also only experienced a marginal jump of 2.57%.
Full report here.
Current & Post-Covid-19 Opportunities
A 2017 PWC report had revealed that by 2020 the pharmaceutical market is expected to “more than double to $1.3 trillion. Mckinsey had also predicted that come 2026, Nigeria’s pharma market could reach $4 billion. The positive outlook of the industry is even more so, following the disclosure by the CBN to support critical sectors of the economy with ₦1.1 trillion intervention fund.
The CBN governor, Godwin Emefiele, had stated that about ₦1trillion of the fund would be used to support the local manufacturing sector while also boosting import substitution while the balance of ₦100 billion would be used to support the health authorities towards ensuring that laboratories, researchers and innovators are provided with the resources required to patent and produce vaccines and test kits in Nigeria.
While manufacturing a vaccine for the Covid-19 pandemic might be nothing short of wishful, the pandemic presents a global challenge that businesses in the healthcare industry could leverage. Through strategic R&D, it could uncover a range of solutions, particularly those that involve the infusion of locally-sourced raw materials.
In order for the company to attain sustainable growth, it needs to come up with structures and systems that are dependable, while also tightening loose ends. One of such loose ends is its exposure to credit risk. It’s Q2 2020 reports reveal value for lost trade receivables of N693.6 million carried forward from 2019. To this end, it notes that while its operations expose it to a number of financial risks, it has put in place a risk management programme to protect the company against the potential adverse effects of these financial risks.
At the company’s last annual general meeting (AGM), the managing director, Matthew Azoji, had also spoken on the company’s efforts to gain a larger market share through its initiation of bold and gradual expansion strategies.
The total revenue growth and profitability of the half-year period undoubtedly signals a potential in the company. However, we might have to wait for the company’s strategies to crystalize and attain a level of consistency for an extended period before reassessing the long-term lucrativeness of its stock or otherwise. That said, it certainly should be on your watchlist.