Common Sense will Drive Next Phase of Development in the Nigerian Advertising Industry – Babaeko
X3M Ideas celebrated its 5th anniversary August 1st, 2017. As part of the landmark event, the agency’s Corporate Social Responsibility for the anniversary was a daring move that impact on the lives of students GGSS, Chibok, main victims of the Boko Haram insurgency in devastated Borno State. Read the CSR account here. Steve hosted the media to an interview session on X3M Ideas’ projections and moving the Advertising industry forward. Hinging on why a practitioners should build competitive businesses and advertising industry. Excerpts.
Congratulations on X3M ideas’ 5th anniversary. Looking back, tell about the journey so far?
Thank you very much, it’s been challenging. It is not like the advertising industry has its own economy separately carved out for the practitioners. We operate within the economy Nigeria has left us with. So it’s difficult especially when you find out that even the clients that give you business, they are facing challenges so you can imagine the impact it has on advertising agencies. It’s been challenging, had to deal with infrastructural issues. Like just trying to power this generator here, it’s a lot of money and all other things that everybody deals with, issues of getting funding for your business is a tough task. All of these challenges we faced but we are grateful to God we are still here and being able to celebrate 5 years of business. It is a landmark.
Why is funding such a challenge, is it that the financial sector is not forthcoming or they still see you as a start-up or SME?
I think we are still an SME. There is no way you can classify X3M ideas and never say we are in the SME category. If you look at it, the state X3M ideas is now, we need to start thinking and talking seriously about Mergers and acquisitions (M&A). You acquire relevant companies, those are the things we need to do and you need a whole lot of funds to be able to scale up to that level. Even if the banks are willing to do it at what time and what rate? At some points, you’re battling between taking the funds that are available and over leveraging of the business! So these are things we are discussing with experts, they are not stuff you can do overnight or by just sticking a finger into the air or using your gut feeling. It is highly sensitive and you need to be guided by professionals in M&A.
When can the advertising industry begin to see flames of these next level moves? Any plans to be listed on the Nigerian Stock Exchange?
As soon as we finalized some of them, we will talk about it. I have spoken unofficially to people who are really into stock exchange, I really need to conclude with them to know what we will be doing but in terms of what we need to do to expand, there is a lot. The WPPs of this word started with maybe 1 or 2 agencies, all of us know how big and diversified the group is today. This is where M & A comes in. How are you able to merge or acquire other smaller agencies and be able to build up? Because the kind of footprint you need to become a key player it’s a major one. You need to have major footprints either in the country or outside the country. You need all these other auxiliary services and be well positioned too, to be able to take control of the entire value chain of communication for the benefit of your clients because at the end of the day we are not even doing these things because we want to feel like we doing business, no, we are doing this because we need to provide quality service to our clients and beyond just strategy and creativity, we need to be able to buy into research, media planning and buying and many others, even within the digital space as well because there are so many things involved, one needs to be creative. And like I always say we’re work in progress. As they say, in the first five years, these determine whether a company is going to die or survive. Thank God we are here and here to stay.
What are those things you’ve been able to put in to ensure X3M Ideas survived that state of uncertainty?
First, I think it’s the team. If you don’t get the right people on the bus, you are bound to fail; you won’t even get to your destination. So it’s about getting the right people. We play very hard, we work extra harder. Everything we do, we do it with so much passion so we have a team of young but passionate people. They are very young and very excited to do what they are doing. They key-in to the vision of the company: “to redefine advertising in Nigeria”. That is the major thing that sets us apart.
People talked about instability and lull in the economy, for you as a business man, which time did you consider making further investment in your business or expanding?
The issue of making investment in your business is an on-going thing, never stopped at anytime. For the life span of a business, it will never stop. Whether human or material resources, you have to make investment on them. At some point you have to brush up or redesign the building a little bit to accommodate something new. It’s an ongoing process and we have been doing that a whole lot.
Clients are critical in this equation, do you think they are now more confident in expanding their businesses beyond what they are used to in the last two years?
That is the question of the economy, because if the clients are struggling with the economy, they are feeling the heat, they are trying to stabilize their own business not to talk of expanding. Any time the economy improves, opportunities become more glaring. That is why we just want to make sure that any client we work for, wins in this market because if the clients are winning, then we will have more jobs and opportunities to “explode”.
Certainly, X3M ideas is an award winning agency but does creativity translate to business?
I think clearly creativity translates to business. If you have a product or service there and nobody knows about it, it’s like the proverbial winking in the dark. However, if we can we use our creative ingenuity and fire power to help the brand win in the market and gain that positive attention, then it’s going to translate to sales especially if we are able to connect the brand into the mind of the customer and that’s what we do.
You passionately talked about M&A; do you think it would work in the Nigerian Advertising industry bearing in mind its antecedents?
It would work. The condition is right there to make M&A work now in Nigeria especially in advertising. How many companies have been able to pay their salaries as when due? So, it tells you that we must unite together instead of being a little fish in a little pond as it doesn’t matter if you become smaller fish in a bigger pond, that is the exigency of today as an agency, if you are to survive in the future. Thinking of buying liability , there are certain due diligence you must do that’s why you don’t just wake up one day and say this is the company I am merging with or acquiring now. There are experts that will help you in evaluation and due diligence process to tell you what the company worth. You don’t tell me in a merger, you will automatically carry the liability of staff! No they do staff audit; if we need to cut staff strength as long as it’s to make the business profitable so be it.
We have more than 100 advertising agencies in Nigeria. The truth of the matter is asking: how many of these agencies are healthy? Another obvious fact is that the clients we are serving are reducing their budgets. If the clients we are serving are cutting down but more agencies are opening shops, there is a dissonance and that’s the one that worries me a little bit.
So what will drive revolution in advertising industry?
I think common sense. That is what must drive it. You have to readjust your strategy. Today the advertising industry is really threatened and the more you have free for all, no entry barrier kind of situation, no industry survives that kind of situation. So common sense dictates that people should start sitting down and say , look my culture is closer to yours, let’s begin to find away to synergize. I’m feeling this way because I am part of the industry and I know one or two people also do as far as I know. People like Sir Steve Omojafor have been talking about M&A in the industry for over a decade. It is dawning on us as the way to go.
If an agency walk up to you for a merger, will you accept?
Yes, it just has to happen but we must first look at the individual culture. Do we have synonyms in culture because we cannot be talking about M&A if our cultures are totally different! Overall, one of the basic things we sell is our culture. X3M has a culture, there is a way we do our things, it may not be necessarily be the same in and out but let there be some complimentary
We know about big agencies acquiring smaller agencies, what about big agencies coming together to form a mega agency?
It depends on how daring we want to get with these things. Nigeria market is still open now that’s why you see some foreign agencies trying to enter the market and take it because they know the market is still open for them. The solution is to discipline ourselves as practitioners, align forces and unite. Until this happens, foreign place will continue to find it easy to break our ranks, come in, take over and dominate the industry in Nigeria.
We understand you launched Etisalat into the market. Between launching Etisalat into the market and recreating 9mobile, which one is most difficult?
Both! I will tell you why. When we want to launch Etisalat then, I was the creative director and I was so scared. It was something I was really looking forward to doing, launching a brand that is already established and well rooted in other markets especially in the Middle East, Egypt and North Africa but bringing it to Nigeria, I wasn’t even sure personally if they are going to like the name. Working with the Etisalat’s team then, we finally launched it and the reception was overwhelming but I had so many sleepless nights because I wasn’t sure maybe people will like what we were doing then.
Nine (9) years later, doing same with 9mobile, this is travelling to a place I just returned from and doing that journey all over again. This is more difficult, one the timing was short but the good thing is that once you have the trust of the client and you have their co-operation, you know that we are going to co-create and the agency has their backing 100%. We did all these together and feedback has been really good.
Are you also aware of the insinuation spreading that the logo might have been copied?
This is the day of guerrilla journalism where anybody can post anything online. It’s not everybody that post stories online that has the professional analytical ability as a thoroughbred journalist like you. The two logos had nothing in common. Is there any other way to write 9? There is no correlation between it so we don’t border to respond to it.
Did you expect this when creating the logo?
We created our thing originally even with the stringent time, we still come out with something which most people say is “fantastic”. We were fully concentrated and weren’t thinking of any distraction.
Surprised at your new passion talking about affiliation, this was never the case, what is responsible for this change of direction?
You know life is a continuous process, you hold certain position for like 5 years like I did, that’s where the young revolutionary spirit come to play and try to change the certain things. The new position is the reality of the business as it exists today as an industry. The industry has to survive and for the industry to survive, we have to build that profession so that individual companies can survive.
Is that not contradictory, if you are preaching for mergers and you are creating subsidiary?
There is no contradiction because you’re preaching merger and you are creating subsidiaries. Do you know how many subsidiaries a company like WPP has? Check their website even in the process of creating those subsidiaries; they acquired some companies to create those subsidiaries.
Today they have huge funds as WPP. Don’t forget 141 used to be Bates, they bought over Bates and turned it to 141, they broke down 141 and turned it to Ogilvy Action and they further broke it down and turned it to G2 – the biggest company today that is working on activation. Business will continue to evolve and you just need to refine and redefine yourself as a company in the advertising industry and its value chain.
In whole lot of the 5 years of the company’s existence, tell us some of the sick-time in the business?
Some of the sick times include times you have to shake hands with some people you’ve always worked with because those people will always have some other plans. These are periods that are challenging. The people you need for the business on how to navigate business and trying to keep it stable. When such people decide to take their leave, it’s usually challenging. But then, life must go on.
What are the competencies you are looking in expansion?
Surely we are looking beyond this market and we are looking at some offices but to be able to do stuff, you have to plan and prepare very well. You don’t need to jump into a market and you don’t know how it works there. So you need to study the market before you jump into it which what we are currently doing now. A few markets we are considering are currently on the table as we speak.
Secondly, to prepare ourselves for the next 5 years because marketing communication dynamics has changed, the eco system has also changed. Therefore to truly prepare for the next phase, we are going to be looking at Engineers, programmers, scientists for human resources. These among others are new skills we have to bring on board in order to compete within the eco system.
Advertising agencies are yet to realise that digital platform is key to the future, however, Nigeria competing against South Africa and the rest of the world in area of Creativity. Is the country truly ahead of South Africa as some people would have us believe?
Nigeria is a major player in creativity in Africa. Creativity cut across many sectors. Look at writing or journalism, we have vibrant people. Look at music, the advertising industry and Nollywood among other forms of creative expressions, if you bring all these together, it’s safe to say “Nigeria has the most creative young people”, and for platforms, we are working on so many platforms that in the next five years, people will wonder how we did it.
At what point did X3M diversified into music and why?
X3M music is older than X3M ideas, X3M music started in2008. I said to myself “one day you will be 75 and people will tell me, you liked music, so with all those years, you didn’t see any talented Nigerian to support”, so we supported Bantu. Bantu was signed to X3M music, we signed management contract with Nneka, we sign Etcetera, Presently we signed Priaz , Simi and whole lots of others.
Having come this far in the last five years, where do you see X3M Ideas in the next five years?
I am hoping that somebody else will take over this position as Managing Director. Like I always say, you don’t wait for anyone to regulate you into what you suppose to be doing. Better to self regulate! If after 10 years you led a company, I think it’s right time for you to let people with new idea take over the leadership and move the company into its next phase of development and the advertising industry.