Crisis Brews Over N8bn Unpaid Advertising Debt

Proshare

Thursday, October 25, 2018    09:43AM  / By Princewill Ekwujuru of Vanguard

 

The advertising industry is enmeshed in controversy over N8billion debt owed by advertisers and media buying agencies, which stakeholders blame on weak regulatory environment.

 

Advertising agencies (ad agencies) said the huge media debt profile of client companies have been creating some operational challenges, especially those in the out–of–home advertising, electronic and the print media.

 

They said the non- payment of the debts comes against the backdrop of promises made last year by all relevant stakeholders to address the challenge of advertising debt in brand management and management of brand business in Nigeria. The ad agencies pointed out that they are facing acute liquidity crisis largely due to the large sum being owed by the client companies (advertisers).

 

Vanguard’s Companies and Markets (C&M) investigation revealed that over N8billion unpaid fees by advertisers, many of whom are multinationals are currently plaguing smooth running of business operations of the media houses and some advertising agencies.

 

While the agencies and the media houses are believed to have fulfilled their own part of the contractual agreement by executing the contracts, they are now faced with the challenge of getting the clients to honour their part of the contractual agreement by paying for the services that have over–stayed the agreed  grace period of 45 working days for payment.

 

The delay in payment, it was gathered was attributed to the sudden non-compliance to the existing payment due date of 45 days by multinational companies who are said to be demanding for 180 days to process media invoices before payment is made. Advertising practitioners and media owners however have decried this request stating that it does not conform to global best practices. Few years ago, APCON intervened in the advertising debt issue by setting up A Special Committee on Media Debts Issue (ACOMDI).  Members of the committee were drawn from the major sectoral associations, namely ADVAN, AAAN, BON, MIPAN, OAAN and NPAN. Chaired by Alhaji  Ayodele Sulaiman, the committee met to review and submitted reports on media advertising  debts totalling N2billion as at 2007.

 

However, the debts have grown over the years in part due to weak regulatory environment, encouraged by absence of a governing council for APCON. The absence of a governing council  for  APCON in the last four years, according to practitioners,  has created a huge gap in its ability to perform  its  regulatory responsibilities. It was gathered that the practice in Nigeria is in contrast to what obtains in South Africa where advertisers are made to pay heavy sanction and financial penalty for defaulting on payment.

 

Practitioners Speak

Mr. Sola Bamgbose, a consultant to a telecom company described the request by the multi-nationals for 180 days of grace to settle the media debt as “uncharitable”. He stated that such a request in this modern day and time negates the true spirit of fairness and justice as some of these companies does not ask consumers of their goods, products and services to come and pay them after 180 days of consumption.

 

 

 

Proshare Nigeria Pvt. Ltd.

 

 

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