Excerpts from the Keynote Address delivered at the 2024 ADVAN Industry Dialogue

Nigeria’s Advertising Industry

The Nigerian advertising and digital marketing industry is projected to grow exponentially, with a projected revenue of US$2 billion by 2025.

Globally, there seems to be an increasing focus on the regulation of the marketing communications industry, and it isn’t any different in Nigeria. With a projected revenue of US$2 billion by 2025,1 the Nigerian advertising and digital marketing industry is expected to grow exponentially. On the other hand, the global digital advertising spend is also expected to reach $753 billion in 2026, representing an over 85% growth from the projected $407 billion spend in 2022.2 As a result, it is not entirely surprising that regulators are beaming their spotlight on this rapidly evolving segment of the economy. This report is gotten from 2022 Templars Market Report.

Advertising: Market View

Most of the time, advertising improves market performance by providing customers with important information and allowing businesses to highlight the features of their products and services, allowing them to compete more effectively with one another. On the other hand, advertising can have a negative impact on market performance when corporations use it to send false or fraudulent statements on which reasonable customers are convinced to rely to their harm. When this occurs, we commonly refer to the outcome as “market failure.”

Nigeria’s Negative Narratives

When delving into the topic of advertising regulation in Nigeria, it is important to look into the negative narratives of Nigeria that can be enhanced through advertising.

Corruption: Many people believe that Nigerian politicians are corrupt and embezzle public funds

Negative Publicity: Nigerian media outlets often portray the country in a negative light.

Economic Challenges: Nigerians face extreme poverty, and the country suffers from economic challenges.

Stereotyping: Nigerians are often stereotyped as fraudsters.

Unfounded Rumours: Many Nigerians believe and spread unfounded rumours about their leaders.

Advertising practices that can significantly project Nigeria’s image positively:

* Promoting national brands and products, showcasing quality and excellence.

* Showcasing cultural heritage and tourism attractions, encouraging visitors and investment.

* Creating a positive narrative, challenging negative stereotypes and misconceptions.

* Highlighting economic and technological advancements, positioning the country as a hub for innovation and business.

* Reinforcing national values and identity, fostering a sense of pride and unity.

* Influencing public perception and shaping international relations.

* Encouraging foreign investment, trade, and economic cooperation.

* Supporting cultural exchange and people-to-people diplomacy.

* Creating a sense of national pride and ownership among citizens.

* Contributing to the country’s soft power and global influence.

Impact of Regulation on Advertising

The multifaceted implications of regulation on Nigeria’s advertising dynamics. While well-intentioned, overly restrictive regulations can stifle creativity, impede innovation, and hinder the industry’s growth potential. Therefore, it is necessary to address the gap between regulatory supervision and industry autonomy in order to create an environment that is friendly to advertising excellence in Nigeria.

Strategically formulated regulation performs a critical role in ensuring the credibility and long-term viability of the advertising industry. It ensures adherence to industry standards, accountability, and transparency within a structured framework. Also, it cultivates consumer confidence by establishing a sense of trust in the products and services being advertised.

The Economic Consequences of Regulation

• Reducing uncertainty: Regulation can provide a clear set of rules and guidelines for businesses to operate, reducing uncertainty and promoting investment and growth.
• Encouraging investment: Regulation can provide a stable and predictable environment for businesses to invest in research and development, innovation and expansion.
• Promoting competition: Regulation can prevent monopolies and promote competition, leading to better services and products for consumers.
• Protecting consumers: Regulation can protect consumers from harmful products and services, and ensure that businesses operate in a fair and transparent manner.
• Reducing negative externalities: Regulation can reduce negative externalities such as pollution, environmental degradation and social costs associated with business activities.
• Promoting economic growth: Regulation can promote economic growth by providing a stable and predictable environment for businesses to operate and invest in.

The Negative Consequences of Regulation

* Compliance costs: Regulation can impose significant costs on businesses, particularly small and medium-sized enterprises, to comply with rules and regulations.

* Barriers to entry: Regulation can create barriers to entry for new businesses, limiting competition and innovation.

* Inefficiency: Regulation can lead to inefficiency, as businesses may need to allocate resources to comply with regulations rather than focusing on innovation and productivity.

* Overregulation: Excessive regulation can stifle innovation and limit economic growth.

* Inequitable distribution of benefits: Regulation can benefit some groups at the expense of others, leading to inequitable distribution of benefits.

* Limiting job creation: Regulation can limit job creation, particularly in industries with high regulatory burdens.

* Reducing economic growth: Excessive regulation can reduce economic growth, as businesses may be discouraged from investing in research and development.

Role of ARCON (Advertising Regulatory Council of Nigeria)

The Local Content Dimension was introduced in order to promote Nigerian content, by the ARCON, on the 22 August 2022, issued a notice (the “Notice”) requiring advertisements and marketing communications materials to only use Nigerian models or artists. The Act provides for the promotion of local and indigenous content as an important element in advertising and marketing communications services in Nigeria but does not expressly require or mandate 100% local content. There are clearly significant practical challenges with this new requirement especially in relation to foreign digital ads that are not materially localized or necessarily targeted at the Nigerian market but are exposed to or accessible to Nigerians through various digital platforms. It is unclear how ARCON would enforce the Notice and if an exception would be made for such ads that do not necessarily qualify as “targeted at the Nigerian market”, but in the absence of any legal challenge, ARCON may use its takedown powers under the Act to request for the removal of advertisements that do not comply with the Notice or as has been seen in the past with the Twitter ban, block access to sites that are seen to be non-compliant.

Recommendations for Private/Public Collaboration

I suggest implementing a cooperative structure that encompasses the following fundamental principles:

Dialogue and Engagement: Facilitating constructive dialogue between government regulators, industry stakeholders, and consumer advocates is essential to forge consensus on regulatory frameworks that are pragmatic, effective, and adaptive to evolving market dynamics.

Capacity Building and Education: Investing in capacity building initiatives and educational programs can empower advertising practitioners with the requisite knowledge and skills to navigate regulatory compliance effectively while upholding ethical standards and consumer rights.

Innovation and Self-Regulation: Encouraging industry-led initiatives for self-regulation and innovation can augment governmental regulatory efforts, fostering a culture of responsible advertising practices, and mitigating the need for overly prescriptive regulations.

Transparency and Accountability: Promoting transparency and accountability mechanisms within the advertising industry, such as clear disclosure of sponsored content, adherence to advertising codes of conduct, and mechanisms for consumer grievance redressal, is paramount to build trust and credibility.

Cultural Exchange Programs: Invite advertising professionals to experience the country’s culture and share their perspectives.

Finally, the route to a thriving and sustainable advertising scene in Nigeria demands a paradigm shift: from viewing regulation as a barrier to positive change to embracing it as a catalyst. By encouraging collaborative collaborations, we can negotiate regulatory difficulties, realize the full potential of the advertising sector, and pave the path for a brighter future.

Let us embark on this transformative journey together, guided by a common goal of improving Nigeria’s advertising industry for the benefit of all stakeholders.

About the Speaker

Professor Olufemi Saibu is the Director of the Quality Assurance and Servicom Unit, and pioneer Director of the Institute of Nigeria China Development Studies (INCDS-UNILAG) at the University of Lagos. He is a NESG-NRF Faculty Member/Senior Research Fellow and postdoctoral fellow at the University of Johannesburg in South Africa. He is a Public Procurement Expert, Higher Education quality assurance specialist and economic policy and programme developer and evaluator as well an expert in program curriculum and project concept development. He has initiated and executed research and project grants for development and capacity building and currently leading a team of scholars in the execution of two different national research grants aimed at strengthening the capacity of small businesses to address the twin development challenges of unemployment and poverty, as well as increasing their global value chain penetration and export intensity.