Last week I had a conversation with a senior manager at an out of home, OOH company, the takeout of the engagement is that the sector in an unprecedented crisis.
It is estimated that over 50% of all hoardings are vacant. In previous times, vacant rate was hovering between 20-30%. The current state of things shows the market has reached a make or mar state.
It is no longer news that Nigeria is in a recession, but by time the market gains buoyancy, it might be too late for the OOH sector.
By default any would suggest that OOH companies should cut rates to increase appetite of advertisers for the OOH media, but it not that simple.
All over the country, the market has received more regulations with new mandatory fees paid by OOH companies. Regulators must be carried along to also reduce their fees, this can then be a practicable rationale for rate reduction.
Also many OOH companies took loans to develop various boards, these loans have reset to higher rates necessitated by a skyrocketing inflation. There is an urgent need to have a multi-sector agreement on how to save the OOH sector from collapse.
State regulators have to cut fees and or give companies some concession on what they pay. Banks might have to renegotiate credit repayment terms.
Should everyone sit on the fence, many OOH companies would collapse before the end of the recession. Banks will be left with toxic assets while states who are in dire need of funds would get nothing.
A stitch in time saves nine.
First published in NEXTGEN, a newsletter of SBI Media