, , , , , , ,

Reflex Eco Group – Uganda News

by Othman Semakula (Ugandan journalist of Daily Monitor)


In April 2011 ZK Advertising, a subsidiary of ZK Tanzania, and one of Uganda’s biggest (then) advertising firm summarily closed after it lost one of its key accounts (Zain and later Airtel).

ZK had handled Zain’s [which was in 2010 sold to India’s Bharti Airtel] PR and Advertising budget for about 10 years, as the telecom sought to turn around its fortunes through transiting from a high end telecom to a mass market.

The sale forced a revision of a number of deals including the renegotiation of the PR and Advertising contract that was handed to Moringa Oglivy in a deal negotiated in South Africa.

Thus as it seemed Airtel thought it needed a new partner to drive its agenda as ZK had failed to substantially influence an increase in subscriber numbers that had stagnated at about three million subscribers despite a huge spend of about $8 million (Ushs20 billion) in advertising annually.

However, it should be noted that early this year Airtel acquired Warid Telecom which has driven its subscriber numbers to about 7.2 million active subscribers.

The events that followed meant that ZK had not only lost its account in Uganda but had also been deprived of huge sums of money in advertising spend in other countries including Tanzania, where the parent company later collapsed in 2012 due to huge debts and loses admittedly spurred by the loss of one of the firm’s cash cows [Zain and later Airtel].

In this case ZK Uganda had lost about 70 per cent of its revenue streams that at the time would rake in about $703,125 [about Ushs1.8 billion] annually.

Airtel operates in 16 African markets and recently entered Rwanda’s data market that has in the last five years registered marked improvements.

In Uganda [Airtel] at least spends in the excess of $8 million [Ushs20 billion] annually on brand image, media placement, sponsorships and public relations among others.

The above scenario is not an isolated case in Uganda’s PR and Advertising industry but is a mark that defines the challenges of continuity especially when such firms lose some of their key accounts.

In 2010 QG Saatchi & Saatchi with links in South Africa and a market leader [then] in Uganda’s PR and advertising sector was almost wiped off the market after the government and a section of civil society accused it of mishandling tax payers money that had been meant to promote and publicize the Commonwealth Heads of Government Meeting (CHOGM) in Kampala in 2007.

The accusations dented the firm’s image forcing the exit of key accounts including MTN Uganda and Stanbic Bank both subsidiaries of MTN and Standard Bank based in South Africa respectively.

The firm had also previously handled key accounts including Gtv [which collapsed in 2008] and Woolworths, a South Africa based clothing line.

Although the firm has scrambled through the fragile tide it was in 2011 almost wiped off Uganda’s market but continues to operate though as a market peripheral.

The above is a clear illustration of Uganda’s fragile but profitable PR and Advertising industry.

The industry continues to register tremendous growth but there is a void with a lot of opportunities ready to be tapped into.

However, the industry is as well saturated with firms that are seemingly not up to the task.

A recent survey conducted by Daily Monitor, a Ugandan newspaper, indicates that the country has about 45 PR and Advertising firms all competing to have a share of the seemingly small corporate market.

However, majority of the above are according players just but scrambling through with many accused of being press release experts with no major impact on building brand image.

Mr Herbert Zzake, the Standard Chartered Bank Uganda head of corporate affairs and a market analyst, shares his frustration when it comes to dealing with PR and Advertising firms.

He says the two firms [though he does not name them] that he had tried to deal with seven years ago disappointed him thus the bank took a decision to handle its PR in-house.

“It was frustrating we had to physically follow them [PR firms] to accomplish the assignments with virtually no value added.”

However, he adds the industry is beginning to pick the rags, which as he says was not the case ten years.

“We still have a long way to go to reach the level of our neighbours like Kenya, however, indications show the industry is on the right path to prosperity.” he says.

Mr Zaake’s claims are a signal that singles out and explains the challenges of Uganda’s PR and Advertising industry as firms struggle to have a share of the small but lucrative corporate market.

And thus the industry has been fondly caught off guard as players employ all forms of underhand methods to suffocate free media in Uganda.

Such firms have an array of means including bribery to fix or kill sensitive stories about their clients as well maligning media managers through cutting advertising spend to critical media houses.

The above is attributed to a struggle that seeks to keep clients ‘happy’ as well as the need to retain or recruit new accounts in a market with a limited number of companies that have capacity to hire third party publicity and media buying.

A 2011 survey conducted by Synovate Uganda – a research firm, indicates that PR and Advertising firms in Uganda rely on about five sectors that form the bulky of the industry’s publicity and advertising spend.

Data obtained by Daily Monitor indicates that MTN Uganda leads in media spend, according to the 2011 Industry Exposure survey.

The survey indicates that the telecom spends about $12.8 million [Ushs33 billion] on PR, sponsorships and advertising

Among the 20 firms surveyed the least spender was Bidco Uganda spending over $156,250 [Ushs4 billion].

Other companies including Airtel Uganda [currently merged with Warid Telecom], Orange Uganda and Mukwano Group are identified by the survey as some of the companies among Uganda’s top spenders in the PR and Advertising industry.

However, it should be noted that the substantial amounts of money involved in the industry is a pivotal feature that defines ethical conduct of most PR and Advertising firms in Uganda.

For instance it’s a known fact that media ethics continue to be compromised through the use of crafty and underhand methods.

However, even amidst challenges, players continue to see optimism considering the country’s growing corporate sector.

In an email exchange recently, Mr Alex Rukundo, the Metropolitan Republic managing director, which currently handles MTN Uganda’s PR and Advertising budget told Daily Monitor the sector continues to register progress even with a number of challenges.

He says: “I strongly believe the industry has strong potential but there will be pain, before happiness. If you compare the industry today and five years ago we have come a long way, people ought to give us some credit.”

Mr Muhereza Kyamutetere, the Fireworks general manager and a market analyst echoes Mr Rukundo’s optimism, saying the industry continues to see some improvements considering the fact that a number of corporate companies are finding it necessary to hire third party publicity firms to spur their brand images and development.

He says although it is still a small sector, market indications suggest a huge void that needs to be tapped into by both local and multi nationals.