ARCON Announces N1bn Indemnity Insurance for Advertising Agencies
Raheem Akingbolu
The Advertising Regulatory Council of Nigeria (ARCON), has announced a mandatory N1 billion professional indemnity insurance for ad agencies under sectoral bodies like; the Association of Advertising Agencies of Nigeria (AAAN), Experiential Marketing Association of Nigeria (EXMAN) and Outdoor Advertising Association of Nigeria (OAAN).
Announcing the development in Lagos, ARCON Director General, Dr. Lekan Fadolapo said; “As part of the ongoing advertising industry reform and the need to strengthen advertising agencies service delivery, build capacity as well ensure long-term stability in the industry, each sectoral group, is to provide N1B (One Billion Naira) professional industry insurance cover for its members. This covers professional indemnity for members of their association as part of the corporate license requirements.”
Fadolapo, who described it as part of corporate licensing requirements coming into effect on April 1, 2024, also announced sweeping reforms aimed repositioning the Nigerian advertising industry for growth and development.
He rolled out a broad framework articulating the government’s urgent priorities and action plans to reposition the advertising industry.
He announced a series of measures to strengthen regulation, build capacity, ensure financial stability and promote the use of local talent and resources within the sector.
According to him, ARCON is also reviewing minimum capital and working capital thresholds for agencies in consultation with industry stakeholders.
“There is an urgent need to review the capital structure and working capital requirement of the advertisement agencies in line with economic realities and capacity building programmes of ARCON. ARCON is currently in talk with the Heads of Advertising Sectoral Groups (HASG) and other relevant stakeholders on the minimum capital requirement for registration and license as an advertisement agency. Regulatory guidelines will be issued as soon a position is taken on this,” Fadolapo said.
On the critical issue of payment terms, the DG revealed ARCON is collaborating with the EFCC, NBC and others to enforce a maximum 45-day payment cycle for ad services. “Any organisation that offered payment threshold outside 45 credit policy will be tagged as economic saboteur of the Nigeria advertising industry. Such organisation will be flagged and reported to other government agencies for further investigation and necessary punitive actions,” he warned.
Restricting use of foreign talent models and voices in adverts targeting Nigerians except where absolutely essential after securing ARCON approval is another reform. The ARCON chief emphasized that Nigerian advertising should primarily utilize local professionals. “ARCON will continue to insist that that Nigerians should be considered as primary in all advertisement targeted at the Nigerian market.
“Use of foreign models and voices are banned except where it is inevitable. In this case, application for variation should be formally addressed to the Director General with detailed explanation of the rationale for the use of the foreign talent. Approval is not automatic. If you are selling your product to Nigerians, use Nigerians to your advertisement,” he said.
Other reforms include the following: creating a data bank for agencies, where ARCON is conducting a nationwide audit of advertising agencies to build a comprehensive data bank. Fadolapo announced that only licensed agencies will be engaged, and a directory will be published after the audit.
Media rates deregulation is yet another reform rates are now fully deregulated, with no regulation allowed. He explained that Nigerian media houses are to be accorded the same business respect as foreign entities.
Another reform is the engagement and disengagement procedures outlined in the Advertising Industry Standard of Practice (AISOP). “All stakeholders are requested to adhere to the engagement and disengagement procedure as stated in the Advertising Industry Standard of Practice (AISOP). ARCON has commenced full implementation of the AISOP framework. Where an agency is disengaged without proper reconciliation of financial matters before engaging another agency on the same account, and ARCON is petitioned. The new agency and engaging organisation will be investigated, and where they are found culpable, they will be sanctioned.”
ARCON revealed that it will also soon publish a register of approved advertising practitioners after completing a membership review. “ARCON has been battling with issues of exposure of unapproved advertisement, illegal advertising practices, damaging actions of unregistered persons claiming to be advertising practitioners among other challenges. Sequel to the above, ARCON would publish its membership register as soon as the ongoing membership review exercise is concluded. A notice has been issued in this regard by the Registration Directorate of ARCON.”
It further added that a national workshop and committee have been formed to develop a regulatory framework for the out-of-home advertising sector in collaboration with stakeholders.
