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Kenya’s agency acquisitions – the big debate: An #OpenAfricaMag feature

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This piece first appeared in Open Africa, a custom digital publication by Ornico that features interviews, insights and business lessons from some of Africa’s leading CEOs, innovators and decision makers.
Download your free digital copy of Open Africa here or go to http://bit.ly/open_africa and share your feedback on social media using the hashtag: #OpenAfricaMag

The big guns of global advertising, PR and marketing entered Kenya some time ago, but lately they’ve been upping their stakes and the markets are seeing more mergers and consolidations. As multinational brands choose new agencies, and more global giants eye Nairobi for their next office, strategic PR and communications professional, Kentice Tikolo, calls for more-responsible market practices.

Kenya agency acquisitions - #OpenAfricaMag

Kenya agency acquisitions – #OpenAfricaMag

Big international advertising entities shop in Africa

Africa is on the shopping list of big international advertising entities, and recent years have seen the likes of Sir Martin Sorrell’s WPP snapping up formerly independent agencies, PR and communications firms.

One of the biggest local acquisitions happened when the global communications giant took a 27.5% stake in Kenya’s Scangroup. A couple of years later, in 2013, it upped that stake to a majority share of 50.1%. In 2015, Scangroup adopted the WPP name, and announced that it had become “the largest marketing and communication group operating a multi-agency model across multiple disciplines in sub-Saharan Africa.”

In a statement after the tighter integration, WPP-Scangroup’s CEO, Bharat Thakrar, quoted a famous African proverb that goes: “If you want to go quickly, go alone. If you want to go far, go together.” Listed on the Nairobi Securities Exchange, WPP-Scangroup manages brand campaigns for the likes of Airtel, Coca-Cola, Emirates, Safaricom, Unilever and others.

As WPP-Scangroup extends its reach, footprint and power, the question that needs to be asked is: How good are these global acquisitions of local agencies for Kenya’s marketing and communication industry in specific, and the economy in general? I have spent a lot of time listening to industry concerns in my capacity as a former chair of the PR Society of Kenya.

Effects of monopoly

Independents worry about the effects of monopoly and the massive leverage that multinationals operating in Kenya have. Bigger, globally aligned companies are able to negotiate discounts of scale, arrange preferential supplier relationships and set specific payment terms that work to their advantage. Independents, though, are forced to try and grow without the obvious advantage of size and global leverage.

Another big issue is the effect of global alignments — parent brands and agencies determine who gets to pitch on which accounts, and this means that local independent agencies don’t often get the opportunity to work on big global brands.

But it does enable good growth and revenues for those local agencies that are aligned with the world’s biggest communications companies, which means that, when it comes to rewarding staff, they can afford higher salaries, and impact the talent market. It is hoped that this does happen.

However, when the big agencies swallow up locals, more mergers take place, and this creates a tendency toward decreased competition and greater monopolies in the advertising sector in Kenya. As a result, local marketing companies suffer because they aren’t as well-capitalised as the bigger global players, and small-and-medium enterprises struggle because the bigger accounts go to the ‘big guns’ who’ve created huge companies that tend to take control of sectors of the local marketing and communication economy.

Relevant local voices

What big global brands need to think about, when making the decision about who to work with from a marketing perspective, is how relevant and local their voices are, and whether their brands are growing with the Kenyan economy. Sustainability and inclusivity are important watchwords in Kenya, and multinational brands need to appreciate the effect they have upon local economies around the world.

What is critical is that multinational brands not only appreciate and communicate their relevance through their marketing and communication, but do so in their business practice. What real benefit is a Coca-Cola to Kenya if it doesn’t participate in helping to grow local marketing skills and engage with communications practices to the benefit of home-grown entrepreneurs?

I am not by any means advocating for market regulation, rather appealing to international PR and advertising giants — and the global brands — to look at innovative partnership models that will help grow the local industry, rather than build a big monolith that makes competition increasingly difficult for local communications entrepreneurs.

What firms such as WPP and Coca-Cola need to do is create more-inclusive and sustainable models of doing business that will truly benefit the industry, as well as service consumers. That’s how one grows an industry, its entrepreneurs, and a country — rather than focusing exclusively upon self-interested growth to the detriment of local businesses.


About Kentice Tikolo
Kentice Tikolo is a strategic PR and communications professional in Kenya. She is a former chair of the PR Society of Kenya.

For more insights on growing businesses, organisations and brands in Africa, download your free digital copy of Open Africa here or go to http://bit.ly/open_africa.
Please share your feedback on social media using the hashtag: #OpenAfricaMag


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