The future of online advertisement in Africa

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  • 7 years ago
  • Posted: September 29, 2014 at 5:21 pm

“College drop-out rakes in millions from advertising in Kenya” came across the headline while skimming through the dailies. Yes, this would have been ridiculous 10 years ago where advertising was not a source of income you could survive on save for the media houses. Individuals did not look at advertising as an income source and now millions are made out of the simple adverts we come across in various platforms.

The advertising scene today has changed; from the medium used to the content disseminated to the public.  The industry has recorded milestones within a short duration of time making it a major source of revenue for governments in Africa as well.

Various advertising platforms now mostly used have replaced the norm of print; Radio, Television, Outdoor which further breakdown to bill boards, commuter benches, buses, side walk advertising are also common in most cities today. Everywhere you look; there is a product you learn about or rather offers you acknowledge to. While at a traffic snarl up, you will hardly daze, information surrounds you right left and centre.

Organizations across boundaries have also embraced the efficient modes of advertising to maximize on profit and public relations with their clients. Online advertising has however taken the lead in developing countries where the middle class is well accustomed to modern communication platforms which have are the mostly used platforms to advertise and reach a tangible number of relevant audiences.

According to a recent report by PwC, increased internet access will generate more consumer spend than any other media product or service in the next five years in the South African entertainment and media industry.

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South Africa’s entertainment and media market is expected to grow by 10.2% compounded annually (CAGR) from 2014 – 2018 to a value of R190.4bn. By far the largest segment will be the Internet. Combined revenues from Internet access and Internet advertising will account for an estimated R71.6bn in 2018, accounting for 37.6% of total revenues, according to PwC’s South African Entertainment and Media Outlook: 2014-2018.

South Africa takes the lead owing to the fact that the state offers significant potential as a strong entertainment and media market.

The growth is largely being driven by the Internet and by consumers’ love of new technology, in particular mobile technology, such as smartphones and tablets, as well as applications powered by data analytics and cloud services. Technology is increasingly being driven by consumers’ needs and expectations.

Online platform is expected to provide an enormous source of income with the report capitalizing on it as the major revenue source compared to other mediums. With the continued rise in its international bandwidth usages, Kenya (75%) also performs well in the rankings. Kenya recorded US$1.7bn in entertainment and media revenues in 2013, and this is forecast to rise to US$3.1bn in 2018.

Once again, it is Internet access that is driving growth Television and radio will account for combined US$1 billion-plus of revenues at the end of the forecast period.

Nigeria’s entertainment and media revenues will reach an estimated US$8.5bn in 2018, more than doubling from the 2013 figure of US$4.0bn at a CAGR of 16.1%. This represents one of the fastest growth rates in the world. The Internet will be the key driver for Nigeria, where the number of mobile Internet subscribers is forecast to surge from 7.7 million in 2013 to 50.4 million in 2018. Television in the form of advertising and subscriptions and license fees, will also become a US$1 billion-plus market in 2018, while the market will grow steadily.

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The online market of advertising stands a big chance of immense growth since  over time, individuals are getting more accustomed to online forms of communication most commonly used; Face book, Twitter, Google plus and Linkein.

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Countries lagging behind

However, some African countries still lag behind in the online advertising platform ranks; media in Angola is government-controlled. Deregulating the media is a gradual process and the handful of emerging ‘private’ radio and newspaper operations are mostly bankrolled – so limiting their independence. Among TV households, pay-TV penetration is high at 75%.

TV currently comprises 28% of advertising spend, a figures that is likely to drop by two percentage points over the next five years. Angola is comparatively well connected, with about one in ten Angolans able to access the Internet by way of a mobile network and two percent of households also able to access fixed broadband services.

International bandwidth is still scarce. If the country’s Internet market is to be better penetrated, greater infrastructure investment will be required.

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A relatively mature TV and Internet infrastructure in Ghana assists in making it a market in which consumers are more receptive to advertising. At the end of 2013, 58% of households had access to a TV set, according to the study. The leading four terrestrial channels comprised 96% of audience time and 12% of TV households were digital.

In spite of a decline in 2011, total advertising revenues are now on the rise again with total spend reaching GHS245.6 million (US$73.3 million) in 2012.  Ghana scores well in the Connectivity Index. The Government appears committed to supporting growth plans for broadband services which are relatively affordable compared to other markets in the continent.

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