Online media revenue may not be increasing at the same rate as in the United States, but it is doing really well, explains Wayne Bischoff.
I read an article recently that said United States mobile and social media revenue is up by 30% and is expected to accelerate to 30.8% in 2012. This seems really high, especially when so many local media owners are saying how difficult it is to make money off online media. I wonder why and how this is happening. Are we following suit? If not, why not? And if we are, how will this impact on the full media picture?
Here are some facts:
Facebook has 4.9-million South African users, 600 000 of whom joined in the last six months alone.
The local Twitter community has increased 20-fold in just one year, from 55 000 in 2010 to 1.1 million in 2011.
LinkedIn has doubled its size to boast over 1.8-million users in South Africa, with over six million members across Africa.
By the end of this year, there will be over 735-million mobile subscribers in Africa.
So why does the local marketing community continue to doubt reports that the mobile medium and its associated social platforms are a viable and robust sector of the industry?
When international research giant Gartner predicts that, by 2015, half of all online sales will be generated through social media and mobile applications combined, the local industry raises its collective eyebrows in disbelief. Closer to home, when the Digital Media and Marketing Association (DMMA) reveals that online spend (incorporating mobile and social spend) in South Africa increased by over 50% for the third quarter of 2011 over the same period last year, the industry shrugs its collective shoulders and responds by saying that this growth isn’t sustainable.
It is astounding, amid the exponential and unprecedented growth of the online medium and social networking, that those who work in the marketing industry can continue to bury their heads in the sand.
Marketers are actually doubling their online spend – often at the expense of traditional media, especially print – to the point where online accounts for anything between five and 15% of advertising budgets. This is substantially higher than the 2.3% share calculated by the DMMA, primarily because the DMMA only measures spend on member sites and excludes the huge international players like Facebook, LinkedIn, YouTube and Google.
Habari Media doubled its revenue last year – a year in which many other media companies took a substantial hit in revenues – which should give an indication of the massive growth in the online arena. Mobile and social media represented the biggest growth areas.
Some say that this growth isn’t sustainable. That isn’t true. PricewaterhouseCoopers predicts that online spend in South Africa will grow at a compound annual rate of over 33% from 2011 to 2015, while mobile ad spend compound annual growth rate will top 73%. And that’s a conservative view.
The ongoing rumour that social networking doesn’t sell product (fuelled by General Motor’s recent decision to pull paid-for advertising out of Facebook) is fallacious. This is clear from the results of research done by Syncapse (an international company offering strategic business intelligence around social media), evaluating the economic impact of Facebook ‘fans’ based on their recent survey of 20 top brands in the US.
According to the research: ‘Fans’ not only spend more money on brands that they ‘like’, but they are also 41% more likely to recommend the brand to their friends and 28% more likely to purchase them again.
In fact, Ford motor company recently said that Facebook has worked so well for them that they are increasing their ad spend with the social media company.
However, the value of social media campaigns cannot be calculated according to sales alone. It’s about having an always-on strategy and making your brand part of consumer conversation, hence part of their lives. That’s the real power of social networking and the reason it will continue to grow and develop as a medium, taking an ever-increasing share of the advertising pie.
And yes, it will impact on traditional media. It has already, with print taking the primary hit both locally and in international markets.
It’s time to take your heads out of the sand. The digital medium – driven by social networking – will become the new standard in advertising. It’s only a matter of time.
Wayne Bischoff is the MD of Habari Media.
This story was first published in the August 2012 issue of The Media magazine.