THE MEDIA YEARBOOK: There was a clear shift last year towards digital as a medium people trust, and advertising revenue is increasingly being directed towards it.
“It’s working for the brands,” says Jarred Cinman, Interactive Advertising Bureau (IAB) South Africa chairman and managing director of Native VML. “The reach and the results that they can get from digital is starting to justify its spend.”
There are a number of reasons for the increase in these digital dimes, he says. Marketers are becoming more comfortable with the new medium, and sales houses and media owners are getting better at selling and packaging their digital products, says Cinman. And then there’s the decline in print revenue, which means that advertising spend is being channelled towards other media, such as broadcasting and digital.
Internet spend is the largest and fastest-growing market segment, according to auditing firm PricewaterhouseCoopers (PwC), whose ‘South African Entertainment and Media Outlook: 2014-2018’ report predicts that combined revenues from internet access and internet advertising will make up an estimated R71.6-billion in 2018, accounting for 37.6% of total entertainment and media revenues.
Search is sticking around
Search marketing is the promotion of websites by increasing their visibility in search engine results pages. Search may appear to be shrinking, says Cinman, but its share of the advertising pie is just less because other categories have grown, particularly video advertising. “Until the way people find information online fundamentally changes, search will remain one of the most important categories because it’s delivering an offer to you at the point that you are looking for it,” he says.
Display decreases
Display advertising, or banner advertising, isn’t considered the most effective method of online advertising, says Cinman, because it has a very low click-through rate, where 0.04% is considered successful; media owners discount display heavily; and display is being sold increasingly using programmatic buying (whereby software purchases digital advertising). For a lot of people, this new technology “has eroded their revenues and confused advertisers as to what they are actually getting when they place an ad”.
Online classifieds remain steady
Online classified advertising, says Cinman, is one of the few digital channels with a business model identical to its print version.
Although it is still successful, Cinman believes its revenue model is ripe for reinvention because “it’s a very old business model based on an old paradigm”.
Video takes off
Video’s meteoric rise in growth has been a direct result of South Africa’s improved bandwidth levels. “Moving picture and video… require no literacy and are highly engaging,” Cinman says.
Gloo founder and CEO Pete Case says video has become one of his company’s standard outputs. “Our clients have been experimenting with video for the past two years and now they are seeing results and return on investment, hence their increased willingness to spend more in this space,” says Case.
The mobile revolution
Case says mobile’s significantly bigger audience size and powerful engagement levels have encouraged advertisers to increase their spend on the medium.
Gustav Goosen, CEO of The SpaceStation, says mobile audience growth is surpassing that of fixed web and, with the smartphone market forecast to grow, the trend will increase.
Effective Measure’s ‘South African Mobile Report’, launched in August 2014, surveyed 5 113 desktop users about their phone habits. An overwhelming majority of respondents (91.7%) claimed to own a smartphone, while 8.4% have a feature phone. Most of the survey’s participants (81.6%) use their smartphones to access the internet, while 18.5% use traditional methods of access.
Among internet users with a mobile phone, 65.7% have a data subscription plan with their telecommunications operator. A significant proportion, 34.3%, choose to access the internet only when free wifi is available. Making purchases from smartphones is done by just under one-third (32.1%) of consumers. Almost half (48.6%) of respondents recall adverts on smartphone browsers, while 26.6% say they don’t. The top three types of adverts recalled on browsers are via SMS text (58.6%), mobile sites (20.6%) and mobile apps (19.2%).
Prices of mobile devices have fallen considerably, especially at the bottom end of the phone market market, notes Indra de Lanerolle, a communications consultant at the University of Witwatersrand. But, significantly, data prices have plateaued recently, despite having decreased in recent years. This still makes data expensive for lower-income earners who have to manage their use of data carefully. “We really need data prices to fall, either on the competition side or the regulatory side,” says De Lanerolle.
According to the ‘SA Social Media Landscape Report 2015’, which is put together by technology research company World Wide Worx and analytics company Fuseware, the top three free downloads on the three main app stores – Google Play for Android, Apple App Store for iOS, and the Windows Store – are all social or messaging apps.
Video will flatten everything
This report reveals that the number of active YouTube users in South Africa has hit 7.2 million people, a 53% growth compared to 2013. Photo-sharing platform Instagram grew by 56% and now has 1.1 million active local users compared to 680 000 active users in 2013.
“People are increasingly visually orientated so they are more responsive to visual communication,” says Arthur Goldstuck, managing director of World Wide Worx. “The more visual material becomes available, the more actively people embrace it and interact with it.”
Only a few marketers are taking advantage of this impending visual revolution, says Goldstuck. “People think it’s just another vehicle driving down the road but it’s in fact this massive thing that’s about to flatten everything in its path,” he says.
Interestingly, Pinterest, also a visual platform, has become less popular with South Africans after dropping to 840 000 users from
910 000 in 2013. Goldstuck says this is because it has become powerfully defined as a female environment.
Mxit is another network that saw its local user base decrease. It now has 4.9 million users compared to 6.5 million just a year ago. It does, however, boast some of the most engaged users of any social network in South Africa, according to the study. Facebook grew by 20% in South Africa to reach 11.8 million users. Twitter also grew by 20% in the last year to reach 6.6 million South African users, while LinkedIn’s user base in South Africa has now hit
3.8 million users.
Big data, big hype?
Big data has become a new marketing currency for gaining rich
consumer insights by mining an unfathomable amount of information. It’s a concept marketers know they should be plugged into, but have they figured out how to do so?
Fran Luckin, executive creative director at Quirk, said at the Digital Edge conference that there is a lot of hype surrounding big data, but agencies are not doing a lot to understand its potential. “It allows us to talk to people creatively,” she said.
Case agrees, saying marketers aren’t personalising the messages they use to communicate with consumers. Organisations keep insights in silos, he adds, and more should be done to work together.
Brett Morris, CEO of FCB South Africa, says agencies shouldn’t be solely responsible for making sense of big data. “It’s a conversation that should be happening with brands at the highest level,” he says. But short-term thinking is a problem and we shouldn’t assume that consumers want marketers to know more about them, he adds.
Media synergy: an obvious solution
Naspers’s Media24 in August 2014 launched Netwerk24, an amalgamation of news from the websites of its Afrikaans newspaper titles.
At the time of the launch, Media24 head of digital news Sebastien Stent told Grubstreet that “the number one reason for Netwerk24 is to consolidate audiences around a brand in terms of selling advertising”.
The reality, Goldstuck says, is that all media is synergistic but that most media houses haven’t figured it out yet.
“Internal politics is the biggest obstacle to media synergy but media synergy is such an obvious approach if you own all those media,” he says.
Monetising digital assets
Media24’s November 2014 announcement of a major restructuring with a massive focus on digitisation is another indication of the company’s effort to tailor its operations in a digital era.
The company hired Lisa MacLeod from the UK’s Financial Times and FT.com as general manager of the group’s digital publishing. Additionally, Media24’s magazine division has been renamed ‘Lifestyle’ and discussions are ongoing with digital media agency The SpaceStation to handle the company’s news inventory.
“Media24 has always followed a federal system with our divisions working in isolation (and often in competition with each other). We need to break down those silos to get better efficiencies in our business and foster greater collaboration,” says Media24 CEO Esmaré Weideman.
The native advertising conundrum
The idea of a brand sponsoring a story, or advertorial, is not new. But the digital era has certainly pushed the practice several steps further. Native advertising has sparked heated debate internationally about whether sponsored content that appears alongside editorial content is crossing ethical boundaries.
While it is not as well-established in South Africa, it has triggered varied responses. Mail & Guardian editor in chief Chris Roper, in an article that appeared in The Media in April 2014, said native advertising could help solve the media’s economic conundrum as it gives news organisations the chance to take back control of their advertising revenue, which is being undermined by advertising aggregators, such as Google AdSense.
But Caxton professor of Journalism at the University of Witwatersrand, Anton Harber, told The Media that “unless we establish rules, particularly around transparency, then it will do us long-term harm for short term benefit”.
Web regulation threat
The Film and Publication Board’s 2014 strategic plan mentions its intentions to extend its regulation mandate to include online and mobile content.
But De Lanerolle says this is not practically possible. “To really do it, you have to put a kind of wall around the country and that is such a fundamental change to the nature of the web’s openness,” says De Lanerolle.
He also questions how the board would establish the reach of its mandate. Would nationality be defined as ‘co.za’ domain names? Would the regulations only apply to servers that are located in South Africa?
“Many of (these solutions) would be commercially resisted by people in the industry and others would be resisted by freedom of speech activists,” he says.
Cinman says the board’s proposal is a concern that is being monitored by IAB South Africa.
This issue points to a broader problem that De Lanerolle doesn’t think media and society engage with enough: education about the fundamental principles around
which the web was built. This includes the concept of net neutrality, which involves internet providers treating all traffic sources equally.
“We do need more public understanding so we can raise these issues,” he says. “The danger is that by the time you realise how important they are, it’s too late.”
This post was first published in 2015 The Media Yearbook. A digital version of the full magazine can be downloaded here.
