The last quarter of the year is always busy in media agencies as strategists and planners scramble to write their clients’ annual strategies and obtain the requisite approvals. It is the time when budget is allocated broadly between media types and then, more specifically to particular vehicles. The media owners are frantically churning out proposal after proposal, in order to secure their chunk of the pie for the coming year. Media agencies and media owners gamely engage in the annual arm wrestling ritual of negotiations. For the latter, it is now that the foundations for success or failure in 2016 are laid.
With Nielsen’s Ad Dynamix report for August 2015 being released this week, it is timely then to examine the state of ad investment. Of course, whenever one refers to Ad Dynamix, there are some caveats to be noted. The study is also essentially geared to tracking classic media investment. The tracking of the ‘internet’ category is extremely patchy and does not track social or mobile investment. The traditional media figures over-read the investment, as they are calculated at rate card. They do not reflect discounts, which can be considerable in the case of electronic media.
Overall adspend, for the 12 months ending August 2015, shows an increase of 6.2% to R40.7 billion compared with the previous period. This is below rate inflation, indicating that the traditional media are in a fairly shaky state. The reported decline of internet category by 12.3% can be set aside as it clearly is inaccurate. Direct mail represents a mere 0.4% of ad investment and shows growth. Out of home is another category that is difficult to report accurately given the number of small and independent players in the industry. It does, however, appear to be under pressure with a 6.3% decline. Investment in Cinema is tracking downwards (-10.9%). Print in total shows a modest decline of 2.8% and now accounts for 23.6% of advertising investment.
Given the much talked about decline in linear viewing, it is perhaps surprising that television seems to be in such good health showing an annual growth of 13.8%. It now accounts for 52.4% of the advertising pie. (Of course, binge viewing is the privilege of the affluent viewer.) Media Manager reported TV rate inflation of 13.5% in the second quarter of 2015, so in reality, this means that TV is holding steady. SABC’s performance differs markedly by station. SABC1 is up by 21.3%. SABC3 is up by 12.7% and SABC2 reflects a mere 3.5% increase. It is clear where the deals will be found here!
DStv continues to flourish with growth of 23.5%. Niche channels such as Africa Magic, Mzansi Bioskop, Travel Channel, MTV, Telemundo and Nat Geo Wild are showing impressive growth. Mzansi Magic has grown significantly (+72%) while Universal, BBC Lifestyle and Entertainment and Comedy Central are flourishing.
By contrast e.tv is showing a decline of 3.0% and e news is down by 16.3%. SABC 1 is impacting on them at one end and DStv at the other. Clearly, too, the management disruption following the departure of Marcel Golding and Bronwyn Keene-Young has affected e’s performance.
Radio is the only other medium that has shown any positive growth – up by 6.1% and now represents 15.7% of advertising investment. Once again, if we consider that Media Manager reported radio rate increases of 14.8% for the second quarter 2015, then the picture is somewhat gloomy. Community radio suffered a 9.6% decline. In tough times advertisers tend to retreat to safe choices, and community radio is not perceived to fall into that category by most national advertisers. Primedia is down by 1.2% across its portfolio of stations. Only 94.7 showed an increase, albeit a modest 2%. This would suggest that the sales teams here would have to become more amenable to negotiation.
After introducing significant rate hikes last year in order to move to the right pricing of their audiences, SABC has delivered a 4.3% increase across its portfolio. SABC management was clearly correct in expecting that the increases would impact on performance. They are biting the bullet now. Having said that, both Metro FM and Ukhozi FM have shown double digit growth. SAFM is up by 24.3% and Ligwalagwala FM is up by 26.5%. Unfortunately, this good news is offset by double digit declines on RSG and 5FM.
The Mediamark portfolio looks relatively robust (up 17.6%) with East Coast delivering a solid 26,1% growth. United Stations has performed fairly (+10,4%) across it basket of stations. Heart is up by 33%. MSG Afrika experienced a notable 46.9% growth, driven by Capricorn. After a lacklustre period, a reinvigorated Classic FM almost doubled its ad revenue.
It is clear that the marketers and their media agencies are very strong positions to wrestle with the media owners. It is going to be a tough negotiation season.
IMAGE: Star Gist, a show on Africa Magic
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