Although the anticipated evolution of out of home media on the continent was slowed by the Covid-19 pandemic, the sector is still rife with opportunity.
Out of home (OOH) media businesses operating in Africa were optimistic that 2020 would be the year when everything would change on the continent. No longer would it be the preserve of hundreds of thousands of static billboards cluttering the landscape and competing for attention. Digital OOH (DOOH) would finally start making inroads, as would mobile OOH (MOOH).
Mall and transit advertising would come into their own, and all those new airports springing up in the larger African markets like Kenya, Nigeria, Ghana, Ethiopia, Egypt and Ivory Coast would deliver major opportunities for airport advertising.
But then, Covid-19…
“Out of home has not been left unscathed by the sharp sword of Covid-19,” says Alliance Media’s Greg Benatar ruefully. “While the majority of the continent did not see stringent South African-style lockdowns, clients’ budgets have been impacted. The disruption to supply chains meant that many of our clients have not had product in market, and as a result were forced to go off air. Other clients held back discretionary spend due to the uncertainty of what the pandemic would bring.”
Still, there were still some positives as “many forward-thinking brands decided to remain invested, and they certainly reaped the rewards in sales and brand equity”, Benatar says. “The sheer traffic densities in many African cities have meant that despite the pandemic, traffic counts did not fall and OOH remains with a large proportion of overall media spend.”
On the verge
Provantage Media Group CEO Jacques du Preez, whose company operates widely on the continent, admits the pandemic had a “significant impact” on their African businesses, with most multinational clients shelving all OOH advertising during lockdown.
“Some markets were more affected than others, as were certain OOH segments,” says Du Preez. “Airports were, and still are, severely impacted due to travel protocols and restrictions. We have seen a recovery in business confidence and brands are slowly starting to increase their advertising spend as OOH audiences are recovering.”
Du Preez says the OOH industry was on the verge of expanding and maturing quite substantially in 2020. While Covid-19 slowed this expansion effort, Du Preez believes there will soon be consolidation and formalisation of OOH media ownership in the big African markets. “We will also see a rapid expansion of DOOH, as well as the combination of it and MOOH over the next few years.”
Seeking a new dimension
Tamara van Eeckhoven, chief operating officer for the rest of Africa for Primedia Outdoor, says the company had cancellations from all sectors during the first part of the pandemic, but that fast food, restaurants, tourism and entertainment in particular saw the largest drop in revenue. “Those sectors shut down completely, and some of them have remain closed or have very little activity,” says Van Eeckhoven.
Like Du Preez and Benatar, Van Eeckhoven is certain the days of Africa being home to a vast number of traditional, static billboards will soon be over. “There has been a notable increase in DOOH in the markets we operate in over the previous three years,” she says. “The majority of the African markets are saturated with standard formats, but any innovation is hugely impactful and highly sought after.”
Because of the preponderance of “one-dimensional” billboards, competition is stiff. Billboards owned by different companies are erected in close proximity to each other, leading to clutter and a lack of differentiation.
“The one-dimensionality of OOH in most markets is largely due to a lack of infrastructure, but that is now starting to change as we are seeing a large numbers of malls, transportation networks and new airports being constructed in the larger African markets,” says Du Preez, adding that transit and mall media is in its infancy and there are few well-established digital networks.
Battle of the billboards
“The billboard category is driven by price and has largely become a commodity category,” says Du Preez. “Large-format digital billboards are available in certain cities, like Lagos, where we find hugely inflated pricing that is only affordable for a few advertisers and brands.”
Beyond South Africa, OOH in Africa is more competitive than anywhere else in the world, Benatar says. “Due to the increase in number of OOH sites in many African cities, we’ve had to invest constantly in updated structures in order to stand out from the clutter.”
Alliance Media has been operating in Africa for 23 years in 23 countries. As Benatar points out, during this time the population has almost doubled from 753 million to 1.35 billion. “Africa’s huge rising population brings an equal amount of opportunity for brands daring to enter the highly competitive markets,” he says.
And these brands will want more than just traditional billboards. “OOH in Africa is entering a new age,” Du Preez asserts. “We anticipate that DOOH, MOOH, transit and mall media as well as modern activation services will be available in the larger markets in the near future. This is due to new infrastructure being built in certain markets, as well as more and more international OOH media companies establishing themselves in these markets.”
No easy road to success
Doing out of home business in Africa isn’t easy, though. “OOH in Africa has seen international players and even South African investors retreat due to the high cost of investment and the relatively low returns due to falling local currencies, which have plagued Africa for the past five years,” says Benatar. “With rising debt levels in Africa, the further outlook is negative. Foreigners have also learned the hard lesson that trying to operate in Africa without being there full time is a recipe for instant failure.”
Local OOH media companies mostly compete with global operations in many African markets. But, says Du Preez, “certain international OOH media companies have established joint ventures in particular markets as this allows them access to certain rights in these markets and also solves certain indigenisation laws that exist in some countries. Certain media owners might buy and sell billboards from each other to fulfil multinational briefs but this is sporadic in nature”.
African operators know only too well that understanding these diverse markets is key to success. Most established OOH companies have developed ways to operate in these markets, and understand the local realities and nuances of each, says Du Preez. “I believe that there is a huge education and skill-transfer opportunity for all OOH role players, and my prediction is that the OOH segment in most markets will settle and mature in line with global best practices in the next five-year period – if the knowledge transfer and standardisation are properly done.”
Across the continent, there are developmental and regulatory challenges that must be overcome – or lived with – in order to make a mark, as listed by Du Preez:
- There is a lack of credible OOH research and accountability in a large number of markets
- Clutter is huge issue and there is lots of billboard inventory available in most large African cities
- Electricity supply is unreliable in most cities, which makes illumination and DOOH problematic
- It is expensive to do business in certain markets as costs are often based on the US dollar. High import duties levied on new technology (LED screens and structures) by certain countries make it costly to introduce new OOH formats
- Lack of credible and independent third-party OOH research is a problem
- Corruption and transparency are issues in certain markets
- Reporting and accountability for the execution of OOH campaigns are often a problem
Benatar believes the biggest challenge to OOH in Africa is the lack of regulation by authorities. “Sadly this has become worse, which has led to a mushrooming of sites by unscrupulous players, many of whom do not pay council taxes, undermining the viability of cities,” he says.
“There is most certainly a new wave of clients who want to support companies that believe in building the continent and this has undoubtedly been positive for us.”
Nevertheless, the opportunities are there, as Du Preez points out. “As markets mature and with infrastructure being rolled out, I predict that OOH in most African markets will start changing from being largely billboard dominated to offering multiple OOH media formats that are more focused on delivering to specific audiences in specific environments such as malls and transit nodes.”