marklives.com

Not a boom, real growth

Date posted: June 18, 2013

By Herman Manson (@marklivesThe African continent isn’t quite the growth honeypot ad agencies had been hoping for. That said – it’s certainly a growth market. While it doesn’t match the growth rates in Asia or even Latin America, listed agency networks seem to have decided any growth is good growth given the state of especially their European operations. North Africa remains fragile – ZenithOptimedia forecast onlyornico 1% growth in ad revenue in the Middle East & North Africa as political turmoil post the Arab Spring continues to rock the region. The company expects 2%-3% annual growth from 2013 to 2015.

Growth in adspend globally is predicted by ZenithOptimedia to hit 4.1% in 2013 and 5.6% in 2015. South Africa will be one of the top ten ornicocontributors to that growth between 2012 and 2015.
South Africa in the South, Kenya in the East and either Nigeria or Ghana in the West of Africa generally gets the most buzz from agencies seeking investment in the region.

It’s not all great headlines though. Publicis, one of the world’s major holding companies of agency networks (including Leo Burnett, Publicis Worldwide, Saatchi & Saatchi), generated only 4% of its revenue in the Africa & Middle East region in 2012 and the continent barely gets a nod it its 2012 results report.

Others, like M&C Saatchi, are seeing their African investments booming. It reported revenue growth of 121% in the Middle East and Africa in 2012. Revenue from Cape Town and Johannesburg more than doubled from £3.0m to £6.6m and it’s actively looking to expand its African network with affiliate offices in Nigeria and Kenya. The South African business is the fastest growing in the M&C Saatchi network.

WPP (and its associates) collectively employs over 24,000 people across the continent, generating revenues of over US$600 million. Globally it had £10.3bn (as at 31 December 2012) in revenue. WPP owns agency networks such as Grey, JWT, Ogilvy & Mather and Y&R (and in South Africa it also holds stakes in The Jupiter Drawing Room and Ireland/Davenport).

The agency networks have accelerated their investment into the continent as they follow the big brands, especially in the cellular, alcohol and retails space, into new markets.

The smart networks are empowering local partners as shareholders – the consensus seem to have been reached that partnerships are the best way to gain traction in new markets. Increased competition amongst agencies are good news for brands and stimulates more money to flow into the marketing economy, which in turn will be good news for independent start-ups, a mini-boom of which we are seeing in South Africa.

 - Ornico and MarkLives have teamed up to present our first ‘The Africa Annual‘, a compilation of some of Africa’s remarkable stories and resources for businesses; and media, marketing and branding enthusiasts. (Article reprinted from The Africa Annual)
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