Digital spend jumps from 1-2% to 10-15% of SA media budgets
by Herman Manson (@marklives) The online media planning space is moving at a hectic pace – where else can you can lose two big spending clients close together and still plan for 100% growth over the next two years? Lighthouse Digital, the media agency launched only three years ago, has grown from 4 to 26 people, and has been doubling its revenue every year since then.
Aaron Van Schaik, Managing Director at Lighthouse Digital, estimates the value of SA’s digital advertising spend at around R1.2 billion – between 40-50% of that is spent on search. Google doesn’t release its figures for the South African market making it difficult to be sure of exact actual spend. But growth has been rapid with spend jumping from 1-2% of media budgets a year ago to between 10-15% today*.
Van Schaik attributes this growth to marketers realising the value digital media represents as well as directives form international parent companies asking local operations to shift budgets online.
Coming from a publishing background at Touchline Media (since gobbled up by Media24) Van Schaik used his connections in marketing to build the business with his planning partner Steven Waidelich. At a time when marketers didn’t really trust digital media the trust relationship they had built with Van Schaik in the print environment helped cement their initial investment in this space. Two joint ventures – with Universal McCann and with Initiative Media – gave the duo access to more big brands wanting to venture into digital.
Its current client roster includes FNB – its biggest client – Air France-KLM, Microsoft, SAB, Investec, Mentos and Appletiser amongst others. The agency lost Telkom/8ta and GM earlier in the year. Van Schaik says the losses simply took the agency to a more manageable place – growth will still be brisk this year.
Lighthouse Digital is set up so that specialists manage different departments like strat, operations and search, ensuring multiple skill sets work on each account.
With the departure of Telkom and GM 80% of the agency business is direct with clients whereas previously that figure had stood at 20%. Van Schaik says he has deliberately pushed for more direct access to clients in a bid to better manage relationships and this approach has been increasingly successful for the agency.
While he initially thought digital only media agencies would have a limited life-span as the big traditional players upskilled in digital he now believes digital specialists will continue to play an important role in the market. Traditional media agencies are not geared culturally to manage the digital media environment very well with its focus on measurable ROI.
While display advertising is becoming less prominent the importance of social and search is growing quickly. Client relationships are also evolving into a two way stream as clients educate themselves in digital. This will affect digital and creative agencies engaged in building web and micro-sites – as Van Schaik points out few digital media properties are being built for the right reasons in a much more sophisticated digital media environment. This is obviously good news for digital media plays.
* Stats quoted here are relevant to Lighthouse Digital clients. Media budget growth across the broader industry is not necessarily consistent with the experience of Lighthouse Digital. – Ed
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