a Mark Magazine: Africa Dispatches feature Growth in media spend in Africa is outpacing the US and Western Europe, while media investments are alive, thanks to the politically connected or business people with big egos and pockets to match. Mandy de Waal (@mandyldewaal) reports.
Media spend in Africa isn’t growing as fast as it used to, but that’s not all bad news. Some seven years ago, year-on-year media spend growth rates peaked at over 20%, but a forecast by GroupM indicates that the growth rate for 2014 will be a modest 5.4%. GroupM estimates advertising spending in measured media in Africa will reach a new high of US$19,9 billion for 2014.
However this is still good news for Africa. The year-on-year media spend growth rate for North America is pegged at 4.1% according to the GroupM report, “This Year, Next Year: Worldwide media and marketing forecasts.” GroupM is the media investment management firm owned by WPP, that oversees the global advertising giant’s media buying agencies, including Maxus, MediaCom, MEC and Mindshare. In Western Europe the forecast is a paltry 1.8%, while the highest growth is predicted for Latin America at 8.6%.
“There’s quite a good correlation between media spend and GDP (gross domestic product),” says Monique Leech of Millward Brown (also part of WPP Plc). “The more income consumers have, the more product buying power they have, therefore buying will follow suit to advertise in those markets,” says Leech, when asked $19,9 billion in media spend forecast for Africa in 2014 by GroupM is expected to flow.
Africa’s best performing economies by GDP, according to the International Monetary Fund, are Nigeria, South Africa, Egypt, Algeria and Morocco. Ghana and Kenya are in the top while Ernst & Young’s 2013 Competitive Survey—which forecasts GDP growth from 2012-2017—identifies Malawi, Mozambique, Angola, Ethiopia and Zambia as the economies that will outperform everyone else in the next five years.
The spend forecast excludes digital, because, says Leech, “there are no digital spend metrics available that can be curated.” Leech says this in itself is interesting because telecommunications and mobile infrastructure has a direct impact on GDP. “We know that infrastructure has a direct bearing on GDP, so the better the ICT (Information and Communications Technology) infrastructure, the more people that are connected, the better the GDP,” she says, adding that ICT infrastructure drives the growth of media environments as well.
“There’s a lot more focus on Africa from our global clients, and we’re seeing increasing numbers of global brands entering Africa, and investing more. This, in part, is what’s driving media spend and pushing its growth 0.4% over the global forecast average.
When it comes to a breakdown in terms of which media the spend is going to, Leech says in ‘developed’ markets like the US, Europe and UK there’s a lot more digital investment because of the infrastructure. “In Africa the ICT infrastructure has hampered digital spend, and what we see is that there’s a big reliance on traditional media. Television takes the lead, followed by radio and then print,” says Leech.
The continent’s two biggest economies tell their own story in terms of share of media spend according to medium, and the top categories and advertisers. Mobile operators are the biggest advertising spenders according to the GroupM report, but in South Africa retailers and consumer goods take the lion’s share. In Nigeria television is massive, but print is in free fall and digital is climbing off a small base. In South Africa newspapers haven’t seen the same degree of media spend flight, and the internet continues its steady climb.
“We haven’t seen the same kind of capital flight out of the media sector that you see up north, or the nervousness evidenced in more mature markets,” says Justin Arenstein a former investigative journalist turned media start-up star, and consultant to Google and the International Centre for Journalists. “You still see a fair degree of investment into traditional media, but with the caveat that a lot of this investment is an ego-driven media asset purchase.”
These investments are characterised by large personalities—either successful business people or politically connected individuals—who create media assets for reasons that aren’t purely business. “This isn’t an unusual ownership trend in Africa, including South Africa,” says Arenstein. “But obviously there has to be a solid commercial model underpinning any of those assets, otherwise it’s a very quick way of losing a fortune – you know the cliché.”
The biggest themes in media in Africa? Spend is driven by big brands and big GDP, while investment in media is stimulated by infrastructure and big, politically connected personalities.
This feature first ran in Mark Magazine: Africa Dispatches — the sister print magazine of marklives.com. Sample or buy the launch issue of Mark: Africa Dispatches #1 here.
Mandy de Waal. Curious scribbler. Born-again atheist. Author on training wheels. Thought activist. Amateur human. Collector of stories. Lover of the long form. Consulting editor to MarkLives.com. Editor of Mark Magazine: Africa Dispatches.
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