Beer, soft drinks, telecommunications, basics and banking. Five things that sum up the African advertising market. But they are enough to keep it ticking, belying its image as a continent of no-hopers. Though the early leaders in the race to build African networks have slowed down their expansion, some of the newcomers are still expanding aggressively.
Savannah Maziya
Chris Marais
DDB Africa, which started as an independent network associated with Framptons International, has now extended its tentacles into 10 African countries, having added Ghana and Côte d'Ivoire in the past year.
"The prospects for the network are looking better than ever," says DDB SA chairman Mike Frampton. "We have gained two really big pieces of business for the network from Citibank (a R60m-R80m account across 26 African countries) and Unifoods. Unifoods' Knorr range is the biggest Unilever branded product in Africa. Energizer remains a big African brand for us, and we're also handling some J&J brands.
Sean O'Brien
"SA was the last big African market Citibank entered, and they are now among the biggest banks in the country. In the rest of Africa they are a strong commercial bank," says Frampton. "Apart from Zimbabwe, the rest of Africa is showing signs of coming right. For us the Kenyan and Nigerian markets are almost as big as SA in dollar terms. We see huge potential."
Click on graphic at right for enlarged version
Peter Atkinson, the London-based South African who heads the Lowe Africa network, sees three problem areas across the continent. "First, there is a shortage of quality personnel, and though we do a lot of training, the process of finding suitable candidates and then training them takes a lot of time.
"Second, the quality of media information and research, except in SA, is inadequate. This is a real challenge. We are working closely with Initiative Media to address that, and with the top clients in each region to improve the quality of media research.
"Third, communications are poor. It's a constant battle just to communicate with the agencies in our network."
Atkinson is, nevertheless, an optimist about the region. "The global recession hasn't had as much impact as I expected in Africa. Perhaps we are insulated. We are projecting 6% growth in real terms across the region. SA and East Africa are our two really strong agency regions. There is a general sense of optimism in West Africa. Zimbabwe is a mess but we are encouraged that lots of other places are looking a lot better."
Cliff van Wyk, the Lowe network's Johannesburg executive, is equally enthused. "There's no slowdown in growth. West Africa is particularly promising. Ghana has become stable, almost a model economy. I am supremely confident in Africa. A continent this rich can't remain poor for long."
Of Unilever's four African regions - West Africa led by Lagos; East Africa led by Nairobi; south central led by Harare; and southern, comprising SA and Botswana - only south central gives cause for concern. Lowe now has 15 agency offices.
Unilever, one of Lowe's biggest clients, adopts a "very workable communication model," says Van Wyk. It involves a combination of global-type innovation with local "activation", which is where local offices bring brand and consumer together. Generic advertising platforms are developed in London for global use, then each region comes up with answers on, for example, how to launch a new Omo variant.
"They select the best and most universal platform, and we place this as it is or with adaptation, filtering it into the whole of Africa and adapting to make it locally acceptable. The main job is not to re-do the generic but to complement it," says Van Wyk.
"We have gone into the remotest parts of Nigeria and have had to create our own media. For a soap brand, we provided local traders with stencils and paint kits to develop point of sale material for use in rudimentary stores. We have a strategy of town storming' where we blitz a town with a product. If you are prepared to go the extra mile and get to know Africa there is enormous potential. We have managed to get the benefits of both globalisation and multinationalism, in a way that the client gets better value and the agency is more profitable as well."
Y&R Gitam has expanded its African network from a narrow core of four agencies to a total of seven in the past year, but network chief Chris Marais remains committed to the hub and spoke principle.
"We have three hubs in east, west and southern Africa with a very strong agency in each," he says. "In East Africa you can service Eritrea, Uganda and Tanzania very comfortably out of Nairobi. The amount of business that comes out of those other countries is tiny. Some agencies have bigger networks, but in most countries they just have offices that carry the name of the network. I don't see a lot of advantage in having a locally owned printing shop with your ad agency name over the door. That doesn't generate money or quality advertising."
Marais is confident, however, that there is good business to be done in Africa. "We expect to see infinitely more growth out of Africa in the next two years than from SA, and the currency of the ad business is the dollar. West Africa, particularly Nigeria, will be our main area of growth. It has the potential to be bigger economically than SA. Mozambique, Zambia and Tanzania are also full of promise. Apart from Zimbabwe, the continent is becoming increasingly stable."
The biggest problem, says Marais, is the quality of data about media. "Some media markets are complex, but there is very little information about circulation audiences. There's a lack of transparency in media buying. You don't always get what you pay for, and it's difficult to know whether you ad actually appears. The quality of implementation at local level is often poor. It is crucial to put in global standards and provide training. There is a demand from clients and from the marketing industry for expatriate expertise. They don't resent expatriates, they welcome us."
Y&R Gitam clients include Colgate, Land Rover, SAB brands and Accenture. Among local clients are the largest cell phone networks in Kenya and Zambia, and Wamco (West African Milk Company), the second-largest advertiser in Nigeria.
But the big networks that led the charge into Africa, such as Ogilvy & Mather, Saatchi & Saatchi and McCann-Erickson, have reached a more stable plateau.
McCann Africa, says chief executive Sean O'Brien, is consolidating its network, and global clients have cut back, so network billings have declined in dollar terms. But as a lot of this is related to weakening African currencies, it doesn't reflect the reality of what is happening on the ground. There remain huge opportunities, particularly in the telecoms industry (where McCann has gained cellular network business in Tanzania and Nigeria).
Western Union, the money transfer specialist, is expanding rapidly because of the explosion of Africans going abroad and sending money back to their families. "Africa is a receiver market for them," says O'Brien. "Ethiopia has 500 000 people working abroad. Western Union is using networks such as ours as a gateway to Africa and the individual markets. We look after them in more than 40 African countries."
The huge amount of informal economic activity tends to depress formal advertising, O'Brien believes. "There's an incredible market on the street for goods that are sold by individual traders. There's no brand equity or brand loyalty behind that. Street traders are sending container-loads of goods from SA. This doesn't contribute to the advertising economy. Trade is direct from exporter to importer and then sold on the streets. Nigeria is a hive of activity on the street, with mechanics offering their services and sales of second-hand goods. There's a large market in Africa for grey goods."
Though countries such as Zimbabwe appear to be a problem "there are always markets out there that are doing OK," says Saatchi Africa MD Eric Frank. "We are seeing a tremendous upswing in our brands in Uganda or Congo even though it is through smuggling and the underground. The markets are still buoyant. People will still buy products.
"Across Africa the total lifestyle is starting to change. Countries such as Tanzania have moved out of socialism and become aspirational. There is a stronger move towards the western lifestyle as the pace of urbanisation increases. People becoming more aware of luxury goods and consumer items they never had before."
Ogilvy Africa is another agency which is consolidating. "We have not added to our network," says network MD Stuart Ingram. "We believe it has been right to concentrate on improving the quality of the network we have. The phase where everybody runs out to put dots on the map is past. So our priorities have been to enhance the quality of creative and account management services. But we have not stopped expanding. We have a few markets in mind. We service clients in 38 countries. We have offices in 22 of them but they are able to service a further 16 from those."
Ingram says some countries are growing fast. "Guinea has been voted the fastest growing economy in Africa. Nigeria, Mozambique and Angola are recovering, but Côte d'Ivoire has had a reverse. Zimbabwe is not doing well. East Africa is doing well. There are pockets of catastrophe but there are also a lot of exciting developments."
One of the biggest problems, says Ingram, is media research. "And the cost of doing it is disproportional to the size of the market. But it is improving. You can get fairly good data from Zimbabwe. Ghana has Gamps. There are monitoring agencies in Kenya. That is why we believe you have got to have strong people on the ground. African agencies are all full-service agencies, offering media plus advertising and promotions. Above-the-line work in most of these agencies would be less than 50% of their business."
Evidence that the pan-African market is becoming a reality is provided by the increase in the number of pan-African media opportunities. There are, for example, two TV networks, modelled on the US networks except that they are transnational.
The first of these was TV Africa, which now transmits up to 19 hours a day through satellite to 26 African countries.
"Widespread broadcasting deregulation opened up tremendous media opportunities," says TVAfrica CEO Dave Kelly. "Cellular phone systems have had an impact on communications. When we started less than four years ago, two countries had cell phone roaming. Now you can travel almost anywhere on the continent and use your cell phone.
"There are many problems in Africa, but there is a lot that has been achieved that Africa is not given credit for," says Kelly, who describes himself as an Afro-optimist. "It's tough. You have to work hard for every bean. But this year our revenue will be eight times what it was in 2000." That cannot be considered an average year, however, since it is a year with both the African Cup of Nations and the World Cup. "But we're working to eliminate the huge spikes."
TVAfrica has four feeds, one in French and three in English to the west, east and southern African regions.
"By May, when the World Cup takes place, we will have 30 regular subscribers," says Kelly. "During the World Cup the number will rise to 41. There are only 15-17 countries that really matter. We are in all of them except one, Senegal. We have some State broadcasters in our network, but we prefer to work with private broadcasters. There are two reasons for this: we take a minority share of equity in the private broadcasters, and the State broadcaster has a public service mandate."
ABN, the second pan-African network, has expanded rapidly in the 18 months since it opened for business. It now transmits a daily two-hour feed to national broadcasters in nine English-speaking African countries, including Nigeria, Rwanda, Malawi and, most recently, Namibia, and as of June 1, will be extending the service to 11 French-speaking countries. The French feed carries the same programming, except that it is dubbed into French and has French-speaking continuity announcers.
Though ABN MD Savannah Maziya is reluctant to disclose advertising revenues, she says the network is "ahead of our projections". Revenues in February were 80% higher than in February 2001, the first full operational month. Advertisers have included companies such as Siemens, MultiChoice and KFC. "We have a potential audience of 100m people, but after we introduce the French segment this will rise to 250m," she says. There's no good media research to quantify this, but it's based on estimates of TV set population and an assumption that four or five people watch each set.
"The absence of good quality research is one of two main problems facing advertisers in Africa," says Maziya. "The first was the absence of quality TV programming, and that's something we are addressing. But once you have the programming, you need independent research to verify your audience figures in particular times slots. Only when you have that can you sell advertising effectively."
ABN's major shareholder, with 51%, is Modern Africa, a US investment vehicle backed by Microsoft and Citibank, among others. Other significant shareholders include Mainstream, SA investment group, and ABN's British founders.
See also Big-time sweetener
