Online advertising revenue jumps in SA

The IAB has built a tool to illustrate the heart of the internet in SA. (Duncan Alfreds, Fin24)
The IAB has built a tool to illustrate the heart of the internet in SA. (Duncan Alfreds, Fin24)

Cape Town – Online advertising is showing healthy growth in South Africa as advertisers follow consumers online, new research has revealed.

Online advertising revenues rose from R452m to R566m and search internet advertising revenues hit R865m, up from R680m from 2013 to 2014, according to the Interactive Advertising Bureau (IAB) South Africa Internet Advertising Revenue Report conducted by PwC.

“This situation provides an ongoing challenge for advertisers, especially in the light of the steep rise in mobile internet penetration in the country,” said Gustav Goosen, head of the IAB’s Research Council.

Mobile revenue declined to R64m from R172m, but the IAB argued that this decline was misleading due to “exclusion of search revenues” ad spend moving offshore and low levels of market participants.

The organisation said that the total was valued at R1.5bn. According the CMO Council the total advertising market in SA was worth $4.39bn (R60bn) at the end of 2013.

Data demand

The demand for data is increasing as consumers increasingly switch to smartphones capable of consuming rich online media.

 “Fuelled by factors such as greater availability of mobile data services and increasingly affordable smartphones, mobile internet subscribers are estimated to increase from 36.6% to 69.1% of the country’s population in the next five years. Already, 61% of South Africa’s web traffic is generated by mobile devices,” said Goosen.

He added that advertisers would inevitably follow increasingly mobile savvy consumers.

“While it goes without saying that advertisers will increasingly target consumers on their mobile devices, the challenge will be to communicate a unified message over a multitude of devices and platforms. This will lead to challenges in the measurement of the value of mobile advertising, when the lines between devices and platforms become blurred.”

The PwC report confirmed earlier data suggesting that social media platforms grab the lion’s share of consumer attention on smartphones and tablets, resulting in advertisers migrating to these platforms.

“According to the PwC report, around 60% of social media spending occurs on Facebook, followed by 18% on Twitter,” Goosen said.

However, he warned that local publishers would struggle to compete with international players.

“The popularity of these US-based players is a mixed blessing for the SA ad industry. These brands are leading the push towards substantial investments into online advertising, but the money is not going to local publishers, who are hard-pressed to compete.”

The IAB advised advertisers to shift to video ads which currently only make up 2% of display revenue. However, the organisation warned that video data would depend on network quality.

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