South Africa’s advertising and marketing industry has enjoyed steady growth over the years, sparking more interest in the sector and creating a rise in competition. To survive in the advertising world, you need to stand out, produce engaging content, invest in marketing, and engage and expand on current trends.
Economic pressure and political uncertainty are posing challenges for marketers and ad agencies. Difficult trading conditions are also impeding South Africa’s economic growth and relationships with other countries. This article will highlight the current state of the advertising and marketing sector and list the main challenges that entrepreneurs in this service industry face.
In this business, your team is an important creative asset that you must nurture and value; this article will list some tips on how to keep staff morale and progression high. The article will also outline the importance offering a niche service within this sector.
Facts and figures
- In 2019, the advertising market in South Africa is estimated to be worth R30.4 billion, with TV and video accounting for the largest share at around 21%
- Online advertising currently holds the second largest proportion; however, forecasts predict the share will increase to 25% by 2023
- Mobile advertising is set to represent 50% of internet advertising revenue, up from 40% in 2018
- Four foreign-owned international media groups – WPP (UK), Omnicom Media Group (USA), Publicis (France) and Interpublic (USA) – dominate South Africa's advertising sector
- 54% of South Africans are online and e-commerce rose 4.2% during 2018.
- 55% of web users have made an online purchase, with 38% of those transactions made on mobile phones
- Industry forecasts show, at the close of 2023 internet advertising will be higher than TV advertising for the first time
- 72% of Instagram users have purchased products on the app; 70% of surveyed Pinterest members use the platform to find products
Snapshot of industry
In 2020, South Africa’s digital advertising market amounts to US$787 million. Social media advertising was the best performing sector, with a market volume of US$322 million in 2020.
One of the biggest advertising trends is influencer marketing – a partnership between a brand and a social media user with a large following – with certain industries performing better than others. For example, on Instagram, fitness has 4,514 Instagram influencers with 6% engagement rate.
Challenges in the sector
Despite an increase in online purchases, only one-third of the population are internet users, leaving the vast majority of South Africans unexposed and possibly unaffected by digital campaigns. This creates uncertainty and risk for entrepreneurs looking to set up an agency.
Digital marketing is growing, but there are issues in the sector, one being a lack of workplace diversity. Offering internship schemes can encourage diversity by employing younger staff. Diversity training is also a positive way to promote an inclusive work environment.
An inclusive work environment is the only way to ensure that you can reach different audiences in an authentic way across the country. Do not be fooled into thinking there is a one-size-fits-all approach that you can use to reaching different sectors of the population.
Data protection is a big issue, with consumers becoming increasingly disenchanted with South African organisations when it comes to issues of privacy. Consumers’ have no trust in large companies and many users stress concerned about their data protection. A huge 64% of surveyed participants knew someone personally whose personal data has been misused. Tackling the issue of consumer trust is a huge challenge.
Your team is your biggest asset
Set up a mentor programme to encourage employee growth in your company; encourage your staff to set personal goals and try to have regular one-to-one meetings with your team to keep track of their success and issues. Form a structure that promotes career growth and aspirations.
Work closely with your management team to ensure they are creating a dynamic workplace and teach your managers how to support employees. Mix up your teams in the office so staff from different departments are sitting next to one another; this can help promote innovation.
Make your employees feel valued at your agency, don’t just host a token Christmas party at the end of the year, celebrate International Women’s Day, Pride parades, or World Day for Cultural Diversity. Make sure your office is inclusive and nip any ‘office politics’ in the bud.
Offer your employees career development options such as training and courses in order to improve their skills.
Offer a niche service
To break into a mass market effectively, find a niche area. This will encourage you to tailor your product, marketing and sales for one group of customers, who are likely to cross-refer your product in their online space, helping you to boost your sales and marketing presence.
Establishing a niche for your agency will give you a competitive edge; you should choose a market that is small enough to dominate but with enough money to sustain your business growth. You may want to be sector-specific, e.g. working with businesses in hospitality.
Big brands are increasing their collaboration with smaller agencies for various reasons; being able to have the agency’s undivided attention and achieve a faster collaboration that is not restricted by bureaucracy. So, dream big and get a renowned client on your portfolio.
Marketing and advertising franchises
There are a lot of reasons for deciding to buy a franchise within this sector. You will have the backing of a parent company and you will be able to get the brand recognition that comes with it. You will need to make sure, however, that you still give your customers individualised services so that they don’t become dissatisfied with the difference between what was promised and what is delivered.
Don’t rely too heavily on the reputation of the brand and, rather, make sure that you are offering the highest quality service you can. Build up the name of your particular franchise and your team so that you have happy customers and good reviews that will lead to more business.