Editorial Team

Editorial Team

The Internet, video games, television, and filmed entertainment segments of South Africa’s entertainment and media industry are projected to continue to grow over the next few years. However, the publishing industry has to work hard to make headway. This is according to the ‘Entertainment and Media Outlook 2016-2020 Report’ for South Africa, Nigeria and Kenya released by professional services consultancy PwC last week. Despite a slower growth projection for the industry, the study forecasts that South Africa’s entertainment and media industry will grow from R125,7-billion in 2015 to R173,3-billion in 2020, a compound annual growth rate of 6,6%. “In spite of widespread disruption in the entertainment and media industry, as well as intense competition for consumer attention, there are growth opportunities aplenty for companies to capitalise from in the new media landscape,” says Vicki Myburgh, Entertainment & Media Industry Leader for PwC Southern Africa. Digital spend is expected to drive the overall growth. South Africa’s Internet access market will rise from R39,4-billion in 2015 to R68,5-billion in 2020, as broadband – both fixed and mobile – becomes an essential utility. “Although the forecast [growth rate] of 11,7% is lower than previously predicted, this still makes Internet access by far the largest contributor to total entertainment and media spend,” adds Myburgh. The study analyses a total of 11 entertainment and media segments: the Internet, television, filmed entertainment, video games, business-to-business publishing, recorded music, newspaper publishing, recorded music, magazine publishing, book publishing, out-of-home-advertising and radio. Aside from the Internet, the report predicts that growth will also be seen in the video game market, filmed entertainment and television segments. “As Internet revenue continue to rise, the forecast for newspaper and magazine circulation is on the decline as consumers migrate from print copies to free online alternatives – and aren’t as yet moving to paid digital formats in great numbers,” says Myburgh.
When it comes to the viewing of major sports events on television, broadcasters and sponsors may be facing an uphill battle to attract young Millennial viewers (those aged around 18-34), who are increasingly either not watching at all, or preferring social media- or Web-based viewing. This means traditional TV broadcasters and their high-spending sponsors and advertisers are finding it increasingly difficult to achieve the critical mass of viewers they require in order justify the high costs involved. Writing for the upcoming issue of the ‘IMM Journal of Strategic Marketing’ (due to be published in mid-October), regular columnist Professor Michael Goldman says figures released by US broadcaster NBC – which paid US$1,2-billion for Rio Olympics broadcast rights – show that its viewership declined by 16% (5,1-million people) versus the Olympic Games held in London in 2012. The biggest factor was the loss of Millennial viewers, who dropped by a massive 31%. This pushed the median age for Rio 2016 viewers to 52,4 years – up from age 49,5 years for London. Some of these ‘missing Millennials’ migrated to NBC’s Internet-based Rio coverage, which attracted 50-million viewers, a more than 100% increase on the London games. But many of the 18-34 age group were missing altogether. “These results confirmed a concern NBC had expressed previously – that Millennials would be in a social media ‘bubble’ and wouldn’t even know the Olympics was coming,” writes Goldman, a South African academic now lecturing in sport marketing at the University of San Francisco in the US. According to Goldman, this trend raises further questions about changing media technology and the way people now watch coverage of major sporting events.
Friday, 23 September 2016 08:27

Improved African supply chain on the cards

Many of Africa’s roads, rail links and ports have suffered years of neglect. But the good news for frustrated marketers and supply chain managers battling to get their goods to market is that change is happening. Issue 3 2016 of ‘Strategic Marketing Africa’, the magazine of the African Marketing Confederation (AMC), reports that many countries are grasping the urgency of making their transport infrastructures globally competitive. Among the nations at the forefront of the modernisation is Kenya, which is tackling the challenge through a multi-billion dollar project that forms part of the Northern Corridor Integration Projects Initiative between Kenya and Uganda. The initiative represents possibly the biggest regional rail development programme since South Africa built the 861km Sishen to Saldanha Bay iron ore line in the 1970s. “Kenya is consolidating its position as the East African regional services hub; the new line will be a game-changer for Kenya and the region” says Jonathan Stichbury, the Kenya-based CEO for East Africa of US asset management firm, PineBridge.” The project is due for completion in July 2017. Other big things are happening in East Africa. Rivalling the Kenya/Uganda rail project, landlocked Ethiopia is nearing completion of a 756km standard-gauge line from the capital, Addis Ababa, to the port of Djibouti. Being built at a cost of US$3-billion, the line will replace the disused meter-gauge line. Nigeria is also in a dash to replace its colonial era system, which has for decades been in a state of collapse. Already completed is a standard-gauge line linking the capital of Abuja with Kaduna, a major trade hub with a population of 1,8-million people. Due for completion this year is a 312km standard-gauge line linking the country’s biggest metro area, Lagos, with Ibadan, a city of 3-million people.
The third edition of the prestigious World Branding Awards saw 210 brands from 30 countries named ‘Brand of the Year’ in a ceremony held at London’s Kensington Palace on Tuesday. Among those honoured were four African brands. South African-based fast-food giant Nando’s was a ‘National Tier’ winner, along with Kenyan telecommunications company Safaricom and Nigerian retailer Spar Park ‘n’ Shop. MTN, the South African mobile communications brand, was chosen as a ‘Regional Winner’. For MTN, the World Branding Awards honour comes hot on the heels of being named as the Most Valuable Brand in South Africa in the Brand Finance awards. Winners of the ‘Global’ brand category included some of the most prominent names in world business: Apple, BMW, the British Council, Cartier, Coca-Cola, Facebook, Google, Lego, L'Oréal, Louis Vuitton, McDonald's, Nescafé, Nike, Oral-B, Pampers, Rolex, Samsung, Starbucks, Schwarzkopf and Visa. The awards are organised by the World Branding Forum, a global non-profit organisation dedicated to advancing branding standards. It organises and sponsors a range of educational programmes. It also publishes branding news on its website that reaches a global audience of over 5 million. Participants are judged through three streams: brand valuation, consumer market research, and public online voting. “Over 120000 consumers from around the world voted for more than 2 800 brands from 35 countries. Winners at the awards have clearly demonstrated their ability to stand out from their competitors,” said Peter Pek, Chief Executive of the Forum.
Although overall growth in Africa has slowed, the long-term fundamentals are strong and there are big business opportunities ahead. This is according to a new study by the McKinsey Global Institute, the business and economics research arm of consulting firm McKinsey & Company. In its ‘Lions on the Move II: Realising the Potential of Africa’s Economies’ report, the firm predicts that spending on the continent will grow from US$4-trillion in 2015 to US$5,6-trillion by 2025. “Big opportunities lie ahead as consumer and business spending continue to grow,” say the researchers. To back this up, they point to several key trends. Among them is the expectation that household consumption will grow by 3,8% a year to 2025. “Spending on discretionary items is likely to grow fastest, reflecting an expanding African consuming class. Just under half of all consumption growth in the period to 2025 will be in 75 cities,” the study notes. The continent also has an opportunity to nearly double manufacturing output – from US$500-billion today to US$930-billion in 2025. A notable change from previous years is that national economies are no longer about exporting commodities, but about tapping into vibrant domestic demand. Three-quarters of this potential could come from Africa-based companies meeting fast-growing demand within Africa, McKinsey believes. “Our new research shows how, in coming years, Africa will benefit from strong fundamentals including a young and growing population, the world’s fastest urbanisation rate, and accelerating technological change,” says Acha Leke, a co-author of the report. “Thriving in [these] markets will require [companies] to offer products and develop sales forces able to target the relatively fragmented private sector. But what our research also shows is how much work needs to be done – both by companies themselves and by Africa’s governments – to translate opportunity into tangible economic benefits.”
Mobile telecommunications brand MTN is South Africa’s most valuable brand for 2016. The annual Brand Finance top 50 list released last week says MTN’s brand has a value of R37-billion. It retains top spot despite losing a third of its brand value due to ‘reputational challenges’ earlier in the year. Rounding out the top five when it comes to brand value are Vodacom, Sasol, Standard Bank and Woolworths. The fastest-growing brand this year was Telkom, which was in 23rd place last year and climbed to 15th spot this year. The researchers said Telkom’s rise was the result of “the integration of Business Connexion and improved performance on the retail side, with good ratings on Value for Money and Customer Satisfaction, according to the South African Customer Satisfaction Index”. Two brands entered the top 50 list for the first time: clothing brand Country Road, which is owned by Woolworths and comes in at number 31; and Growthpoint, a property investment company, which is in 50th place. “The more competitive the market, the more important it is to have a strong brand, leverage it to its full potential and measured and monitor [it] at all times,” says Jeremy Sampson, Director of Brand Finance Africa. “Brands are increasingly the major assets of companies, yet does anyone have an idea of their true value? Marketing is no longer a 'nice to have'; it can be the difference between success and failure” The top 10 brands, according to the 2016 study, are: 1. MTN 2. Vodacom 3. Sasol 4. Standard Bank 5. Woolworths 6. FNB 7. Absa 8. Nedbank 9. Investec 10. Mediclinic
Supermarket chain Pick n Pay has confirmed that it is testing self-service checkout technology at one of its stores in Cape Town. However, the company has denied concerns that a successful trial could lead to job losses. Last week, social media users posted photos of the self-service unit at a store in suburban Ottery and, while some thought it was a good idea, others were worried that cashiers’ jobs may be at risk. Self-Service checkouts are already in use in supermarkets in many parts of the world, but not in South Africa as yet. In media interviews, Pick n Pay executive David North said the chain was always looking at ways to make customers’ shopping trips easier and more convenient. “In this case we are testing self-service checkouts in one store to see if it can save customers time at the till – particularly those in a hurry and shopping for just a few items,” he is quoted as saying by ‘Business Day’ newspaper. “We see it as an additional service and we are testing it in one store. Staff are required to monitor self-service checkouts and there is no impact on employment.” But self-service checkouts are not always plain sailing. A UK study found that customers were regularly pilfering small quantities of goods, most notably fruit and vegetables. The researchers said self-service failed to take into account human frailties such as frustration in operating the technology and a willingness to steal small amounts of goods on a regular basis once shoppers realised they could get away with it. “I’m sure most of those who now admit to stealing via self-service checkouts didn’t initially set out to do so, said a spokesperson. “They may have forgotten to scan something and quickly realised how easy it would be to take items without scanning them.”
Urbanisation has become a key trend in Africa, with people increasingly moving to the cities and thereby making it easier for companies to target certain consumer groups. But, cautions the African Consumer and Retail Sector Report 2016 published by professional services firm KPMG, although the demographic make-up of the continent is extremely favourable, success is not guaranteed. Firstly, there are vast differences across countries. North Africa is, for example, far more developed than sub-Saharan Africa, while the retail market opportunities in countries will differ due to variances in consumer tastes, culture, income and demographics. Secondly, says KPMG, it is important to distinguish between opportunities at the national and city level. Data at the national level can often be misleading, as a city’s GDP per capita can vastly exceed the national average due to the greater concentration of wealth in some urban areas. “Finally, simply because a country has favourable demographics does not mean that this will necessarily translate into higher levels of economic growth and consumer spending,” the report notes. An increase in the proportion of the working-age population relative to the total population is potentially beneficial for consumer spending as it frees up resources. But this will not happen if there is a high unemployment rate in the working-age population.” Turning to the outlook for African retail, KPMG says the formalisation of the sector will be a key trend underlying its expansion in the coming decade. At present, most consumers – especially south of the Sahara – remain extremely poor and spend most of their money on food and other necessities. This makes for a promising outlook for FMCG companies, given the large market to cater for. Crucially, an increasing number of consumers are on the cusp of the US$1 000 annual income level, which will allow for the expansion of consumption.”
Thursday, 15 September 2016 07:31

Influencer marketing has gone to the dogs

While digital marketers are increasingly turning to social media influencers to help drive their campaigns, it appears that in the US the strategy is going to the dogs. There, four-legged friends with names such as Toast, Menswear Dog and Knox the Dox are being used by an array of brands to connect with consumers via social media. According to an article in‘Ad Week’ magazine, canine social media influencers can be paid anything from US$2 000 to US$10 000 to appear in a sponsored post on Instagram. “All sorts of brands want to tap into dogs. [They] are a common denominator for everyone and they're safe because everyone likes a cute or funny dog. They're not going to get in some scandal or say something stupid on Twitter and have it reflect negatively on the brand,” the magazine quotes Rob Schutz of Bark & Co as saying. The company has a service that sends treats and other products to American dog owners every month. Among the biggest stars is Toast, a one-time rescue dog who has nearly 370 000 Instagram followers and has appeared in sponsored posts for the likes of Proctor & Gamble. “Toast has such a large and loyal fan base on her social media channels, and her tone is witty and honest, making her a natural fit to partner with, a P&G spokesperson said. Menswear Dog has almost 280 000 followers and has appeared in posts for clothing brands such as Banana Republic and J. Crew. “The great thing about a dog model is [that] it rises above all of the demographics that people worry about,” said its owner, Yena Kim. According to management consultancy McKinsey & Co, word-of-mouth and one-on-one strategies such as influencer marketing generate more than twice the sales of paid advertising
Brands are increasingly turning to social media and online ‘brand friends’ to help in the development of new products. The strategy, called co-creation, harnesses the wisdom and innovation of crowds, the ‘IMM Journal of Strategic Marketing’ reports in its August-September 2016 issue. Recently social media fans of a beer brand in Argentina called Quilmes created a plastic cup that fits on top of a beer can and becomes a handy peanut holder. The company was so impressed with this viral fan-created concept that it launched its own limited-edition beer with built-in peanut holder and bag of nuts. In another example, a few years ago the international ice cream brand Ben & Jerry’s created a new flavour called Fairly Nuts based on Internet users’ input. Fairly Nuts uses caramel ice cream with praline almond clusters and caramel swirls – all sourced from Fair Trade-certified suppliers. It came about as a result of a Ben & Jerry’s global marketing campaign called ‘Do the world a flavour’, whose aim was to raise awareness for fair trade ingredients by challenging customers to invent their own flavour of ice cream using only ethically sourced items. In all, nearly 100 000 flavour suggestions were received from Internet users. According to co-founder, Ben Cohen, crowdsourcing and co-creation offers an opportunity for fans to participate and create fun around the brand. There’s even been a crowdsourced car design. Fiat executives in Brazil launched a project called Fiat Mio (‘My Fiat’ in English) which set out to design a concept car using a collaborative process. More than 17 000 people drawn from 160 nationalities participated in the project over a 15-month period. A prototype car was built using many of the ideas submitted and the Mio was displayed at the São Paulo Auto Show in the country’s largest city.