Splitting HairsOnline ad spend in US expected to beat print in 2010 |
But SA is still woefully undervalued.
EAST LONDON - Online advertising spend is expected to outstrip print advertising this year in the US, according to a survey of advertisers.
The Financial Times reported this week that online spending is expected to rise 9.6% to $119.6bn while print ad spend will decrease 3% to $111.5bn, according to a survey of 1 000 advertisers by Outsell publishing research company. The advertisers say they are spending more of their marketing budgets on web-search ads, their own websites and "webinars" - web conferencing used for live meetings, training or presentations on the internet.
If the $119.6bn seems an outrageously large figure to Netizens in South Africa, it's worth recalling that last year online advertising in the UK beat TV ad spend for the first time. A study released by PricewaterhouseCoopers and the Internet Advertising Bureau in September showed that online spending grew 4.6% to £1.752bn in the first half of 2009 while TV spending shrank 16.1% to £1.639bn.
It may not be a completely fair comparison as the UK online ad spend calculation includes e-mail campaigns, classified adverts, display ads and search marketing, which means this is both above- and below-the-line. Television is very squarely a medium for above-the-line advertising.
Local internet and mobile expert Arthur Goldstuck, MD of World Wide Worx research and consultancy agency, says the Outsell survey may say more about the serious decline of print advertising in the US than the rise of online there.
However, the fact is that more and more advertisers internationally are seeing more value in online at the expense of traditional media. South Africa, of course, is behind the trend. According to the Online Publishers Association (OPA), online ad spend last year in SA was at about R419m though this doesn't take into account ad spend with Google South Africa, which does not submit its numbers to the OPA. (Google likes to play its cards close to its chest across the world).
It's very difficult to compare online ad spend to traditional in South Africa but Nielsen's AdEx figures put TV ad spend at R10.4bn last year, print at R8.9bn and radio at R3bn. It is, however, very important to note that the AdEx figures are calculated on rate cards and, therefore, do not factor in discounting (of which there was a lot going on last year as the recession took hold) and media houses doing deals across their different titles or stations.
It dismays many in new-media circles in SA that online advertising is so undervalued here and Goldstuck says he believes it may have something to do with resistance from advertising agencies because online advertising is measurable in a way that big corporate above-the-line campaigns can never be. The fact that online advertising allows advertisers to see exactly what kind of bang they're getting from their buck may scare many at the agencies.
South Africa's internet penetration is also low compared with other countries, which puts many advertisers off. According to research by World Wide Worx, South Africa's internet audience passed the 5m mark last year for the first time, which puts penetration above 10% for the country's 49m population.
The OPA points out that Belgium, which has an online ad spend of about $500m, has an internet user audience of only 5.5m but then you must remember that Belgium has a population of 10m so the penetration is excellent in what is already a wealthy, highly educated nation.
The growth rate in South Africa was promising last year up 15% to 5.3m from 4.6m - and it is expected to grow at a similar rate this year. The growth of internet users in this country was relatively stagnant from 2002 to 2007, when it never rose above 7%, says Goldstuck, but this almost doubled in 2008 and continued accelerating in 2009. (Click here to view a very interesting interactive BBC map of the growth of internet users worldwide from 1998 to 2008 and compare South Africa's progress to other countries.)
World Wide Worx's research says the recent growth of internet users can be largely attributed to the granting of Electronic Communications Network Service licences to more than 400 organisations, which meant that service providers previously required to buy their network access from one of the big guys, could now build their own networks or choose where they wanted to buy their access. This led to more competitive packages and then the considerable migration of small and medium businesses from dial-up to broadband brought a lot more users on stream.
While the high-speed undersea Seacom cable that landed on South Africa's coast last year hasn't brought down broadband prices as radically as we had hoped for, there are other underwater cables in the works and combined, these new pipe lines will have the desired effect.
Not too long from now South Africa will have much cheaper and faster broadband, which will change the game. As our online population rises and it will be able to do so much more on the web, online advertising will become a very attractive option.
*Media columnist Gill Moodie spent 14 years as a salaried hack in print media in South Africa and the UK before escaping to the blogosphere and freelance journalism. She is the publisher of Grubstreet http://grubstreet.co.za/ in between unpacking and packing the infernal dishwasher and bringing up a four-year-old with attitude.
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