By Kerryn Le Cordeur
The Advertising Media Association of South Africa (AMASA) held its June forum at the JSE on Wednesday, 2 June. This month, Chris Botha, The MediaShop Sandton’s Joint Managing Director, explored the effect of the 2010 FIFA World Cup on the South African media landscape.
Botha contrasted the blinding optimism felt with regards to the World Cup and 2010 by some, with the blinding pessimism felt by others. Those who are optimistic see it as an opportunity to make money; a new dawn for South African politics; and the opportunity for ‘green shoots’ that will ultimately turn into a ‘green forest’ – that is, the opportunities will turn into tangible and long-lasting benefits. On the other hand, pessimism stems from the repercussions of ‘recession doom and gloom’ and the feeling that the World Cup won’t make a difference to the financial or political instability in our country; and added to this, the perhaps more realistic notion that the green shoots that exist as a result of the imminent tournament are just that – shoots – and won’t necessarily translate into anything tangible or sustainable in the long run.
He went on to explain that while research shows that ad spend certainly increases in countries hosting prominent sporting events, this growth has decreased over time, so that tournaments held now result in a much smaller amount of growth than those held a few years ago. This is because of a global clamp down on guerrilla marketing; the increased cost of sponsorship; and the increased realisation that sponsorship alone isn’t good enough, it needs to be amplified – and this costs even more.
In terms of ad spend in South Africa, Botha said that while it appears to have increased since 2007, if you remove self-promotion, and take into account the 5% media inflation and the under-reporting of AdEx, along with increased discounts, there has been an estimated 15% drop in ad spend across the industry. Be that as it may, he noted that there has been a 13% increase in 2010 thus far, although he cautioned against over optimism, and added that the MediaShop predicts a seven to 10% increase in ad spend over the course of the year; we should also guard against what might happen in 2011 and even late 2010, when the hype of the World Cup is over.
Botha moved on to explore what marketers and advertisers will be doing in 2010, saying that there are three possible approaches: the ‘run and hide’ approach; the ‘business as usual’ approach; and the ‘mimic’ approach. He explained that ‘run and hide’ involves keeping a low profile before and during the World Cup, while your competitors are going all out to advertise, only to launch a campaign once the tournament is over. While this approach has certain benefits for the smaller competitors, Botha warned that if everyone was to adopt it, it would have a significant effect on ad spend. ‘Business as usual’ is the approach he feels most advertisers will choose, in that only a few brands have anything to gain from the World Cup, and life goes on for everyone else - including consumers - so, while money will certainly be made as a direct result of the tournament, it will continue coming in from other avenues, too. Lastly, the ‘mimic’ approach can be effective if it is applied properly, as it involves brands matching their competitors rand-for-rand in terms of ad spend during the tournament, which can create confusion as to who the actual sponsor of the event is. However, Botha feels that such an approach won’t be effective so far down the road when, for example, MTN is already synonymous with the World Cup – Vodacom or Cell C would have a tough job coming in and trying to fool consumers into thinking they might be the sponsor.
Looking at TV specifically, Botha commented that just because a broadcaster such as e.tv is not broadcasting the World Cup, this isn’t the end of the world for the channel. He explained that while most people believe that broadcasting the World Cup games is a good thing, it is interesting to note that the SABC’s ratings for the 2006 FIFA World Cup final were 17.4 ARs with a share of 50%, while the very next night, Generations got 23.5 ARs with a 30% share. Generations is the SABC’s biggest revenue generator, and already the effects of moving it to accommodate the soccer was felt during the 2009 FIFA Confederations Cup, when the local soap experienced a drop of three ratings. Botha commented that the 2010 FIFA World Cup is a much bigger tournament, taking place over a longer period of time, with matches taking place every day rather than every second day as was the case during the Confederations Cup, so ratings for Generations and the channel will be sure to drop as it is moved to another time slot and non-soccer viewers move to another channel, such as e.tv or M-Net. However, he did concede that while the SABC will experience a loss in this regard, it will most likely make this up elsewhere, through viewers who do enjoy the soccer, as well as through sponsorships. At the same time, the channels that do not broadcast the World Cup have an excellent opportunity in terms of the deals they can make and programming they select, and should take full advantage of this.
Moving on to other media, Botha began by looking at out-of-home media, saying that there are many additional signage opportunities available along motorways - this is a good way to reach tourists. However, in a fairly saturated market, it is important that your message be presented in an eye-catching way and repeated often. He also wonders if the market is growing too fast, and what will happen after the World Cup is over – the feeling being that there may be more supply than demand.
Print is in a precarious position as a result of soaring costs; decreasing circulation (resulting in declining revenue); and the increasing proliferation of publications, although the number of readers hasn’t increased to match the supply. As a result, Botha’s prediction is that 2010 will be a tough year for the print industry, especially for magazines, although those that cater to niche markets will be better off.
In a similar vein, radio has become more and more expensive as an advertising medium, with higher inflation than any other medium. The number of radio stations has also increased dramatically over the years, and it is now necessary for advertisers to make use of 23 stations in order to comprehensively cover LSMs six to 10 – resulting in significant cost. As a result of this, radio is being pitted head-to-head with TV, as opposed to acting as a support medium, and the creative therefore needs to be that much better in order to have the desired outcome so that TV is not constantly the preferred medium, with radio seen as its ‘ugly sister’.
Botha said that online ad spend is still measured poorly, although it is definitely increasing rapidly. However, in South Africa, only 2.89% of total ad spend goes toward online advertising because, Botha feels, the current form of online advertising is not efficacious, which is seen simply by looking at click-through rates of only 0.12% - and continuing to drop as consumers become more ‘online savvy’. He predicts that online advertising in its current form will disappear in the next 10 years, to hopefully be overtaken by usable branded online content and mobile advertising – but only if this is done in the right way.
Botha ended off by presenting his ‘wish list’ for 2010. This includes ‘ideas that break through the clutter’, so that your ad becomes the 0.1% that consumers remember and act on (In South Africa we are exposed to 3 000 ads a day, but in general would only be able to recall about three, which equates to 0.1%). He also hopes to see great branded content, and an understanding of the importance to create content that encourages interaction and rewards consumers for this; and lastly, a mobile campaign that works, as we have a very high level of mobile penetration in South Africa and this opens up opportunities to speak to different market segments on a different platform.
In closing, Botha stated that 2010 will be a growth year in the South African advertising industry, although we shouldn’t be overly optimistic, and the path to success will require much consideration; innovation; and planning.