Following two years of lukewarm growth, South Africa's advertising spending is back on the boil with the first six months of this year showing a solid 20% growth over the same period last year. This is mainly due to gains across all major media, spearheaded by a 38% (R1,2 billion) increase in spend by the top 10 companies, growing confidence in the local economy and healthy competition in most commercial sectors.
Figures released recently by Nielsen Media Research - AIS/EdEx show that advertising spending in the Internet sector grew by 100%, with eight additional sites now supplying their data from January 2004. Cinema grew by 82%, followed by outdoor (27%), radio by 21%, print by just under 20% and TV by 18,5%. The only sector in negative territory was direct mail unaddressed (previously knock and drop), easing 2,3% due to one media owner not supplying data.
Growth in the domestic advertising industry reflected similar trends in many of the world's major economies, with the UK, US and Australia reporting double-digit growth. Driving the upward movement in South Africa are the strength of the economy, a successful Government election and an increase in traditional advertisers which added to the growth in advertising across all key sectors.
The retail category (food stores, supermarkets and hypermarkets) topped the list of advertisers as major retail food advertisers Pick 'n Pay Supermarket, Spar South Africa and Checkers Hyperama upped adspend considerably.
The second half of the year will reflect the impact, if any, of the Athens Olympics on local adspend.
Showing the biggest increase in advertising spend for the first six months of 2004 were Government National (61% increase), Standard Bank (60%) and MTN (59%). Government National was largely due to the IEC voter education programme, together with Government departments GCIS, Department of Treasury, National Olympics Committee, National Road Safety and SA Tourism. The ANC spent R27,5m, spread over outdoor, print and radio.
After three years and with the marketing effort of the Online Publishers Association, together with cooperation from the Internet Media Owners, it appears that this media type is now attracting the spend it merits. Annual earnings for the first six months stood at close on R44m, projected to 90m for the full year. The top five Internet advertisers for the period January - June 2004 were (Rm):
1. Piggs Peak Casino R3,4m
2. Auto & General Insurance R3,0m
3. Outsurance Insurance R2,9m
4. Dial Direct R2,8m
5. Standard Bank R2.3m
With few exceptions, there has been a direct correlation between a strengthening of brand value and increased advertising spend. Also, as competition among the country's leading brands hots up, so too has advertising spend. The top 10 brands in product classes such as detergents, fabric softeners and laundry soaps upped their spend by a combined average of 34%, outlaying R1,44b compared with R1,07b for the same period in 2003. Budgets for the top 20 brands grew by 41%. Leading the way was Sunlight with a whopping 510% increase in spend, followed by Coca-Cola (-43%), Pantene (40%), Axe (88%) and Pampers (76%).
Interestingly, seven out of the top 10 brands were for personal care products. No food brands made it to the top 10 - the highest ranked, Vitalinea, produced by Clover Danone, was in position 14 - and only three beverage brands, Coca Cola, Lipton and Tropika, were listed in the top 20. Lipton, the Ice Tea produced by Unifoods, increased its advertising budget by a whopping 5195% to R9,3m. Other three-digit budget increases came from Doom (245%), Lux (165%) and Tropika (107%). The biggest drop in spend was for Coca-Cola, although with R18,2m spent, it was still strong enough to be in second position overall. Kelloggs spent 21% less on its Kellogg's Cornflakes brand.
Sunlight increased spend of over R6m on fabric conditioners, R8m on detergents and an increase of R3m on dishwashing liquids. In line with marketing budgets for many other categories, Coca Cola spend has shifted noticeably (R13m increase) from above the line to promotion and sponsorship, driven mainly by a flurry of campaigns in townships and informal trading areas.
The top 10 brands were produced by only three manufacturers, and eight for the top 20. Unifoods accounted for two thirds of the top 10 brands spend followed by Proctor & Gamble with 21%.