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Opportunities for digital advertising in Nigeria 09 Aug 2016

The global advertising industry is valued at nearly $600 billion. The industry has an annual growth rate of 5 per cent, with television being the leading advertising platform – accounting for 40 per cent of the market share. However, according to several industry research, internet or digital advertising is gathering pace and could become the dominant advertising medium.
    
According to a media research agency, ZenithOptimedia, global advertising expenditure for 2016 will grow at 4.6 per cent to $579 billion, propelled by major events such as the United States presidential election; the Summer Olympics in Rio de Janeiro, Brazil; and the UEFA European Championship in France.

Advertising trend in Nigeria is not much different than the global trend. Media publicity for the 2015 general election drove advertising expenditure in Nigeria to N97.9 billion; up 5.2 per cent from N93.1 billion recorded in 2014, according to a recent report by mediaReach OMD, a Lagos-based media agency. The Mediafacts report of MediaReach also shows that television stations attracted the highest advertising spend of N39 billion, whilst the print media, outdoor advertising, and radio stations accounted for N23.7 billion, N20.1 billion and N15.1 billion, respectively.

The Nigerian advertising landscape has evolved considerably. There are hundreds of TV and radio stations across the 36 states and the Federal Capital Territory, Abuja. In addition to the proliferation of print media outlets, this reflects a vibrant media space upon which strategic marketing communication of products and services is taking place.

The industry continues to evolve. For instance, digital migration is poised to change how content is disseminated. With the emergent technological revolution, content developers will play a key role in creating marketing materials for both the mass media audience and denizens of the digital universe.

The advancements in broadcast television systems, such as the transition from terrestrial television or analogue TV to digital television has increased the penetration and reach of the television media leading to its preference in advertising. Based on the Mediafacts report, television advertising grew by 12.7 per cent year-on-year from N34.6 billion in 2014 to N39 billion last year when it accounted for 39.8 per cent of total advertising expenditure.

Whilst radio advertising spend also saw an increase last year, print and out-of-home advertising declined by 8 per cent and 2 per cent, respectively. But the big question is that are clients really getting value for money, especially with the fragmentation of the mainstream media.

Across the TV media, there are a multiplicity of networks cutting across various formats such as cable, terrestrial, satellite, direct to home (DTH), Internet Protocol television (IPTV), etc. Lagos State alone has over twenty FM radio stations, leading to a fragmentation of choice. The challenge for advertising executives is how to rightly determine the networks that will transmit the client's campaign to the target audience and produce the desired impact by calling the consumers to action.

Given this challenge, decision-making to choose the right media is more often than not a case of discretion than any measurable criteria. Placing advertisements in print publications is also driven discretionally. Most Newspaper Proprietors' Association of Nigeria (NPAN) members have not joined the Audit Bureau of Circulation (ABC), the global not-for-profit, voluntary organisation consisting of publishers, advertisers and advertising agencies, which develops audit procedures to certify the circulation figures of its member publications. Therefore, advertising executives in Nigeria have to rely on the statistics on readership and circulation provided by the media houses.

The strength of out-of-home advertising is the exposure it gives to consumers through billboards and other outdoor platforms. With this media platform, getting the traffic density and eye contacts is key. However, out-of-home advertising revenue has steadily declined over the last three years from N23.3 billion in 2013 to N20.1 billion in 2015.

For Advertisers' Association of Nigeria (ADVAN) and other advertisers, there is an emerging trend that perhaps gives more value for money. Digital advertising is a form of disruptive advertising. In the modern technological terms, a disruptive phenomenon is one that displaces an established framework or structure. The rapid adoption of internet technology and the ubiquity of mobile phones has catalysed the emergence of digital and social media advertising to the forefront of advertising.

The latest Global Entertainment and Media Outlook report of Pricewaterhouse-Coopers (PwC) shows that digital advertising revenue will surpass TV advertising in the U.S. – the world's largest advertising market – in 2017. Findings from PwC's annual five-year economic forecast for media and entertainment industry revenue and ad spending show that mobile advertising will grow from 35 per cent in 2015 to constitute half of all digital advertising by 2020.

The report states that there is an ongoing shift from watching TV to streaming of videos online. eMarketer, an  independent digital marketing research company, also says mobile advertising is the key driver of growth around the world. Revenues of the two companies, Google and Facebook, who are clear leaders in the global digital advertising industry have been increasing. Last month, Alphabet, Google's parent company, reported that Google division, which accounts for more than 99 per cent of the company's revenues, posted 21 per cent jump in revenue in the second quarter of 2016 to $21.5 billion due to the shift to mobile. This represents the company's fastest growth rate in two years.     

The GSMA estimated that there will be 540 million smart phones in Sub-Saharan Africa by the year 2020. The mobile industry remains a key driver of economic growth and employment in the region with Nigeria accounting for the largest number of mobile phone users at currently more than 140 million active GSM subscriptions.  

As the eyes of consumers shift from TV screens and billboards to their phones and mobile devices, digital advertising – which entails advertising on desktops and mobile devices – will also increase and potentially surpass other traditional advertising platforms in the near future. Digital advertising is increasing in attraction also because it is cost-effective and affordable, especially for small and medium enterprises (SMEs) who do not have very deep pockets for marketing campaigns.

The growth in digital advertising is taking place on the back of the revolution in social networks with the advent of Facebook, Twitter, Google Plus, LinkedIn, YouTube, among others. Digital advertising and social media advertising are now being used interchangeably, although each is quite different.

Improvements in internet penetration in Nigeria is driving the uptake of social media and the digital advertising that those social networking sites are attracting. As of June 2015, there were 16 million monthly active Facebook users in Nigeria, 97 per cent of those accessed the social media site on their mobile devices. Facebook advertising comes in two forms; namely, direct and indirect. Direct advertising refers to the placements on the Facebook walls of users while indirect advertising refers to third-party placements usually by brands and corporate organizations.

Discussions on digital and social media will be incomplete without providing insights on blogs. Blogs are dedicated webpages designed to provide information across several genres, including news, technology, lifestyle, entertainment, sports etc. Some of the most popular and most visited blogs in Nigeria include Niaraland.com, lindaikeja.blogspot.com, bellanaija.com, naij.com, notjutstok.com, 360nobs.com, thenet.ng, ynaija.com.

With web analytics, digital advertising provides the benefit of scientifically measuring the traffic to online platforms. This helps to overcome, for instance, the print and outdoor advertising limitation of measuring data accurately. With internet and mobile advertising, brands are likely to get more value for money, with increased rate of conversions.  

While it is measurable and strategic in terms of advertising utilization, digital and social media advertising is still a nascent industry in Nigeria. There are only few digital media agencies, even as traditional advertising platforms are still dominant in the local industry. But the digital industry is growing and the Advertising Practitioners Council of Nigeria (APCON) has recognised this fact by setting up the Advertising Practitioners Digital Advertising Compliance Committee as a watchdog for the emerging industry.