Broadband Shortage May Limit Internet Adverts in Africa

By Eddyson Lugangwa Posted 23 March 2006 @ 10:47 am EET     Print     Reprint     E-Mail     Comments

Nairobi (IBTimes.com) - A lack of affordable broadband for high-speed internet access could hurt the growth of internet advertising in South Africa, industry players have said.

According to a report by Nielsen Media Research, spending on internet advertising grew 21 percent to R141 million last year, compared with a 15.9 percent decline in 2002.

In 2004 advertising on the internet grew 137 percent to R116 million, but industry players cautioned that the increase might be short-lived because of high telecommunications costs.

Chris Moerdyk, a marketing analyst, said it was no surprise that there was a slight increase in internet advertising.

About 10 percent of the population have access to the internet.

"Advertisers are getting to understand the attraction and power of the internet … but as long as there is poor broadband access and higher tariffs, one will continue to see slight increases," he said.

He also added that there is no question in my mind that the internet will be a powerful [medium] of the future.

The report, which was released earlier this month, says advertising spending excluding self-promotions increased by R17.1 billion. The lion's share went to print media, television and radio, which accounted for R15.5 billion, or 91 percent of the total.

However, cinema received its largest spending on advertising, which increased ninefold from R61 million to R591 million in five years.

Moerdyk said that although cinema attendance had not increased significantly, the cost of advertising at cinemas had escalated. He said that mass market advertising is becoming expensive and a lot of advertisers prefer a niche medium that gives them a specific audience.

A bid by Ster-Kinekor and Nu Metro to slash ticket prices to R14 last year to attract black attendance has not yet paid off but the groups are optimistic that attendance will increase, helped by improved content.

Moerdyk said advertisers were looking for a format that could complement the mass media - radio, newspapers and television but direct marketing lagged other media in growth, and recorded a 0.6 percent drop to R121.5 million last year.

Primedia Homes' David Pennels said there had been growth in free publications, which might have resulted in a drop in direct mail advertising. Last year media group Caxton set up about 10 community newspapers in Soweto.

Pennels said that although some people saw direct mail as "junk", he felt that there was a need for a medium that could reach about 10 million households, especially in areas where newspapers were not distributed. "Research has shown us that people plan their shopping with leaflets."