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Online advertising booms as usage soars

Jun 27 2010 11:49 Tony Koenderman

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Johannesburg – With each month that passes, online usage tops new highs. A year ago the number of online South African users was put at 5.3 million. Now, says the Digital Media & Marketing Association (DMMA), 9.1 million South Africans visited its registered sites each month during the first quarter.

About as many people go online as read a daily newspaper (9.3 million).
The digital tipping point has been predicted many times. But now it looks real. The trickle has become a flood. The combination of underlying media reconstruction and a deathly tough recession has done its job.

Advertising revenues have responded, rising 31% in a year. Online now accounts for 2.3% of national adspend, according to ACNielsons Adex. '

The reasons are manifold, believes Habari Media sales manager Garth Rhoda. "Nielsen Online Market Intelligence recorded a 51% increase in online traffic, year on year, in the first quarter," he says. "There has been a significant shift in global media consumption with more eyeballs opting for digital and we are now seeing the tangible results.

"In addition, the cumulative effect of educating the marketplace and the general increased understanding of digital media has built confidence in the medium. It is no longer a mystery. More planners and clients are aware of the benefits of digital advertising and this has resulted in more spend being allocated to the medium. Support is growing among ad agencies, which generate 70% of Habari Media's revenue.

"Combine this with the hype around social media, the growth in home connections and the recent ADSL price war, and you have an unbeatable formula for success."

Habari Media is an online sales agent, selling advertising on behalf of publishers from the BBC to Sowetan.

More multinational blue chips have started dipping their toes into the local digital market. "This is hugely exciting," says Rhoda. "They tend to test the waters with big budgets, and are realising better campaign results. Clients in turn get better value-add which further enhances confidence in the medium."

South Africa is following the same curve. "Online adspend should top R800m this year," says DMMA chairperson and Habari Group CEO Adrian Hewlett. But this only represents DMMA-registered businesses audited by Nielsen. It's guesstimated another R200m is earned by Google SA, and some medium-sized digital media owners don't submit figures, so the true figure is thought to be significantly higher.

Growing user numbers, lower ADSL costs, an increase in the skills pool and international pressure to spend more online are all factors driving this trend, says Hewlett.  "One thing that could hold back growth is the skills shortage. That aside, digital businesses are thriving, audience and spend metrics are up, and the future looks is better than ever."

 - Fin24.com


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