Internet digital video ads forecast to boom

An explosive growth of digital video advertising for online, a platform generating revenues in excess of $1 billion (R6.74 billion) internationally, is expected for South Africa's advertising industry this year.

“It all about entertainment and we're now starting to see rich-media advertising take off in South Africa,” said Richard Mullins, a director at Acceleration, an international company offering technology services.

Arthur Goldstuck, managing director of technology research firm World Wide Worx confirmed this.

Goldstuck said the areas of highest expected growth in data usage in South Africa were social networks, cloud computing and online video.

The United States of America aided by large success of YouTube in terms of user generated content and the ability to create branded channels has become the main hub of video advertising according to Goldstuck.

“The US market for digital video advertising reached about $1.5 billion last year. In other words, it remains a niche market even in its biggest market,” Goldstuck said.

Analysts and industry are not yet willing to speculate on the platform's revenue potential in South Africa.

Big advertising agencies such as Saatchi & Saatchi have, however, been forced to adapt or risk becoming irrelevant.

“We've had to bring in digital expertise into the agency, which we've never done before,” said Colin Herholt, an account director at the agency's Johannesburg branch.

He said an increasing number of clients were requesting video advertising as an alternative.

“You can effectively reach far more people in a cost effective and creative way. The main trend is that marketing and communicating is becoming more personal.”

For advertisers it offers a targeted and measurable reach of consumers. Pay-tv channel DStv has introduced a feature allowing consumers to view only advertisements they are interested in.

“Before brands would have to find consumers now consumers find brands. It's revolutionised the way we get brands to people,” said Herholdt.

Mullins said, “In our experience, video campaigns drive far higher levels of customer engagement and conversion than traditional display campaigns. With bandwidth prices constantly falling in South Africa, publishers can now deliver video-based ads without the fear of website visitors being annoyed with high bandwidth cost implications.”

Growth of this platform in Africa is however, not expected to overshadow traditional advertising which is still the most effective means of reaching the mass market.

Werner Puchert, head strategist at Tequila, a specialised digital and social media company affiliated to the TBWA/South Africa group, speaking in his individual capacity said, although video advertising as a trend was increasing, the return on investment in South Africa would be slower due to less disposable income in SA households.

Slow local bandwidth was also inhibiting what agencies are able to achieve in a digital landscape.

Warren Hunt, head of digital strategy at Ogily Interactive, said some of the most watched video content online were traditional adverts as long as the videos were relevant and entertaining.

He said the greater challenge was to create content relevant enough to have an impact especially in a South African context where many consumers were still easily reachable through traditional broadcast channels.

“Due to low end mobile device handset capabilities it might very well be a long time before video becomes the norm in SA as much as in the US or UK. We'll lose video advertising with campaigns targeted at lower LSMs because the largest part of the SA population isn't really very active in an online space. It is however, very active in the mobile space. Mobile marketing currently replaces video advertising as a result,” Purchert said.

Goldstuck said locally video advertising would form part of the advertising mix and provide a longer shelf life for adverts initially made only for TV.

“Ultimately, video ads will be made in such a way that they comfortably straddle both TV and the Internet. There are numerous areas of evolution available to video advertising, with interactive ads and mobile ads being merely the most obvious.”

Other online trends Acceleration expected include:

1) Behavioural targeting. “With behavioural targeting, marketers are able to use information collected about user's web-browsing behaviour, such as the pages they have visited or the searches they have conducted, to choose advertisement to display to them,” Mullins said.

He said this allowed advertisers to improve conversion by focusing the appropriate messages on customers whose behaviour indicated genuine interest in the products on sale meaning that return on investment is improved.

“The reason that behavioural targeting will start to become bigger in South Africa this year is that the technology to segment and target users by behaviour has finally matured to a point where it is sophisticated enough to produce significant results, yet easy enough to use,” Mullins said.

2) Content providers will collaborate more closely with marketers to monetise their content through strategies such as syndication and custom publishing.

3) This year marketers are also expected to use web analytics tools to achieve better results from online marketing investment.

“They will track their campaigns in an increasingly integrated manner as they seek to understand how the various online elements such as email, display and search interact not only with each other but also with offline campaigns and channels,” Mullins said.

4) The foundations for significant growth in mobile within the next two years would be laid this year with constant improvement of technologies for delivering advertisements and measuring campaign performance.

“For years the industry has hyped up the potential growth of the mobile channel, but we have yet to see mobile really explode. This year will probably not be the year that mobile search and display advertising will really take off but we'll see the groundwork being put in place for some strong growth during 2012 and 2013,” Mullins said. - Asha Speckman for the Business Report website