How big is the size of the digital marketing economy in South Africa?

Bra Willy Seyama | eNitiate | Digital Marketing Economy | South Africa | December 2021 - banner

We know that COVID-19 has driven consumers online in droves globally, and indications are that this trend is not going to be reversed. 

South Africa – a country where 6 in 10 people have Internet access, and 7 in 10 have a smartphone, according to the the Broadcast Research Council of South Africa’s latest Media Consumption Trends report – is not an exception. 

Naturally, the size of the digital marketing economy has also grown, in support of brands following the consumers.

The question I address in this eNsight is: 

What is the size of the digital marketing economy in South Africa in 2021?

Read on.

Table of Contents

Inspiration for this eNsight

While I was busy with a new business development pitch due for submission in mid-January, a question about the size of the South African digital marketing and communications economy (or digital marketing economy for short) came to mind.

So I started exploring the answer, based on the many related eNsights that we published since the beginning of 2020, including the one below.  

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Summary

I have been able to estimate the value of digital marketing economy in South Africa in 2021 at R13.45 billion.

I shall show in this eNsight how I got to the estimated value above, using a combination of the following:

  • the country’s published digital advertising stats,
  • trends in the digital marketing industry, which we published many eNsights about on this platform,
  • my experience, having worked in the sector for the past 13 years, and 
  • a bit of common sense.  

I encourage you to go through the rest of this eNsight to gain understanding of the method I used to arrive at the value of South Africa’s digital marketing economy.

For context - the digital marketing economy value chain

The digital marketing economy is made up of the following components:

  • Paid media, also called digital advertising,
  • Content conceptualisation, design, production and packaging, loosely called content development,
  • Content distribution, which includes multicasting and automation,
  • Community management, which includes influencer marketing, social crm and chat bots,
  • Analytics, which includes online listening,
  • Online platform development, optimisation and maintenance, and 
  • Training

The list of the components above is not exhaustive, and I predict that it will keep changing and growing as this value chain’s contribution to the overall digital marketing economy increases.   

Of the seven components above, only digital advertising has published industry value in South Africa.

Based on my thirteen years of experience in this sector, the first 2 components are the main contributors to the country’s digital marketing economy.

Starting with the published stats that are part of the digital marketing economy

According to Statista, the size of total advertising economy in South Africa in 2021 is R35 billion.

As the Statista graph above shows, Internet advertising is R7.3 billion, or 21% of the total advertising spend. 

You may be interested to know that global digital advertising is 56.1% of total spend in 2021. Undoubtedly, there is still a scope for growth in South Africa.

The main contributors to South Africa’s Internet advertising basket are:

  • Google advertising, which includes search engine marketing,
  • social media advertising, dominated by Facebook, 
  • Youtube advertising, and
  • display and native advertising on closed networks, with the bulk of this spend going to the 24.com group of Websites

The Independent Advertising Bureau of South Africa (IAB SA) indicated that 42.5 cents of every R1 of the country’s total Internet advertising spend went to social media in 2019.

Unfortunately, I do not have the stats of the other 3 contributors in the bulleted list above, but this will not get in the way of achieving the intended outcome of this eNsight. 

RELATED ENSIGHT:

Digital adspend: comparison of the top 9 African countries

Please note:

I use the terms Internet advertising and digital advertising interchangeably in this eNsight.

Content development - the six scenarios

Advertising is preceded by production and packaging of the communication “material”, generically referred to as adverts (or ads).

Digital marketing ads can be in many formats, and these include display banners, videos and native content.

As I indicated already, there is no published industry value for this component of the digital marketing economy. Understandably, this would be tricky to work out due to the many variables and nuances.

But now that we know the size of South Africa’s digital advertising spend for 2021 (= R7.3 billion), here are the six scenarios for content development value guesstimation:

0
Million Rand, at 10% of Digital Adspend
0
Million Rand, at 20% of Digital Adspend
0
Million Rand, at 30% of Digital Adspend
0
Million Rand, at 40% of Digital Adspend
0
Million Rand, at 50% of Digital Adspend
0
Million Rand, at 60% of Digital Adspend

Your guess on what is the most probable content development scenario from the six above?

HINT 1:

As a general rule, digital content reaches fatigue much quicker, as compared to non-digital content.

HINT 2:

The higher the contribution of social media content to the total branded content, the higher the content fatigue. 

As a reminder, social media contributes 42.5% to digital advertising spend in South Africa.

Therefore, based on the two hints above, the rate of introduction of fresh or repurposed content is higher for digital advertising, than would be the case for the other forms of advertising. 

HINT 3:

Brands are increasing the contribution of video in their digital content basket.

97% of marketers claim that videos help their customers better understand products. 81% of businesses are now using video as a part of their digital marketing strategy. Live videos account for 13% of total traffic. 90% of consumers claim a video will help them when making a purchasing decision.

Source: www.topfloortech.com Tweet

As any Marketer or agency will tell you, video is the most expensive type of content to produce. 

HINT 4:

Not every piece of paid-for branded digital content gets promoted.

A fair chunk of the branded content gets distributed on the likes of social media as organic content and not as promoted content, setting digital marketing apart from the other types of brand marketing.

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By implication

The four hints above point to the fact that the contribution of the content development component to the overall size of the digital marketing economy is not small. 

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Considering the six scenarios presented in this section, therefore, the value of content development is most likely in the scenarios with the highest percentages of digital advertising spend, and not the scenarios with the lowest percentages.

The total size of the digital marketing economy in South Africa revealed

Bringing it all together, my guesstimate is that the total size of the digital marketing economy in South Africa is R13.45 billion in 2021, made up as follows:

Key takeout

Clearly, the two components with the highest contribution to the digital marketing economy in South Africa are digital advertising (54.3%) and content development (30%), with a combined value at over R11 billion (or 84% of the estimated value of the country’s digital marketing economy). 

With the published stats for digital advertising in place, and using the six scenarios together with the four hints to determine the value of content development, arriving at the estimated value of the digital marketing economy was made possible.

Question to you?

Do you agree with my guesstimate of the digital marketing economy in South Africa? 

Whatever your view, I would love to hear it. 

The latest digital advertising 2021 stats

Updated: 31 March 2022

As per the latest the Digital Report, digital advertising in South Africa was valued at $756.4 million (or R11.060 billion in today’s exchange rate) in 2021.

The Digital Report 2022’s digital advertising value is 33% higher than that of Statista, the latter which was a projection.

Clearly then, South Africa’s digital marketing economy is higher than my initial estimate of R13.45 billion.

Therefore, Mzansi’s revised size of the digital marketing economy can be as high as R17 billion!

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