The latest advertising spend reports show that South Africa’s insurance industry is caught in a time warp, refusing to move with media consumption trends that are shaped by the ever-changing digital technologies.
I shall demonstrate how I came to this conclusion in this eNsight – part of the Digital South Africa Today 2022 series, based on the various stats that I extracted from the reputable sources.
Table of Contents
Inspiration for this eNsight
A friend sent me a report by Ornico Media in late May of 2022, which showed how South Africa’s insurance industry spent their advertising money on the various media channels in the first quarter of the year.
The contribution of the various media channels to South Africa’s insurance industry advertising spend, as shown by the pie chart in Figure 1 from the Ornico Media report, caught my attention.
The finding in the pie chart inspired this eNsight.
Total advertising spend in South Africa in 2021
I could not find a report on the internet that shows total advertising spend for South Africa.
However, separate traditional and digital advertising numbers were published by 2 reputable sources.
First, the traditional advertising spend
According to BusinessLive, the value of non-digital advertising spend in South Africa in 2021 was R47 billion.
Second, the digital advertising spend
According to The Digital Report 2022 South Africa, the value of digital advertising spend in Mzansi in 2021 was R11 billion, based on the 31 March 2022’s $/ZAR rate of exchange.
Note that the phrases “digital advertising” and “internet advertising” tend to be used interchangeably in the industry.
Strictly speaking though, digital advertising includes both internet advertising and mobile advertising (e.g. SMS and USSD marketing that do not need internet) .
Traditional advertising + digital advertising
Adding the two totals above, South Africa’s total advertising spend in 2021 was R58 billion.
Equally importantly, digital contributed 19% to the country’s total advertising spend.
So why is the insurance industry's digital advertising spend not in line with the overall trend?
As Ornico’s report shows, the insurance industry spent only 8% of their advertising money on digital channels (made up of internet and mobile) in the first quarter of 2022, less than half of the national average in 2021.
What was even more (un)remarkable about the report, is that this sector of the financial services industry spent 9% on print advertising, which was 1% more than digital, and this despite print media’s continued decline in the last 10 years in South Africa, exacerbated by the last 2 years of COVID-19.h
My conclusion
Mzansi’s insurance industry is either stuck in their ways of old advertising spending patterns despite the blowing winds of change in favour of digital channels, or they know something that I don’t.
My conclusion is that the former of the two statements is correct.
With the current trends showing that uncapped data competition is spiralling upwards in South Africa, and the expectation that there will be increased entry of disruptive insurance brands such as Naspers’ Naked, I predict that traditional insurance brands are facing plenty of head winds ahead.
