Howwemadeitinafrica – excerpt from Business in Africa: Corporate Insights
The battle of the brands is about to begin in Africa, predicts Rick de Kock, Director of Africa Operations for advertising company TBWA\Africa. As the word spreads about the consumer opportunity in a continent of a billion people with rising incomes and high economic growth levels, global brands from all over the world are rushing in.
With 54 diverse countries on the continent, even rigorous business plans can run aground on the unique and complex set of circumstances found in each country. Dianna Games, the CEO of Africa @ Work and a columnist for Business Day, has recently compiled a book, Business in Africa: Corporate Insights, that addresses these issues concerning doing business on the continent. Below is an extract reproduced in online newsletter Howwemadeitinafrica.
The battle of the brands is about to begin in Africa, predicts Rick de Kock, Director of Africa Operations for advertising company TBWA\Africa. As the word spreads about the consumer opportunity in a continent of a billion people with rising incomes and high economic growth levels, global brands from all over the world are rushing in.
“The competition for consumer spend is keen and growing,” he says. “Some of the world’s fastest-growing economies are here and international brands want a piece of the action.”
The original driver for TBWA’s African expansion was the movement of South African multinationals into the rest of Africa. “But we started to find that more and more of our global clients wanted to go into the continent and wanted us to work for them in African markets.”
Interest in the consumer markets of Africa is coming from all over the world, he says. “We are seeing more brands from India coming down the east coast of Africa and there are a lot of new brands coming from Europe and America such as Walmart and Yum Brands, which is opening KFC outlets across the continent. There are very few coming from China at this stage but that may change in time. And there are also the African brands. Many of the big African brands have traditionally come out of South Africa but that is also changing as African companies spread their wings out of their traditional local markets.”
Talking to customers
“Consumers are starting to understand that everybody wants to talk to them. With the explosion of new technology, African consumers are more connected to the world than ever before so they have more choice and they know what is good and what isn’t. If you try to sell them rubbish, they’ll know.”
This rapid penetration of technology into Africa has implications for the way business operates. The landing of numerous submarine cables on African shores since 2009 has given the continent vastly increased access to international fibre bandwidth and the numbers of internet users is rising as the technology becomes more affordable. The number of internet users rose from 4.5 million in 2000 to nearly 140 million by 2012 – with 45 million in Nigeria alone. But internet penetration still has not reached beyond seven per cent of the population, so the potential for growth is huge.
The GSM Association, a body that represents the interests of mobile operators worldwide, predicted that the number of mobile phone users in Africa would reach 735 million by the end of 2012.
“We are dealing with a mostly young, dynamic target market that is becoming globally connected through the internet and mobile phones and they are understanding brands a lot more,” says De Kock. “The way we communicate with this market will have to change dramatically. Everyone will have to up their game.”
“With the massive competition for audiences and consumer spend, advertising messages are starting to fade into each other; they are becoming wallpaper. So advertising has to move from being literal to more conceptual in order to stand out.”
“Traditional media such as radio, television and billboard are still key delivery platforms in Africa and they will be for a while. But millions of Africans are now getting their messages from a variety of places. We can’t just run a television advert anymore. We have to ask how we can also start tapping into consumers’ social networks. The model being used in Africa is changing rapidly.”
De Kock says the biggest spenders in African advertising are, by far, the mobile companies, followed by financial services providers and the producers of alcohol products and fast-moving consumer goods (FMCG). The fastest growing spend is in the alcohol and FMCG industries.
As more and more multinationals arrive in Africa they will challenge local brands, De Kock predicts. “The challenge for African marketers is to build local brands to the point where they become pan-African and even global brands. There are very few pan-African brands currently that don’t come from South Africa.”
The advertising industry in South Africa is far more advanced than it is elsewhere in Africa. “We have a long tradition of advertising here and this country worked hard to box above its weight in the rest of the world.” He cites the example of Hunt Lascaris, which, from small beginnings, became not only a top agency in South Africa but internationally.
But, he says, the advertising environment in other African countries is changing. “Over the past few years, advertising in Africa has gathered momentum, the messaging is getting sharper and the production quality is getting a whole lot better. I have seen real strides being made in the industry. Some countries are much more sophisticated than others, for example Kenya where there has been a long tradition of advertising; whereas West Africa is now playing catch up. But it can be difficult to draw skilled people into the industry because it is quite intangible. It’s not like becoming a lawyer or a doctor,” notes De Kock.
Thinking locally
“You are not dealing with homogenous societies within regions, or even within countries. Foreigners have tended to regard Africa as one country rather than acknowledging the many differences in nationalities, cultures, religion and languages. The worst thing you can do when you are trying to sell something to people is to offend them by being culturally insensitive.”
The advertising industry reflects, in part, the society in which it operates. “This means you can’t adopt a one-size-fits-all approach,” says De Kock. “If you want to be relevant, you have to spend money making adverts that are particular to a market and that means you cannot re-use material that has been made for other markets. You have to invest in understanding your consumers to know what drives them and what visual language would appeal to them.”
“You need to pay attention to the cultural differences between North, East, West and Southern Africa. There are also local differences that need to be taken into account, even within countries, when developing advertising campaigns. Nigeria, for example, has more than 250 ethnic groups while in East Africa, where Swahili is widely spoken, there are variations of the language between countries such as Kenya and Tanzania.”
“You can speak to people in official languages such as English but if you really want to resonate with markets you should try to build in the local languages and regional peculiarities. Humour is something that needs to be handled carefully – what is funny in one market may not be funny in another.”
“Religious sensitivities also have to be taken into account. In many countries we would think nothing of showing men and women in bathing costumes on a beach together. But this would be a real problem in countries in North Africa for example. And even within countries you need to consider these issues because of religious diversity.”
De Kock says such factors make it crucial that multinationals operating in Africa truly understand the markets they are trying to reach. In the past, market information has been difficult to find. However, recently market research firms have proliferated, servicing companies that are competing for advantage in a crowded marketplace. “But, at the end of the day, it really helps to have a presence on the ground. No one knows a market better than someone who lives in it.”
Although he believes South African companies have a big role to play on the continent, “people from the rest of Africa have a lot to teach us about entrepreneurship. If you drive through African cities late at night, you will see many entrepreneurs hard at work, with their workplaces lit only by candles or torchlight. The sense of energy across the continent is massive, particularly in East and West Africa. Nobody stands still. They are always finding ways to make money.”
“There is no doubt things are moving and, with the developed world in trouble, investors no longer regard Africa as being so risky. There is almost a sense that if you can lose your shirt on Wall Street, Africa seems quite tame. In fact, if you’re not doing business in Africa already, you’ve possibly missed the boat.”
This article is an extract from Dianna Games’s book, Business in Africa: Corporate Insights (published by Penguin Books, September 2012).
Available at all leading book stores – R260 (US$31.60).
Dianna Games is the CEO of Africa @ Work, a South African-based company that aims to facilitate and improve business in Africa through the provision of research, information and networking opportunities. She is also a columnist for Business Day.