Paula Hulley | Lead | Advertising Revenue Report | IAB South Africa | Managing Director | Digitas Liquorice | mail me |
Digital advertising in South Africa is on the rise, driven by business-oriented trends. The annual report, conducted in partnership with PwC, seeks to accurately measure the total revenue generated by domestic online media, including mobile advertising.
While we have witnessed how the digital ecosystem has become a lot more creative, driving performance and connecting with audiences to build trust, the power of generative artificial intelligence (AI), retail media and social communities continue to provide opportunities for marketers and business growth alike.
If the digital environment can remain focused on key areas of excellence then we are most likely to see sustainable growth and greater allocation of advertising investment in the years to come.
Digital growth continues as technology advances
While accelerated growth experienced in digital advertising post-pandemic stabilised in 2022, this year’s report shows a remarkable 21.5% year-on-year (YoY) growth — more than double that of the previous year. Revenue during the same period increased to R17.7 billion, up from R14.5 billion in 2022.
These growth levels are more reflective of the growth expected in the future. This year also saw an upward growth for internet advertising, which now accounts for 39.8% of the overall advertising market in 2023, up from 36.1% in the previous year. Paid search revenue also increased from R11.14 billion in 2022 to R12.99 billion for the 2023 fiscal year.
As businesses increasingly embrace digital channels to connect with their audiences, we are witnessing a significant shift in the advertising landscape. This Report underscores this trend, highlighting the substantial growth in online ad spend and the increasing importance of digital strategies for businesses. To cement IAB South Africa’s commitment to creating progression and innovation in the industry, the Council has also identified four key trends that will continue to affect internet advertising spend in the foreseeable future.
– Clare Trafankowska, Chair of the Research & Measurement Council and Head of Digital Media and Marketing at FNB.
The four key trends cover the impacts of AI, the customisation of ad campaigns, a new way of leveraging social media and the introduction of retailers as advertisers.
The impact of AI on digital advertising
AI has become an essential tool for brands and marketers, helping to automate tasks like budget optimisation to generating personalised content and optimising ad campaigns.
Major brands such as Audi, Takealot and Nando’s are already leveraging AI to improve their advertising strategies, with Takealot offering personalised product recommendations and Nando’s monitoring social media sentiment and conversations to create relevant, targeted content.
The benefits of AI are significant, however, responsible use and ethical considerations remain crucial. As AI continues to evolve, the South African government and industry stakeholders are working to establish guidelines and regulations to ensure the beneficial and ethical application of AI within digital advertising.
The importance of targeting and personalisation
Third-party cookie deprecation (i.e., the phasing out of third-party cookies) still looms, which has led to companies relying on AI to analyse user data to create highly targeted campaigns. This shift is driven by the need to effectively reach audiences without relying on traditional tracking methods.
AI offers powerful capabilities, such as using dynamic creative to ensure ads are served at the right time with the right message to the right consumer, but privacy concerns and ethical use of data remain paramount, meaning opt-in and opt-out visibility will continue to play a key role.
The influence of social media communities
Social media communities have become powerful platforms for brands to connect with consumers and drive engagement. These spaces allow participants with comfort, connection and a place to engage with their interests and like-minded individuals.
By participating in these communities, brands can leverage authentic word-of-mouth marketing, build customer loyalty and increase sales. A defining element that will ensure a strong brand presence is the authenticity of the brand content and the value offered to community members in exchange for engagement, which will be essential to avoid negative online sentiment and discussions.
The rise of retailers as advertising platforms
The growing popularity of online shopping has transformed the digital advertising landscape. Retailers are now using their platforms to reach consumers in new, unexpected ways. Brands can adapt to this trend by offering convenient features such as same-day shipping, personalised recommendations and loyalty programmes.
E-commerce platforms like Amazon and Takealot offer significant opportunities as well, however, retailers must focus on building their first-party data and providing seamless omni-channel experiences.
Checkers’ omni-channel strategy is a great example, with their offers remaining consistent across their online and physical channels while the retailer has also capitalised on its brick-and-mortar spaces to increase advertising opportunities. Additionally, the growth of township e-commerce and social media marketplaces, where customers can generate income through buying and selling online, highlights the evolving nature of retail media in South Africa.
In conclusion
The trends are key to understanding the evolution of the consumer and run parallel to our objective of servicing the 2030 customer.
Keeping these conversations top of mind is imperative and this Report remains a key component of IAB South Africa’s mission to provide the digital media and marketing industry with essential insights that support strategic growth and development.
For in-depth data and analysis, the full Online Advertising Revenue Report, conducted by PwC (‘Online AdSpend Report’), is available to IAB South Africa members on the IAB South Africa Member Portal.
Related FAQs: Digital advertising growth trends
Q: What are the current trends in the digital advertising market?
A: Current trends in the digital advertising market include a significant increase in mobile advertising, a rise in video content consumption and the continued growth of social media advertising. As businesses adapt to changing consumer behaviours, these trends are shaping advertising and marketing strategies.
Q: How has the pandemic affected the digital advertising market?
A: The pandemic accelerated the growth of the digital advertising market, as more consumers shifted to online platforms for shopping, entertainment and information. This shift led to increased digital advertising spend, particularly in sectors like e-commerce and digital services.
Q: What is the growth rate of social media advertising?
A: Social media advertising is experiencing a robust growth rate, with platforms like Meta leading the charge. The rise in user engagement and targeted advertising capabilities has made social media an essential channel in the advertising industry.
Q: What are the key players in the digital advertising market?
A: Key players in the digital advertising market include major social media platforms, search engines and programmatic advertising networks. Companies like Meta, Google and various DSPs (Demand-Side Platforms) play a significant role in shaping the market dynamics.
Q: What are the trends analysis reports indicating for digital marketing in the next few years?
A: Trends analysis reports indicate that digital marketing will continue to evolve with a focus on personalisation, data-driven strategies and the integration of artificial intelligence. These factors will drive the advertising spending and influence the overall marketing and advertising landscape.
Q: How does video advertising fit into the digital advertising market?
A: Video advertising is becoming increasingly important within the digital advertising market due to its high engagement rates and effectiveness in conveying brand messages. With the rise of video content on social media platforms, brands are allocating more of their advertising budgets to video advertising.
Q: What is programmatic advertising and how does it impact the digital advertising market?
A: Programmatic advertising refers to the automated buying and selling of online ad space. It has a significant impact on the digital advertising market by increasing efficiency and allowing advertisers to reach their target audiences more effectively, ultimately driving higher returns on advertising spend.
Q: What are some common challenges faced in digital advertising?
A: Common challenges in digital advertising include ad fatigue among consumers, ad-blocking technologies and the need for constant adaptation to changes in algorithms on social media platforms. Advertisers must continually innovate to overcome these obstacles and maintain engagement.
