The Kenya Forum | Kenya's New Age in Advertising - The Kenya Forum

October 18, 2022

Summary

Spending on internet advertising will continue to outstrip spending on more traditional advertising method

More by Correspondent

Kenya’s New Age in Advertising

Kenya’s New Age in Advertising

Image courtesy aqusagtechnologies.com

Internet advertising to see the biggest growth in Kenya’s Entertainment & Media industry…

The internet advertising segment of Kenya’s Entertainment & Media (E&M) industry is predicted to see the largest growth in spending of all E&M segments over the next four years. This is according to PwC’s latest Africa Entertainment & Media Outlook for the years 2022-26.

The analysis and consultancy company’s Outlook uses past and present developments – socio-economic, technological and developmental – to posit projections on the shape and evolution of the industry. The Outlook presents the future of consumer and advertiser spending in such a way as to give interested parties an insight into where greatest growth (or lack thereof) might be observable.

With a projected compound annual growth rate (CAGR) of 24.4% over the following four years, spending on internet advertising will continue to outstrip spending on more traditional advertising methods. At that rate, internet advertising will be the fastest growing area of Kenya’s E&M industry.

Kenya’s spend on internet advertising reflects a shift in industry priorities

With the focus of the report’s analysis on advertising as it exists within the E&M industry as a whole, only internet, television and ‘out-of-home’ advertising are considered as their own segments of the industry. Spending and revenue generation within the sectors of radio and newspaper/magazine adverts are not considered specifically. They are, instead, assessed only as a part of the net spend within ‘music and radio’ and ‘newspaper and consumer magazines’.

So, without the benefit of directly comparable industry statistics on spend between internet advertising and, say, radio advertisements, we have only TV and ‘out-of-home’ as our comparable others in the consideration of where advertising money will be going over the next few years.

$98 million was spent on TV advertising in 2021

Industry spending on internet advertising in Kenya only outstripped TV advertising last year. According to PwC, $98 million was spent on TV advertising in 2021. That is up from $93 million the year previous. Internet advertising, saw a jump to $144 million from $89 million over that same timeframe.

Despite that this might be considered a slow start for Kenya’s growing internet advertising sector (South Africa’s spend on internet adverts was even outstripping that which they spent on television advertising in 2017), PwC’s analysts predict such a rapid increase in sector spend that, by 2026, Kenya’s total spend on internet advertising will be $429 million.

It is this huge increase that gives Kenya’s internet advertising segment the 2021-26 CAGR of 24.4%. In comparison, spend on tv advertising will only grow to $132 million, thus reflecting a CAGR of 6.3%.

Growth driven by more mobile phone use, greater internet penetration and changing consumer behaviour

Following global trends, in Kenya, “mobile display will be the largest contributor to overall revenue added to the [internet advertising] segment through to 2026”. That should surprise no one. Considering that the everyperson, the world over, spends an increasingly large amount of their time on their phones, it is easy to see the importance (and revenue-generating capacity) of a product’s being eyeballed on a phone screen.

Couple that with the growing affordability of smartphones and the fact that internet penetration is expected to rise to 56.4% of the Kenyan population in 2026 (it was 46.4% in 2021), and this sub-sector’s importance to total revenue is evident.

This, combined with the globally observable shift away from in-store purchases and toward e-commerce options – Jumia, as the greatest example here in Kenya – is PwC’s explanation behind their prediction that Kenyan companies will increase their internet advertising budgets over the next four years.

For access to PwC’s Africa Entertainment and Media Outlook 2022-26, follow this link (sign-up required)

TAGS

Related Articles