Ad giants target Africa

25 October 2010

JOHANNESBURG: Major advertising companies including WPP Group, Publicis Groupe and Omnicom Group are seeking to raise their profile in Africa.

According to research firm eMarketer, adspend in Africa and the Middle East currently stands at $14bn (€10bn; £12bn) a year.

While only representing 2.9% of the $482.6bn global total, these regions are among the fastest growing, anticipated to achieve a 3.5% share by 2014.

"All of our major clients, as they are looking for geographical expansion opportunities, have Africa and the Middle East high up on their priority list, if not at the top," Sir Martin Sorrell, ceo, WPP Group, told the Wall Street Journal.

Africa delivers $500m in annual revenue for WPP, measured against $150m four years ago, having been bolstered by acquisitions.

"People say it's small, but $500m is the same as [WPP makes in] India, about half of China and the same as Brazil. And it's growing very rapidly," said Sorrell.

Moreover, the cost of acquisitions in Africa has not yet soared as in other key markets.

"We aren't seeing the insanities there that we are seeing in Brazil or in digital in the US. But it will get, I'm sure, more competitive," Sorrell continued.

Until recently, much activity was centred in South Africa, where advertising expenditure levels should reach $4.7bn in 2010, per ZenithOptimedia.

However, many local and multinational brand owners are now focusing on Nigeria, Angola, Kenya and Ghana.

Omnicom Group is equally ambitious, with TBWA planning to expand into Nigeria, Ghana, Uganda and Mozambique.

Patrick Ehringer, president, Middle East and Africa for DDB Worldwide, also intends to "bulk up in Nigeria, because of the volume of business that is going on there."

Working in Africa sometimes proves challenging, as poverty and corruption occasionally lead to political unrest. Language and cultural differences can also make communications labour intensive.

In Nigeria, for example, campaigns often have to incorporate five languages, meaning finding sufficiently talented staff can be difficult.

Despite this, Bharat Thakrar, chief executive of East African marketing company Scangroup, is optimistic: "Risks have become fewer... in recent years; there is a lot more law and order now."

Kofi Amoo-Gottfried, nephew of former United Nations secretary general Kofi Annan, is running a unit for Publicis in Ghana.

"The idea was to move away from the affiliate model to a fully owned agency model," he said.

"Fifteen months after Kofi started to set up shop, we already have higher revenue in Ghana than in South Africa," added Richard Pinder, coo, Publicis Worldwide.

This office boasts a roster featuring Nestle and Vodafone, and functions in one of four key nations identified by Publicis, the others being Morocco, Kenya and South Africa.

Havas also has an "Africa Project" with operations in Tunisia, South Africa, Nigeria, Kenya, Ivory Coast, Cameroon and Senegal, servicing clients including L'Oreal and Hyundai.

Fernando Rodés Vilà, Havas' ceo, believes Africa will generate between 3% and 4% of the group's annual returns by 2012, compared with just over 1% today.

Data sourced from Wall Street Journal; additional content by Warc staff