Where the advertising money goes

Unilever has become the first brand in SA to surpass R2bn in advertising spend in a year — a clear sign, according to one media strategist, that 2021 was the year of the great recovery.

Marketers’ rates for advertising (rate-card spend) on traditional media — not on digital and online media — is revealed in SA Nielsen’s advertising spend report.

"The big takeout is the extent of the bounce-back we saw in 2021," says Chris Botha, group managing director of Park Advertising, which has the media buying house The MediaShop in its stable.

"All advertising spend in SA totalled R47bn in 2021, up by a huge 29% from the R37bn spent in 2020.

"And when the 2021 data is compared with advertising spend in 2019, the number is still a very handsome 16% ahead."

Media commentator and strategist Gordon Muller of GSM Quadrant says one should not get overly excited about the big numbers.

"Reviewing adspend at rate-card level without factoring in discounts is a bit like conflating Smarties and calories. There are 70 calories in a 45g box of Smarties, but only 15 Smarties. And it is the same when it comes to adspend reflected at rate-card level versus actual media cost.

"Of course, this does not alter the pecking order among the top 30 advertisers. As strategists, what we are really interested in is relative advantage in terms of volume of exposure against a supposed audience — share of voice, not share of nominal rate-card cost."

Botha says 2020 was a tough year for the marketing industry, with advertising spend declining by R5bn.

He points out that as many retail outlets were closed the industry took a serious knock.

The biggest category of advertising spend remains retail advertising. But the big jump came in the fast-moving consumer goods (FMCG) categories. Advertising on food (up by 66%) and home care (up by 36%) were the major contributors.

Unilever, one of SA’s biggest FMCG companies, was SA’s biggest advertiser of 2021, followed closely by Shoprite and GlaxoSmithKline.

Botha says the top 30 advertisers in SA accounted for 40% of all advertising spend, with the top three advertisers accounting for 10% of the total.

He says: "To put these numbers in perspective, the top 30 advertisers in SA spend R56m a day on advertising."

Botha says it’s important to bear in mind that the research does not measure advertising spend on digital media such as Google, Facebook and Twitter. Sixty-eight percent of all advertising spend is placed on television, followed by radio with 16% and print with 11%. Botha says the high-penetration platforms like the SABC TV channels, DStv and e.tv remain appealing to advertisers.

Some platforms are under pressure because of changing media habits brought on by the pandemic — these include outdoor billboards and print, Botha points out.

Muller tells the FM that to fully understand the dynamics of media investment, "we need to factor in the invisible media investment going into the all-too-visible digital and social media platforms". Anecdotal insights would put that at about 30% relative to global patterns, which seem to be plateauing at 50%. That is why it is more useful to focus on more tangible parameters like seconds of advertising than gross costs.

So what is the outlook for advertising in 2022? Botha says: "The consensus is that the market is recovering and business is fighting back. We expect advertising spend to continue to grow into 2022 and 2023.

"As digital platforms’ share of the pie grows, traditional media owners will remain under extreme pressure."