Digital advertising spend continues to grow, IAB reports

Digital advertising spend grew 21.5% in 2023, with revenue increasing from R14.5bn in 2022 to R17.7bn,  according to the IAB’s latest “Online AdSpend Report”. Internet advertising accounted for 39.8% of the overall advertising market in 2023, up from 36.1% in 2022. Paid search revenue increased from R11.14bn  in 2022 to R12.99bn for the 2023 fiscal year.

The annual report, prepared in partnership with PwC, measures the total revenue by domestic online media — including mobile advertising — and provides the industry with accurate and reliable data about digital advertising investment in South Africa.

The IAB has identified four key trends that it maintains will continue to affect internet advertising spend in the foreseeable future: the effects of AI, the customisation of ad campaigns, a new way of leveraging social media and the introduction of retailers as advertisers.

AI has become an essential tool for brands and marketers, helping to automate tasks like budget optimisation to generate personalised content and optimising ad campaigns. A number of brands, including 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.

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 in digital advertising.

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 reach audiences effectively without relying on traditional tracking methods.

AI offers powerful capabilities, such as using dynamic creative to ensure that ads are served at the right time with the right message to the right consumer, but privacy concerns and the ethical use of data remain paramount, which means that opt-in and opt-out visibility will continue to play a key role.

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 with 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 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 omnichannel experiences. Checkers’s omnichannel strategy is a great example, with its offers remaining consistent across its online and physical channels. 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, at which customers can generate income through buying and selling online, highlights the evolving nature of retail media in South Africa. 

The big take-out: The four trends affecting internet advertising spend in the foreseeable future are the effects of AI, the customisation of advertising campaigns, a new way of leveraging social media and the introduction of retailers as advertisers.