Freakonomics local style: Part one

I’m in the middle of a book called Freakonomics and, as usual, when reading something that interests me, I tend to apply what the author is discussing to what’s relevant in my everyday life. One of the key points in the book refers to asking the right questions. Someone who can ask really good questions can come up with some interesting suppositions. I’m not going to try and beat or even equal the questions in Freakonomics, but will apply some questions to our local on-line advertising industry. Let’s go with the following;

Why is the internet advertising spend in South Africa is one sixth that of Switzerland or even Belgium, when we share similar audience sizes? Why do brand marketers keep telling me that on-line reach in SA tiny?

To keep you reading, according to Zenith research in 2007 there were five and half million internet users in Belgium and annual online advertising revenues of two hundred and thirty six million US dollars. Compare that with our five million users and thirty million US dollars. Similar comparisons can be shown for Portugal, Greece, Norway, Finland and many more…

For part one, I will address the question of online reach. The answer is both simple and two fold: A lack of education and not enough fear! So many marketers in South Africa are clueless. Would you believe that nine and a half out of ten marketing people I speak to have no idea how many taxpaying South Africans SARS has on its books? But they will happily tell you that there are 48 million, or so, South Africans. This is the number they think about when they plan their businesses and their sales forecast. Problem? They are in the business of selling products that only someone earning more than R5,000 could ever afford.

What does this tell us? Simple: That these people are basing their business on the premise that the economically active audience in SA is many times larger than it is. Bad news folks — it’s not. The number is in fact 4.6 million tax payers. So if you add back in people evading Trevor Manuel’s effective collections, the youth and the elderly population, I would doubt that the upper income marketplace is much more than 7 million.

So what’s my point? Simple, so many people in marketing jobs in South Africa are out of touch with the actual size of their potential market, and if this is the case, how can one expect them to understand the value of the internet medium fully. It is far easier to jump on the “internet reach is small” bandwagon than to invest time in learning to this tackle this new medium and to make it work for them. As the cliché goes, “no one was ever fired for running a TV campaign”.

I’m not here just to criticise our marketers however, in fact I believe that South Africa boasts many seriously switched on marketers who get snatched up whenever they venture beyond our borders, it’s just that the fear of being left behind in the on-line world has not hit SA like it has in many other markets, so our people have not felt the need to invest more energy in their own upskilling. I bet that if they got a sneak peak at the numbers and business success of local companies in SA who truly are using the internet medium properly, they would be rushing out to buy every book and attend every conference on they could.

[Now for a quick plug; If you want education and don’t know where to start just drop Theresa at the (online publishers association) OPA a mail and she’ll get you started [email protected].]

I’m not one to fall prey to hysteria or panic, but I will admit to feeling at a loss every time I am in Europe and get exposed to how far behind we often are when it comes to the use of the on-line medium, that fear drives me to learn more quickly.

My closing point to question one? Simple. Our internet market is in fact big, so the only reason the adoption rate amongst advertisers is relatively low is a lack of fear, a resultant apathy and therefore lack of education. But I tell you what, the medium is here, the tools and the education are readily available and it is only a matter of time before a CEO realises that spending fifty grand on thirty seconds of airtime seen by only a fraction of his potential market is madness. Maybe then he will fire the clueless employee who spent his money!

More to come! We still have the first question to answer…