Adworld Explores Final Frontier: Africa, 'Continent of Opportunity'

Marketers, Agencies Seek on-the-Ground Support in Fast-Growing Ghana, Nigeria and Angola

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NEW YORK (AdAge.com) -- When WPP's Ogilvy & Mather struck a deal in late April with global communications group Scangroup Limited, it was a clear sign that the world's-largest holding company has officially set its sights on advertising's last frontier: Africa.

"Increasingly, Africa is the continent of opportunity, rather than war, disease and poverty," the company, which has spent the last two decades conquering Asian markets, wrote in its last annual report. Indeed, Miles Young, Global CEO of Ogilvy & Mather, said that with many African countries developing middle classes, "they are assuming the characteristics of Latin America and Asia as they were 20 years ago."

The World Cup, hosted by South Africa, is speeding up global investment in the continent.
The World Cup, hosted by South Africa, is speeding up global investment in the continent. Credit: Marc Atkins

The focus isn't a surprise given that multinational marketers such as Henkel, Procter & Gamble and Unilever, seeking new revenue opportunities, are scrambling to make inroads in the region with agencies trailing behind them. And then there's a matter of a certain soccer tournament stirring up interest. "The World Cup has sped things up as well and put the spotlight on our country, attracting more participation by multinationals," said Michael Gullan, managing director of Gullan & Gullan/ICOM in Johannesburg.

But satisfying client needs on the continent is easier said than done. Marketers want a presence in Africa beyond the relatively mature South African market or other established ones like Egypt and Morocco in North Africa. They are seeking truly pan-African, on-the-ground marketing support in a sprinkling of fast-growing markets such as Ghana, Nigeria and Angola.

Until now, Western agency networks that have been on the continent have largely operated out of South Africa, leaving many unfamiliar with the individual (and often arbitrary rules) imposed on foreign investors in each country. Language considerations are plentiful, too, as primary languages range from French to Portuguese, Arabic and English. Other challenges include the unrest, poverty, governmental corruption and poor infrastructure issues that plague pockets of the continent in places such as Tunisia, Sierra Leone, Mali and Niger -- though foreign investment dollars from Asian countries such as China and Korea are helping.

Credit resources
"Africa is only really coming into its own at the moment, and that's primarily because of its resources," said Reinher Behrens, head of Africa operations for Interpublic Group of Cos.' McCann Erickson. Along with Ogilvy and to some extent Omnicom Group's TBWA, McCann has one of the better-developed U.S. based networks in the region.

Mr. Behrens has observed China and Korea increasingly investing in Africa in return for oil, iron ore, food products and land available to grow certain crops to export back to their countries. "It brings in a lot of resource and infrastructure development -- and that's where there's an opportunity for business, including the ad business," Mr. Behrens said. For advertisers, some of the biggest opportunities lie in the financial sector and in telecommunications as local African bank brands leave their respective countries to spread throughout the continent and the mobile phone becomes rampant. "As the money starts flowing down into the man on the street's pockets, retail becomes important from a spending point of view," Mr. Behrens said.

Some of the global package-goods players, including Unilever, Colgate-Palmolive Co. and Henkel, have long had well-developed businesses in South Africa, but those companies as well as Procter & Gamble Co. say they are turning their attention further north in Sub-Saharan Africa. Laundry bars and powders are frequently leading-edge products in less-developed markets for the global consumer products companies (see related story, P. 8) and Africa is no exception.

"We have a large business in the South African market, where we tend to have very large market shares and a strong tradition," said Randy Quinn, exec VP-global laundry of Unilever. "We have modest-sized businesses in some of the less-developed markets as you get into central Africa, which are markets that are still dominated by local players and don't have a lot of international companies."

P&G, as it advances Chairman-CEO Bob McDonald's drive to add a billion additional consumers to the ranks of its brand customers in this decade, has stepped up its focus on Sub-Saharan Africa, too. Online job listings show the company staffing up in everything from brand management to manufacturing and R&D in Nigeria in recent months. The company last month added a new production line to produce Always feminine products at its Ibadan plant in Nigeria, originally opened in 2002 to produce Pampers diapers, and also sells Ariel detergent and Vicks medicine in the country.

"Clients are now starting to think of Sub-Saharan Africa as viable," said Y&R's Mr. Young, who said that for the new Ogilvy Africa venture, one of the most important markets is Angola. He noted that the country is "developing fast, reasonably stable, and has an oil market."

In terms of the most common media mix for marketers, outdoor and radio are still huge, and to a small degree, so is print advertising. TV is a key medium in urban areas, and the web less so in all but a few markets -- Rwanda is one because it has placed a premium on broadband access.

The biggest opportunity for advertisers lies in mobile, which for many Africans is replacing the personal computer. In a country like the Democratic Republic of Congo, the use of mobile cellular services has surged and subscribership in 2008 approached 9.3 million -- roughly 15 per 100 persons. Today it's approaching nearly 50 per 100 persons, according to the CIA Factbook.

Another prospect is Ghana. It is seeing some stabilization of its government, as evidenced by President Obama's visit last year to the country, which effectively endorsed the new administration.

The stability has given encouragement to marketers, said Wale Adeoye-Famosa, managing director and CEO of Primus Advertising Ltd./ICOM in Accra, Ghana. "As far as major multinationals stepping up their presence in Ghana, some of them are Unilever, Guinness, Mobile Telecommunications Network -- a major voice and data network -- and Vodafone," he said. Airlines are also entering the country, such as Virgin Atlantic last month and Brussels Air.

Mature markets
Markets in the North, such as Egypt and Morocco, are comparatively mature -- according to Dataxis Intelligence, ad spending reached $562.1 million in the latter market in 2009 -- while South Africa has long been the most advanced in the region. But that doesn't mean there isn't room for growth.

As the South African economy moves online, new-media advances are offering opportunities for global marketers. Facebook usage is growing, as is mobile technology with the growth of user-friendly mobile apps such as MXit (pronounced "mix it"), a free instant-messaging app that runs on both phones and PCs. Just last month, Google launched a South African version of YouTube, the first localized version in all of Africa.

Some African countries that still present major challenges? Mozambique, for one, and Tunisia, which has above-average internet access but also suffers from government interference. Sierra Leone is poor, as are landlocked Niger and Mali, the latter of which is mostly desert. Eritrea's combined fixed-line and mobile-cellular subscribership is only about 3 per 100 persons, according to CIA figures.

With so much growth so fast across the continent, there are several promising possibilities for marketers, but it requires battling local players and not every market is an opportunity -- yet.

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