The recent spate of trading results from listed companies has shown the media sector to be very buoyant indeed, and Primedia, Kagiso, Caxton and Naspers have all done very nicely in the past year, thank you very much.
If one goes to the Nielsen data for adspend in 2004, we see that in fact if you didn’t have a good 2004, you’re likely to shut down in 2005. Marketers emptied out as if there was a Lotto carryover, and clearly must have had some payout to have persisted all year long. We ended up with measured adspend at R14.4-billion compared to R11.6-billion in 2003 – which amounts to a massive growth of 23,6% year on year. Six advertisers’ spend was measured to be in excess of a quarter of a billion rand – led by Unilever at R420-million, then Government, Shoprite Checkers, MTN, Pick ‘n Pay and Vodacom respectively.
All the media sectors performed well, but TV may well in 2005 overtake print as the largest grossing medium.
Clearly, among the big guns, TV is where the action is at – and I believe that as long as there is availability (and this is a scarce commodity) TV will continue to grow its share year on year, creeping up towards a ceiling closer to 45% (of total spend). If we look at the TV cake, SABC clearly dominated – SABC 1 was the largest single revenue spinner (R1,325-billion), and of the total R5,5-billion spent on the medium, they took R3,34-billion, or around 66%. E.tv managed a touch over R1.1-billion (or 20%) with the balance going to M-Net/DStv. On DStv, while sport was clearly the major money spinner, generating over one third of its revenue, the success of KykNet head and shoulders above the rest, with almost R64-million in income, is worth noting.
There was a lot of action among the smaller media types too – radio losing ground, and cinema (with its new innovative sales packages paying dividend) and internet (off a tiny base) both showing massive increases. One has to temper this by saying that both are vastly over-read, and the reality would reflect far more modest (but still large) gains.
So much for the year that was. But what about the months that lie ahead? Can we be as bullish about future growth? Well, for the next year at least I think so. We’ve seen no let up in the strength of the rand, the inflation rate remains under control, and growth is positive. The short term positive outlook is spoilt only by the level of personal borrowings sitting at an all time high – but then again, South Africans have never been known for their high level of savings, have they? In the longer term the ravaging effects of HIV/Aids, and 30% unemployment, will have to have major economic effects. But meanwhile both January and February have steamed ahead at around 20% up on 2004, and it would take the ultimate pessimist to believe the ad industry is not in for a bumper year in 2005.
Harry Herber is group managing director of the MediaShop