Mobile driving brand communication in Africa, says Ole! Media boss
Mobile is a big opportunity for the advertising industry and it will transform how brands engage with consumers.
Mobile advertising is gaining increased traction across Africa as brands and agencies attempt to reach the continent’s 781m mobile phone subscribers.
A 2011 research report titled The Global Online and Mobile Advertising Industry Outlook predicted the US$2bn global mobile advertising industry would experience dramatic growth in emerging markets where mobile phone adoption has grown exponentially over the last decade.
Tim Legg, CEO of digital media company Ole! Media Group, says mobile is a big opportunity for the advertising industry and in coming years it will transform how brands engage with consumers.
“Everyone has got a personal content consumption device in their pocket, they are reachable, they can be profiled and we have to come up with ways of engaging that audience either through content or through compelling advertising campaigns. We can see there is a huge opportunity… particularly in Africa.”
According to Legg, most brands and agencies in Africa are not yet fully maximising the potential of mobile.
“I think there is an innate conservatism in that industry and at the moment digital, and mobile in particular, is still seen as an add-on and not a mainstream channel. I think in the next five years we will see a total transformation around how people communicate with consumers and a lot of that will be driven by mobile.”
While it won’t kill traditional advertising, Legg says mobile marketing “will take a bigger portion of advertising budgets and mobile will be integrated into every single campaign”.
Ole! Media Group owns and manages various subsidiaries within the digital media arena. Its subsidiaries include TEAMtalk media, a digital sports network and news syndication agency, MobiMedia, a digital and mobile marketing and media agency, and AddSwitch, a digital advertising sales house and technology provider.
Speaking to How we made it in Africa on the sidelines of the Mobile Web East Africa conference in Nairobi, Legg noted that in five years digital advertising spend in Africa will increase to well over 25% from the current estimates of between 2% and 5%.
Originally from the UK, Legg relocated to South Africa where he started MobiMedia. Married to a South African, Legg and his family lived in Holland and Germany for two decades before moving to Africa.
The land of opportunity
“We could have stayed in Germany but it was boring and we saw Africa as a land of opportunity and something new and challenging. I think we probably went in with rose-tinted spectacles. We thought it would be easier than it was and it took us five to six years to really establish ourselves properly in the African business world. It’s really only in the last [18 months] that we have made the breakthrough.”
Legg notes that initially he underestimated “how difficult it is to set up a business as a new kid on the block”. It took a while to get to know people and build up levels of trust and confidence.
“It didn’t occur to me to give up. I didn’t have a job so I just kept going. We were doing well enough to survive and we were lucky that we had some savings behind us so we could afford to invest. But look, it’s paid off. I think we have built something of value.”
Ole! Media Group currently employs 70 people in Africa and has offices in Cape Town, Johannesburg, Nairobi and London, with representation in Germany and New Zealand.
“This year we are predicting revenues of about $5m which really for a company that is five years old is quite a good going.”
Thinking globally
Ole! Media serves clients within and outside the continent, something Legg explains was “a common sense approach that generates revenue for Africa”.
“Business is all about managing risk. We felt it was sensible to have multiple revenue streams and not to be dependent on one market.
The other thing is we have got some great skills in Africa and we can provide services from Africa back into Europe and into the UK.”
Legg explains that with increasing connectivity with the rest of the world, more African businesses are better placed to offer products and services to Europe.
“Africa is an ideal [because we are in the] same time zone, most people have an English language education [and] so, the standard of English here is much higher than in Eastern Europe or even India.”
Legg notes that African businesses expanding across the continent need to know and understand the culture, customs and work ethic in their host markets.
“If you are an entrepreneur and you are looking to expand into a new country, don’t act like a foreign company, act like a local company.”
Challenges and risks
The group recently signed its first contract in Kenya and is looking to lock in some more business. However, finances pose a challenge.
“There is almost so much opportunity and we can’t expand fast enough with the resources that we have at our disposal,” says Legg. “But we are reluctant to borrow money and we are reluctant to go to private equity companies or VCs because we don’t want to relinquish control. We don’t want to be dictated to by faceless financiers. If we want to go and raise funding we want to do so from a position of strength.”
When starting a business, Legg says, one should look at how it is going to make money, know the business drivers and work out a realistic strategy.
“It has got to be realistic. I have seen so many business plans which are hockey sticks. You need to have a gradual growth,” he says. “If something is not working be prepared to let it go… and try something else. Always try to live within your means. Above all, don’t give up.”
Legg says a common mistake young tech-entrepreneurs make is to build businesses without a clear plan on how they will monetise, hoping that if they build it people will come.
“When the money runs out entrepreneurialism flies out of the window… you can’t ignore the finances.”
Understanding Africa
Legg notes that “Africa is now becoming hot”, adding that coming here five years ago gives him an advantage over other investors who are now realising the potential in the continent.
However, foreign investors should be aware of the risks of doing business in Africa such as currency volatility and political instability in some countries.
“The markets are [also] much smaller in terms of what can be achieved from a revenue perspective. If we achieve $5m we think, ‘wow that is great’. But our equivalent in the UK would probably be nearer $50m. So the financial scale is smaller.”
While the solution would be to target regions as opposed to individual countries, Legg warns that investors should not “treat Africa as one”. Companies need to understand what features are common across the continent or region and understand what works in individual markets.
“Things that work in one country may not work in another. For instance, BBM is of no interest to Ghanaians but it is big in Nigeria. We also know that Barclays Premier League is popular across all of Africa, but in South Africa the local league is more popular. There is not a one-size-fits all strategy.”