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Virus hits adverts, cuts expenditure by Sh25b

By John Otini
Wednesday, September 30th, 2020
Media personnel at work. Photo/Courtesy
In summary
    • KCB Bank, East Africa Breweries Ltd cut the budgets for adverts by more than half as gambling companies fought to recover from government crackdowns that started last year. Betting firm Lotto slashed Sh2.8 billion from its ad spend.
    • All the three media platforms registered a significant drop in revenues, however, TV advertising began to recover in May as businesses started to adjust to the new normal.
    • A sharp drop in outdoor advertising due to the virus lockdowns saw outdoor advertising agencies suffer as analysts reckoned that digital advertising could eclipse outdoor ads in a historic shift.

Spending on advertising dropped by Sh25 billion in the first half of the year as Kenya’s leading corporations froze spending due to the coronavirus pandemic, the latest data shows.

Data from consulting firm Reel Analytics shows Safaricom, the largest advertiser  in the local market, slashed its overall spending on ads by Sh12 billion this year compared to 2019.

KCB and East African Breweries Ltd (EABL) cut the budgets for adverts by more than half as gambling companies fought to recover from government crackdowns that started last year. Betting firm Lotto cut Sh2.8 billion from its ad spend.

“All the three media platforms registered a significant drop in revenues, however, TV advertising began to recover in May as businesses started to adjust to the new normal,” Reel Analytics says.

This cut in advertising expenditure was, however, slightly mitigated by the Sh8.2 billion campaign by the Ministry of Health on Covid-19 awareness campaigns.

A sharp drop in outdoor advertising due to the virus lockdowns saw outdoor advertising agencies suffer as analysts reckoned that digital advertising could eclipse outdoor ads in a historic shift.

Outdoor advertising agencies such as Magnet Ventures, Alliance Media were the most affected as the number of billboards on highways dropped.

Newspapers were the largest casualties followed by radio with TV suffering the least impacted as acres of advertising real found fewer buyers except for the Ministry of Health and Safaricom.

Digital advertising on search engines and websites rose sharply with foreign tech companies such as Google and Facebook emerging as the winners.

Analysts say that this year’s digital ad spend could overtake spending on traditional media for the first time, a historic shift in market share that has been accelerated by the coronavirus pandemic

“East African Breweries was the biggest outdoor advertiser in 2020 with Sh126 million down from Sh243 million in 2019, while Safaricom followed with Sh62 million compared to Sh182 million the previous year,” said Josiah Kimanzi of Zeros & Ones, a Nairobi- based digital adverting consultancy.

Spending threshold

Cocal Cola spent Sh52 million on outdoor adverts compared to Sh116 million last year with real estate Hass Consult spending Sh28 million.

Glaxo Smithkline is the only firm whose ad spend remained unchanged at Sh1.2 billion while Coca Cola cut its ad spend by Sh1.5 billion. 

The Ministry of Health is the only agency whose ad spend increased this year from Sh100 million to Sh3 billion.

Advertising on traditional media such as television, newspapers and billboards will fall by 20.7 per cent, even after including revenue from their own digital advertising products.

The communications sector, finance and betting and gambling were the biggest advertisers over the period.

Safaricom Skiza tunes continued to dominate other campaigns since last year with the government’s Kazi Kwa Vijana coming second. Safaricom’s Lipa Na M-Pesa was the third largest promotion.

Since the lockdowns began, companies have tried to slash costs and move to online marketing, that is more targeted towards purchases rather than promoting brands.

Spending by small businesses is an increasingly important part of the ad market and is “primarily responsible for driving digital advertising above the 50 per cent spending threshold. This disproportionately hit broadcasters and publishers, even though the audiences rose sharply. 

Many of the multinationals said this month that they planned to further delay campaigns by about six months.

The drop in outdoor advertising also hurt the revenues of town councils, especially Nairobi.

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