South Africa: Mercury Plans to Lift Its Turnover to R1bn

Investment

Media buying company Mercury Media hopes to boost turnover from R464m to R1bn within the next three years as it continues its drive to attract more private sector clients and "take the company global", chief operating officer Morne Ebersohn says.

Mercury Media is one of the first majority black-owned media buying houses -- and the first new entrant in 10 years in an industry renowned for its tough barriers to entry. Ebersohn says turnover has grown from R250,000 in 2003 to R464m last year. Part of its success has been an ability to attract and maintain clients with significant billings, such as the Government Communication and Information System , which acts as a centralised media-outsourcing agency for 28 national government departments

Less than 40% of turnover, says Ebersohn, is derived from government business. This follows a strategic decision taken two years ago to reduce reliance on public sector revenue. A challenge the company has had to overcome was the incorrect perception in the market that because Mercury does a lot of work for the government it is unable to take on private sector clients as well.

"Although we're not too perturbed about this because the government is a solid client, we have successfully increased the proportion of private sector billings," says Ebersohn.

Mercury's strategic approach is two-pronged, the other aspect being the fresh perspective it has brought to the business thanks, ironically, to its later start in the industry. For instance, the agency works with its clients to establish a media strategy. Ebersohn says : "Previously the government used to spend a lot of money just on print advertising, which is often not accessible to large portions of the population in the lower income groups.

"Through our strategic advice, they are now not only targeting the right media, but we estimate that the bulk media buying deals we have been able to negotiate have saved the government in excess of R250m," says Ebersohn.

Another innovation for the industry was Mercury's establishment of subsidiary Pink Advertising, a first-of-its kind specialist agency that targets the gay community. Always on the lookout for business opportunities to grow their offering, gay magazine Wrapped has also been added to the stable.

"Typically we would not invest in media outlets, but this is a specialist publication and we needed some kind of professional media outlet to cater for this market," says Ebersohn.

"One can't only rely on classical media anymore. The 30-second television commercial may not be successful over the long term as audiences are becoming more fragmented, " he says.

"For example, we launched a gay social networking site as part of our strategy to explore new opportunities in the digital media, and by that we don't mean banner advertising."

Business Day (Johannesburg) 17 April 2008