Conference special – Monopoly and high cost of commercials production hold back broadcast

Investment

Speaking at the 1st African Broadcast and Film Conference in Nairobi last week, the Nation’s Ian Fernandes pointed out that two issues were holding back the development of broadcast TV in Kenya and elsewhere. It is extremely expensive to produce TV commercials: a 30 second spot costs one eighth of the cost of a full page ad in a newspaper.

Toyin Subair of HiTV pointed out that many Nigerian companies get their commercials made outside of Africa. (One of the leading Nigerian-owned telco operators flew in Saatchi and Saatchi to get its made.) These skills will not grow unless broadcasters put more work into an independent sector rather than keeping it all in-house.

Also Kenya has a particular problem in that a great deal of buying decisions are focused in one group of commonly-owned ad agencies:”They demand as much as 30-40% of the advertising rates charged. There is a lack of collaboration amongst broadcasters to put a stop to this.”

Steadman’s Joe Otin told the conference that Africa constituted only 1.4% of global advertising revenues but that it was growing much faster than elsewhere with a regional growth of 19.6% last year. He pointed out the existence of a “two-track” Africa: a fast growth group of countries and 25 countries that are very poor and unstable. East Africa grew by 30% last year and 38% the year before. (Figures are based on rate card and do not take account of discounting.)

Chris Kirubi, CEO, Capital Radio pointed out the dangers of fragmentation:” The more stations, the less advertising to run a station.”

Ian Fernandes was only the first amongst several speakers and contributors to call for better research to give advertisers good information about what programmes are being watched:”Most spots are concentrated around news programmes….you cannot (currently) justify higher rates around local content.” There is need for the equivalent of the UK’s BARB or RAJAR audience tracking systems to provide up-to-the-minute market intelligence. So have pity on Kije Mugisha from Rwanda TV whose country has no serial audience research work of any kind but backed the need for it.