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Africa: a digital coming of age

Africa’s lack of internet access has been well documented in recent years. However, growing access across the continent, together with a rapid uptake in smartphone use, is spurring publishers to change direction.

As the global magazine publishing sector has increasingly grasped the opportunities offered up by digital and social channels in recent years, one region has proved an anomaly. With ongoing issues around internet access for large swathes of its population, Africa has until now retained a strong reliance on print.

 

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Africa’s internet access figures make for a revealing story. Stifled by generally low levels of computer literacy in the population, poor infrastructures and high costs of internet services, as well as scarce power availability, in 2010 only 10 per cent of the African population were internet users. For context, the figure in Europe by then was 67 per cent. In the Americas, it was 49 per cent. Fast forward to 2017 – the most recently available figures from the same source¹ – and, while the percentage of Europeans using the internet had grown to 79 per cent, Africa remained stuck at 21 per cent.

However, in the same period, uptake of mobile devices has grown considerably in Africa, opening up access to digital content, albeit in mobile form. Also, internet access in some countries – South AfricaMorocco and Egypt – is far higher, meaning publishers in those locations must adapt quicker. In South Africa, for example, the proportion of internet users is now 54 per cent.

So, what does all this mean for publishers?

 

Focus on change

Julia Raphaely, CEO of Associated Media Publishing, based in Cape Town, explains the situation in South Africa: “Online publishing has come a long way in the past 10 years in South Africa. Some publishers were quicker to adopt and hone digital-friendly processes and systems for their print publications than others in an effort to make online publishing easier and more cost-effective. There are many great success stories now, which publishers can start to share – this is a positive sign.

“There remain challenges specific to South Africa. We are a mobile-first country, with 31.18 million internet users,” she adds. “Of these online users, 93 per cent are using mobile phones. Thirty-three percent of internet users still use a mobile phone as their primary device to browse the internet. Therefore, again, the type of content we produce needs to always consider this.”

Leonard Stiegeler, a technology and media investor who has been helping establish Swiss media company Ringier on the African continent – as general manager until the end of 2018 and as a board member since the beginning of this year – agrees the market is currently undergoing great change.

“While print still holds editorial and reputational strengths across many African markets – and magazines (stronger) and newspapers (weaker) differ in their defensibility against online consumption – online, mobile and social consumption of content is largely winning across the continent now,” he says.

“This phenomenon is even more important than in other markets around the world, as many new mobile readers/users did not have access to news content prior to the establishment of the new technology. As such, news reader apps have hit Africa in the past year – and the leaders each have millions of downloads now.

“The issue here remains monetisation, however, as CPMs remain low and untargeted ads versus the power of Facebook and Google targeting remain relatively unattractive,” he adds.

Raphaely concurs: “Monetising digital content is a universal constraint we face as well. Some subscription-based online publishers have seen success with a leaky paywall, much like that of The New York Times. This signals a change in behaviour – users are now willing to pay for online news, especially if it is a bundled deal. However, the actual numbers in terms of successful conversion in South Africa are hard to come by. They are often not shared publicly or audited, so it’s difficult to measure as material. Our model includes experiences and new platforms like ‘Ready to Shop’, all in a quest to make the magazine media experience better for our audience, with the consumer front and centre.”

The rise of ecommerce in South Africa compared to global trends in first-world economies is still very small, at 1.4 per cent of overall revenue. Yet, it is estimated to reach R45.3 billion (US$3.75 billion) by the end of this year, and this figure represents a 19 per cent increase from 2017. Research released by PayPal suggests this trend could accelerate, projecting that online spend will reach R62 billion (US$4.28 billion) by 2020. The research also indicates that 62 per cent of online shoppers have used mobile devices for their purchases, resulting in an estimated R14.9 billion (US$1 billion) spend this year – around 33 per cent of the total spend. Raphaely believes that magazine media specifically can play a role as a driver here, and not a bystander.

 

 

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Advances across the region

Away from South Africa, and into other parts of the continent, Stiegeler says digital transformation is also driving change, if not as rapidly or on the same sort of scale.

“Markets that were slower in adoption – like Tanzania, Senegal and Ethiopia – are now rapidly increasing in internet users to join the hundreds of millions of young, aspiring, mobile internet users in Africa,” he says. “This is still driven by the proliferation of affordable Chinese smart phones and reducing mobile data rates.

“While basic needs, communication and entertainment are still dominating in internet usage, especially non-physical trading, transactions and services via mobile phones are increasingly prevalent as the internet matures.

“Exemplary for this phenomenon is the explosion of online sports betting across the continent and online credit and banking apps.”

 

Into the future

With Africa in the midst of rapid digital change – and the pace of change unlikely to slow any time soon – publishers must also grapple with further developments on the horizon.

One area of interest for Raphaely is the rise of podcasts. “We’re seeing the same trend as the rest of the world when it comes to podcasts,” she says. “Audio is more accessible due to the proliferation of smartphones, tablets and cars with their own OS. People are into ‘on demand’ options, such as Netflix, Showmax and Hulu. Podcasts allow you to listen when and where you want. You can multitask – listening while you drive, exercise, run, fly… whatever. All of these things, together with cheaper data and more free Wi-Fi hotspots, mean podcasts are growing rapidly in popularity.

“That’s a great area to watch for us, because as an established publisher, we already have high-quality platforms to build on, we have established promotional channels and we have existing advertiser relationships.”

For Stiegeler, as a tech investor by background, the interesting area of development going forward is around the focus for investors – and what that means for ownership in the market.

“International and investor interest in media in Africa is continuing to grow – and on the ground social media and online video continue to be unbeatable in their consumption,” he says.

“Companies like Google, Facebook, Opera and the BBC; and strategic investors like Canal+ (see IrokoTV ROK transaction) and DSTV (see IPO; see product Showmax) are intensifying their efforts in investment in content/media on the digital side – riding on a wave of massive user adoption across the continent.

“Social media use and specifically social video continue to grow rapidly with a growing, young and mobile population,” he adds. “The question for media is if it can develop and showcase investable business models for investors to tap into the massive media and entertainment user demand.”

Africa, it seems, has the most interesting times ahead of any of the global regions when it comes to the magazine media market.

[1] “ICT Facts and Figures 2005, 2010, 2017”. Telecommunication Development Bureau, International Telecommunication Union (ITU). Retrieved 2018-10-07.

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