Fertile frontiers: Changing regulations and better audience targeting are generating new opportunities

Sub-Saharan Africa is a major potential market for advertising, and Côte d’Ivoire is no exception, although recent years have proven difficult for the industry. The 2011 conflict inflicted heavy damage on the sector, costing advertising businesses CFA12.24bn (€18.4m) and resulting in the destruction of almost 30% of the country’s outdoor advertising panels. However, the return of political stability, economic growth, increasing urbanisation and a burgeoning middle class are all factors that are helping to entice investments from major multinationals like Nestlé, Danone and Coca-Cola.

In particular, increased purchasing power among the growing youth population is expected to spur consumer demand for sectors such as telecoms, food and beverages, and retail, fuelling the need for innovative advertising strategies. New regulatory initiatives such as the upcoming liberalisation of the audio-visual sector also promise to boost competition among television channels to attract advertising revenues, offering more opportunities for local firms to advertise for less. The recent lifting of restrictions on advertising for religious radio channels has enabled advertisers to better target selected audiences, while the enforcement of regulations surveying the outdoor segment will boost profits and enhance the quality of advertising panels. Although internet and mobile advertising activities remain limited, improvements in internet connectivity and purchasing power will assure the growth of new markets. Speaking to local media in 2011 during the establishment of pan-African advertising agency Ogilvy Africa, Miles Young, global CEO of Ogilvy & Mather, said, “I passionately believe that sub-Saharan Africa is one of the last great frontiers in global communications – and that it will be one of the most fertile.”

SECTOR ORGANISATION: Since 1980, Côte d’Ivoire has enjoyed strong activity in its advertising sector and attracted a growing number of communication firms. Currently, 26 agencies are authorised to work in the sector by the Superior Advertising Council (Conseil Supérieur de la Publicité, CSP), but an undefined number of informal agencies also perform advertising activities, heightening sector competition. “The advertising sector is very competitive, and although smaller-scale companies have a much harder time acquiring the clients with sizeable budgets, many small agencies offer advertising for smaller local clients. Everyone is finding their niche in the market,” Mohamed Sylla, responsible for research and business intelligence at Voodoo Communications, told OBG.

Before 2000, the advertising market was dominated by international advertising agencies like Ogilvy, but with the disruption of the market with the crisis, many small local companies were encouraged to enter the sector, performing traditional advertising work and then branching out into promotional work. Today, more advertising agencies work in promotional activities such as event planning than in traditional advertising. Major actors include foreign-owned firms McCann Erickson and Océan Olgivy and Ivoirian-owned Voodoo Communications, with the latter known for its management of President Alassane Dramane Ouattara’s election campaign and the major telecoms operator, Orange.

MAJOR TRENDS: An estimated 30% of local economic actors advertise their products or services, with approximately 70-75% of the country’s advertising market accounted for by Abidjan, a trend furthered by massive refugee flows to the city during the crisis. “In the interior of the country, there isn’t much going on in terms of advertising as it is a largely rural setting and purchasing power is much lower. At the same time, it is harder to communicate to people in the interior regions – newspapers are not always distributed every day, and limited purchasing power translates into the radio being the most effective means of communicating beyond Abidjan,” Jean-Paul Enoh, responsible for operational marketing and events at Vitamines, told OBG.

Between 75% and 80% of products advertised are international brands, although local ones account for around 50% of outdoor advertising. Major multinationals active locally include Nestlé, Orange and Coca-Cola, making for tougher competition for Ivoirian brands. “Many local products are not very well branded relative to well-recognised international ones that have already encouraged brand loyalty through decades of advertising campaigns. Local brands simply do not have the same advertising budgets as multinationals and therefore do not communicate as often or as effectively,” Emmanuella Dago-Akribi, head of studies at Axes Marketing, told OBG.

The liberalisation of the telecommunications market has fuelled exponential growth in demand for advertising: large telecoms operators spend up to CFA600m (€900,000) annually for audio-visual ads. Telecoms accounts for 30-40% of advertising investments in subSaharan Africa, and with six telecoms operators, Côte d’Ivoire is no exception. Mobile operator Orange spends an average of CFA8bn (€12m) per year, according to Enoh. Another 10% of annual advertising revenues is represented by banking and insurance; with 24 banks present nationally and only 14% of the population possessing bank accounts, the small and fragmented nature of the market makes advertising an important investment for banks trying to differentiate themselves to attract customers. The cosmetics industry accounts for 5-7%, while food and drinks represent 15% of revenues. The country’s vibrant party politics has also provided new advertising opportunities, with political campaign spend accounting from 10% to 50% for different agencies. After declining in importance during the recent conflict, the government is using advertising to communicate health messages concerning issues such as HIV/AIDs and malaria.

HISTORICAL LEGACY: Print advertising was traditionally uncompetitive due to the monopoly of the country’s first post-independence newspaper, Fraternité Matin. From its launch in December 1964 until the liberalisation of the print sector in the early 1990s, growth in print advertising activity was constrained by a lack of publications. Since the 1990s, the print advertising industry benefitted from a proliferation of daily and weekly newspapers and magazines. Ranging between 20 and 30 publications, the number of daily newspapers periodically fluctuates due to the transient nature of publications. The state-run daily Fraternité Matin accounts for the largest share of advertising revenues among print media with about 16% of the market. Other popular daily publications include the pro-Laurent Gbagbo newspaper Le Temps, the private daily Soir Info, the pro-Ouattara daily Le Patriote and another pro-Gbagbo paper, Notre Voie, though advertising revenues are not as large as for Fraternité Matin.

Now with approximately 25 daily newspapers, 24 weekly papers, and 13 monthly and bi-monthly publications, competition within the print media to attract advertising clients is fierce due to the limited number of revenue sources and the large number of publications. While advertising is relatively scarce, it remains crucial for print outlets and often represents the single largest revenue stream. Increases in taxes and rising paper and printing costs have been a problem for many publications, prompting at least seven newspapers to exit the market in 2012.

LONG-TERM POTENTIAL: Sales rates in print media remain low in Côte d’Ivoire. At the end of the fourth quarter in 2012, the country’s best-selling newspaper, Fraternité Matin, maintained a sales rate of only 65%, selling 871,031 out of the 1,330,906 newspapers delivered. This reflects a number of pressing challenges to the country’s print media, including low literacy rates, limited purchasing power, the practice of renting newspapers and problems with transporting publications (see Media overview). However, the sales figures are not indicative of readership and, furthermore, many of these issues are arguably short-term challenges that will improve with time, increasing the effectiveness of the print media as an advertising strategy. Increasing literacy rates and the development of a middle class will expand the market size, while growing purchasing power will not only enable consumers to buy newspapers but may also reduce the practice of renting them.

RADIO: Radio advertising began in the early 1950s, but steps to organise the sector came later in 1970 with the creation of a service that scheduled broadcasts and began developing advertising to entice foreign advertisers. Advertising on the state radio channels, la Chaine Nationale, Frequence 2 and Radio Bouaké, is now managed by RTI Publicité, formerly known as the Ivoirian Advertising Bureau (Bureau Ivoirien de Publicité, BIP), within the Group Radiodiffusion et Television Ivoirienne (RTI), the state radio and television broadcaster.

With the liberalisation of the radio sector in 1992, a number of private local, regional and international radio stations began broadcasting in Côte d’Ivoire, opening up new territory for advertisers, though some restrictions applied to certain types of radio stations, namely religious broadcasters. However, radio-advertising space was expanded again in August 2011 when the president of the High Authority for Audio-visual Communication (Haute Autorité de la Communication Audiovisuelle, HACA) repealed restrictions banning religious radio stations from broadcasting ads to help alleviate the financial challenges faced by religious broadcasters. Liberalisation measures also enabled advertisers to better target desired audiences. Although the majority of radio advertising is in French, around a quarter of advertising is broadcast in indigenous languages, of which there are more than 60.

RADIO VS TV: The larger coverage area of radio broadcasts and the affordability of radios over televisions enables radio to be the most utilised media, making it a popular medium for advertisers. With more than 100 radio stations broadcasting nationally, the price of radio advertising is low relative to television ads, enabling this type of advertising to remain accessible to small and medium-sized enterprises (SMEs) as well as large national and multinational corporations. Radio advertising costs an average of CFA60,000 (€90) for a 30-second advertisement, while RTI’s monopoly over television broadcasts enables it to price a 30-second advert on television at an average of CFA350,000 (€525), making television too expensive for the majority of local advertising clients. Nevertheless, according to a study conducted by Voodoo Communications in January 2012, television remains the most popular medium for reaching out to Ivoirian consumers due to high audience figures. In Abidjan, 97% of people aged 15 years and over had access to television in 2009, compared to 82% of the same age group who had access to radio. In the same year, the same population watched an average of 182 minutes of television per day compared to an average of 86 minutes of radio time. “Television, and to a lesser extent radio, are the most effective ways of communicating with consumers, as these strategies are able to engage viewers and reach people in the countryside, unlike outdoor advertising, and to a certain extent, the print media,” Dago-Akribi told OBG.

TELEVISION ADVERTISING: As in other countries, the price of television adverts varies according to the time of day and the duration of the commercial. A five-second advert played during the week between 6.00pm and 6.30pm on the channel RTI 1 can costs CFA44,000 (€66), while a minute-long commercial during the same time costs CFA293,000 (€439.5). Weekend prices increase considerably, with the most inexpensive advert (lasting five seconds and broadcast between 8.00pm and 8.30pm) costing CFA48,400 (€73) and the most expensive slot going for CFA656,700 (€985), broadcast for a minute between 8.00pm and 8.30pm. While the majority of advertisers cannot afford television spots at present, the upcoming liberalisation of the audiovisual sector is expected to help in this regard. The issuance of five broadcasting licences to private operators is designed to increase competition in the segment and should result in more, cheaper options for advertising on television. “RTI is currently able to dictate the price of television adverts, but the hope is that with the entrance of new channels, there will be more competition to set lower prices for advert spots, enabling more possibilities for clients to communicate to the population, express themselves creatively and develop economically. Clients and the general population will also have more choices for both products and channels at a lower cost,” Jean-Paul Enoh, responsible for operational marketing and events at Vitamines, told OBG. Although liberalisation is expected to produce benefits for TV advertising, observers in print media are concerned about the impact of new channels on the profitability of newspaper advertising and readership rates. However, the overture of the audio-visual sector can also open new doors for print media, as each media type appeals to a different segment of the population. The liberalisation may lead people to watch more TV, but it can help print media by reducing the price of television advertising, providing newspapers with better access to television adverts so that Ivoirians can get to know their press better. This is particularly true for the interior of the country, where print media has had difficulty reaching due to transportation constraints.

OUTDOOR ADVERTISING: Accounting for around 15% of the market, outdoor advertising has annual revenues of approximately CFA8bn (€12m), which funds over 4000 advertising panels. An estimated 52 firms devote their activities to outdoor advertising, of which the majority are local firms. Approximately 20% of such agencies are considered large firms, although they employ around 20 workers or less, while the rest are SMEs. A total of 12 actors participate in the sector, including regional player Global Outdoor Systems, SN Publistar, Cible, Pub Regie, Light Media, Mediatrics, Mandingo, Visuel Concepts, Emergence, Mediaways, Quartz Regie and Canal Street, though competition from small informal firms undermines the activities of authorised agencies. “Sector competition is rude and is primarily based on the placement of panels. Due to weak sector regulation and control over activities, there are new advertising enterprises created every day, while the potential for installing panels is limited. This has the effect of weakening the sector and encourages injurious dumping activities, which hurts growth. It is a situation that we cannot afford,” said Mahama Coulibaly, president of the Chamber of Outdoor Advertisers of Côte d’Ivoire (Chambre des Afficheurs de Côte d'Ivoire, CAFCI). In coordination with the state advertising regulatory body, the CSP and local authorities, the CAFCI has cracked down on the activities of illegal advertisers, helping to remove sources of unfair competition. Representing 35 of the 52 sector participants, CAFCI’s role as a professional association of outdoor advertising agencies has facilitated cooperation between private firms and the state to tackle other challenges to sector development, particularly the lack of a strong regulatory regime to oversee the placement of panels. In 2007, a decree was passed that defined standards for panel placement and included provisions on the size of panels and the distance that must be maintained between advertisements. Although the decree was implemented, the law lacked disciplinary measures to punish violators, a trend which was exacerbated by weakened government authority during the crisis. “During the past 10 years, the law related to outdoor advertising was not strictly respected by all the local actors. This anarchy affected site rentals and also the quality of services. Today, a serious change in mentality and actions is being implemented on the ground for all actors to respect the law,” Joseph Lebbos, West Africa regional manager at Global Outdoor Systems, told OBG.

SECTOR CLEAN-UP: Upon coming to power, the Ouattara administration defined the clean-up of the outdoor advertising sector as a state priority, and has so far removed 1000 unauthorised signs. Clean-up efforts aim to reduce the number of panels from 4000 to between 2500 and 3000 classic-sized signs.

“The anarchical nature of the sector currently ensures that annual revenues remain lower than the sector’s potential, accruing CFA8bn-10bn (€12m-15m) per year. However, the reduction of panels is set to stimulate sector demand, enabling us to increase our prices while improving the quality of signs displayed and the innovative elements of outdoor advertising. With these changes, outdoor advertising has the potential to easily make CFA10bn-15bn (€15m-22.5m) annually,” said Coulibaly. Representing 80% of outdoor advertising, a 12-sq-metre panel should be priced at CFA130,000 (€195) without tax, which adds another CFA48,000 (€72), but regulatory gaps and unfair competition have lowered the average price to CFA90,000-100,000 (€ 135-150). Other sector priorities include cooperation efforts between advertisers and urban architects to improve the quality of panels and the enforcement of rules for environmentally friendly billboards.

Although the liberalisation of the audio-visual sector is expected to increase competition between advertising mediums, outdoor advertising agencies see the challenge as a positive one that will generate new opportunities for growth. “The entrance of new television channels will allow us to coordinate with other advertising agencies to introduce interesting commercial offers, such as packages that offer a certain amount of panels and a certain amount of television time slots. At the same time, liberalisation will encourage us to improve our technique and the quality of our advertising,” Coulibaly told OBG. Innovative investments in outdoor screens will also enable agencies to advertise 24 hours a day, seven days a week for up to 10 clients at a time, presenting competition for television.

OUTLOOK: Political stability and efforts to improve regulatory conditions will continue to support wider growth. Improvements in purchasing power and literacy rates will also increase the size of the market over the next five to 10 years, while the liberalisation of the audio-visual segment will boost accessibility for SMEs.