In the late 90s and early 2000s, television reigned supreme as a form of entertainment in South Africa.
Television advertisements during this period generated high returns on investment for advertisers, as viewers tuned in to their “big boxes” in living rooms.
The Shift to Digital Platforms
However, as the viewing landscape evolved from living room TVs to palm-sized devices, TV’s allure as an advertising medium began to diminish.
Broadcasters like the state-owned SABC experienced a decline in advertising revenue, reporting a R600 million ($33 million) reduction in 2023.
Multichoice, the owner of pay-TV service DStv, also recorded a 7% decrease in advertising revenue, attributing the pressure to competition from digital online channels.
Changing Dynamics and Competition
Once, advertisers readily paid premium rates for prime-time TV slots. But with viewers increasingly opting for cord-cutting and turning to digital platforms, TV broadcasters have been struggling to adapt.
Advertisers have migrated their budgets to digital channels, seeking greater reach and engagement.
The 2023 Kantar Media Report revealed a global decline in TV’s popularity as an advertising medium, dropping from third to twelfth place in advertisers’ preferences.
Even specialized agencies like The Media Box, initially focused solely on TV advertising, recognized this shift and started offering digital advertising in 2010 as social media became a dominant force.
Digital Advertising: More for Less
Digital advertising offers a compelling proposition for advertisers, providing greater value for less investment. Producing and placing a 30-second TV ad can cost over R2.5 million ($136,000), while digital advertising requires only a fraction of that amount.
Moreover, digital platforms offer advanced measurement tools, allowing advertisers to track ad performance and optimize campaigns effectively.
Platforms like YouTube, TikTok, Facebook, and Google attract billions of users globally, offering advertisers unparalleled reach.
Through economies of scale, these platforms can offer advertising at significantly lower costs than TV.
Additionally, digital platforms provide valuable insights like conversion volumes, click-through rates, and cost per acquisition, enabling personalized and targeted advertising that TV cannot match.
The Future of TV Advertising
Despite the challenges, TV advertising in South Africa isn’t entirely doomed. eMedia, a South African TV broadcaster, reported a $17 million profit in its latest annual results, demonstrating that TV advertising still holds potential.
Free-to-air broadcasters like eTV continue to appeal to advertisers as internet access for social media and streaming remains limited, particularly among low-income groups.
To counter declining revenues, Multichoice plans to leverage popular sports events, attract new customers through small and medium enterprise initiatives, and expand its digital advertising channels.
Some broadcasters are even bringing ad sales in-house to prevent agencies like The Media Box from offering alternative digital options to advertisers.
The Inevitable Shift
While these strategies may provide temporary relief, the overall trend suggests that companies will continue to allocate more of their advertising budgets to digital platforms due to their continued growth and effectiveness.
The digital revolution is transforming the advertising landscape, and TV broadcasters must adapt to remain relevant in this evolving market.