Advertising Spend: Entertainment, media and advertising companies in Kenya are set to reap from rising spending even as traditional components of the sector such as television decline, a new report by PWC s**ws. In a report ***led Altering the Dynamics of Entertainment and Media (E&M) Industry, PWC estimates that Kenya’s potential annual revenues in the industry w*** hit Ksh900 b***ion by 2025.
This means entertainment and media revenue in Kenya w*** overtake Nigeria to deliver just below Ksh100 b***ion ahead of South Africa. “Over the coming five years, growth in E&M revenues w*** be the norm across all 53 territories we cover. No country’s combined consumer and advertising revenue w*** rise at less than a 3% five-year CAGR (compound annual growth rate) to 2025,” the report reads.
In 2020, Kenya experienced a 28% dip in advertising revenues as outdoor advertising fell sharply after companies cut spending d****g the Covid-19 ********. “This year, not surprisingly, the twin forces induced by COVID-19 — economic disruption and powerful shifts in consumer behaviour — challenge our underlying ***umptions and frame our insights,” the report says.
It says in 2020, the ******** triggered the sharpest contraction in overall E&M revenues in the history of this research — and accelerated changes in consumer behaviour to pull for***d digital disruption and industry tipping points by several years. “In 2021, t**se tipping points morphed and coalesced into power shifts that are rapidly reshaping the industry,” says PwC.
The report, **wever, s**ws a shift to***ds digital channels with revenues coming from movie streaming, digital advertising, gaming, podcasts, data consumption, and virtual reality among others.
The media and entertainment has seen a shift in favour of individual in***encers w** are now competing against e****lished companies for advertising revenues. This growth of micro-in***encers has allowed advertisers to target in***encers in their niche markets helping to lower advertising costs and maximize on their returns.
Powered by high internet and smartp**ne penetration, Kenya w*** be a key driver of media industry revenues in Africa. In 2020, consumer spending on E&M fell 5.5%. But by 2025, PwC estimates that the total is projected to rise to Khsh10 tr***ion, representing a 3.9 per cent growth from 2021.
“The stagnation of legacy sectors such as newspapers and magazines w*** be offset by rapid revenue growth from booming areas that cater particularly to younger consu****, such as video games and e-sports,” PWC notes.
That said, traditional TV and **me video w*** continue to account for the largest share of total consumer revenue — even as that segment declines at 1.2% compounded annually through 2025.
Internet advertising
As more goods and services are sold online, advertising aimed at encouraging and in***encing decisions migrates to these platforms. Internet advertising spending rose by Ksh3 tr***ion in 2020 to reach Ksh3.4tr***ion, a 9 per cent increase.
Alt**ugh slower than the 16% recorded in 2019, this st*** represents impressive growth off a continually rising base. The ******** had its own impact on this sector. With more people spending more time at **me and more time online, there was a rapid move to digital content services in a wider migration of consu****.
“People streamed s**ws and read e-books instead of going to movie theatres and bookstores, ***aled along with Peloton instructors instead of going to SoulCycle studios, and formed digital communities on the audio app Club**use instead of attending debates,” says the report.
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The shift had a knock-on effect on the economy fueling e-commerce, which in turn attracted more advertising — even if consumer activity overall was muted. “Cross-currents were evident in the three main sectors into which E&M spending is divided: access, consumer spending and advertising.”
As internet access and data became a lifeline and a form of utility, access was the only one of the three main sectors that rose in 2020,” says PwC. With internet advertising set for a 7.7% growth from 2020 to 2025, even as traditional components such as television stagnate or decline, overall advertising revenues are expected to rise from Sh6 tr***ion in 2020 to Sh8 tr***ion in 2025.
It is fair to say that the past year represented a watershed in global media regulation, with the emergence of a more aggressive pushback against the big digital platforms on a range of fronts. D****g the ********, power shifted to Amazon, Apple, Facebook, Google and Netflix as e-commerce, digital advertising and time online boomed.
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