Firms spend Sh65 billion in advertising

By Macharia Kamau

There were significant changes in advertising patterns last year, with heavyweights that have previously sunk billions of shillings in advertising holding back and instead opting for alternative methods of customer acquisition and retention and brand growth.

Notable are cuts on advertising spend by banks and telecommunication firms that have over the years dominated the list of top advertisers.

A reduction in call rates among mobile telephone operators significantly reduced earnings for the telcos forcing most of them to cut advertising budgets. Among the operators, only Safaricom and Airtel, were among the top ten largest advertisers.

Previously the four mobile operators have been among the top ten advertisers.

None of the banks was among the top ten advertisers.

This is according to the annual media review report by Ipsos Synovate.

However, the holding back by banks and telcos did not dampen earnings for media industry, which heavily relies on advertising for revenues.

Traditional media

Advertising spend on the four traditional media of radio, television, newspapers and cinema still grew by a significant 33 per cent to Sh65.4 billion last year, up from Sh49 billion in 2010.

In the place of banks and telcos are manufacturers of fast moving consumer goods and pharmaceutical companies that are now heavy spenders.

The largest three advertisers last year were Safaricom, which spent Sh5 billion, the Government that spent Sh3.66 billion, and Population Services International (PSI) that spent Sh1.85 billion in advertising.

"Telcos pulled back because of the price drop and expected impact on their bottom lines. Banks changed their client acquisition strategy based on the negative impact on the economy," said Joe Otin director, Sub-Saharan Africa Ipsos Media CT.

Non-essentials

The high spending by Government is despite a directive by the Finance ministry to other ministries to cut spending on adverts and other non-essentials.

Other key advertisers include Unilever, Reckitt Benckiser and East African Breweries, each spending about Sh1.5 billion in advertising. Bidco, Airtel Kenya, Coca Cola and Sonal Holdings close the list of top ten biggest spenders in advertising, each having spent about Sh1 billion last year.

The report by Ipsos Synovate also shows that media buying agencies might be losing their spark, with most companies opting to book adverts directly with media houses.

This is yet another radical departure from the tradition, where media buying agencies are contracted to scout for the best positions for a company to place an advert.

They then negotiate on behalf of the company and also do creative work of coming up with the adverts.

The agencies also advise advertisers on the best timings and even best media when placing an advert.

The number of small and medium enterprises that may not afford their services but still need to advertise seem to be on the rise. These are taking their adverts directly to the media houses.

Buying agencies

Sales by media houses through direct booking stood at Sh38.8 billion and accounted for 60 per cent of the Sh65.4 billion in from advertising.

Sales from media buying agencies stood at Sh26.7 billion.

"It appears that there are many small players coming into the market and booking directly and this has increased the proportion of the direct booking," said Otin.

In its report, Ipsos Synovate also tracks coverage of companies in local media and found that the Kenya For Kenyans was the most covered campaign last year.

The campaign was to raise money to aid regions that were heavily affected by a prolonged drought that spurned two years.

Publicity index

"Sports sponsorship from the various companies were also well covered. The mobile phone porting was a big story at the beginning of the year.

The restructuring of KCB was big, the drop of the shilling and high inflation was also big," said otin.

According to media publicity index, a tool Ipsos Synovate uses to measure coverage given to firms by media houses based on the tone of a story and other measures, Kenya Commercial Bank, Safaricom and East African Breweries were the most covered companies. Others were Equity Bank, Kenya Power, Airtel, Coca Cola and Orange.