Read time: 3 minutes

Telcos are the real media giants in Africa

By , ITWeb
02 Nov 2018

Telcos are the real media giants in Africa

Google and Facebook own the most popular media platforms online. As the two most dominant players in the online advertising space globally, they both have the largest amount of data on online audiences. The more insights gained on consumer behaviour, the better they have become at driving effective advertising results and the more their share prices have risen in the last five years.

However, when it comes to the African continent, a different approach is required to address the unique needs and challenges of reaching the African consumer. Today, Google and Facebook are yet to develop solutions that relate to how African consumers use their mobile devices. This gap leaves a real opportunity for innovative tech partners and telecommunications companies (telcos) to start delivering real value to advertisers and the consumers they aim to reach.

Africa is 'mobile first' and in many cases a 'mobile only' market. This is unlike the rest of the world. The African consumer is uniquely mobile. However, the way African consumers use their mobile devices is different from almost all other markets.

A larger portion of consumers in Africa are offline with only about 35% of the population actively connected to the internet, according to Internet World Stats. This large offline population, 97% of whom are prepaid mobile subscribers, generate and consume media channels that sit within the telco environment.

Think about it for a minute, how many times does an average subscriber interact directly with a telco daily? Multiple times. A subscriber tops up, checks airtime balance, interacts with the telco network via USSD channels to access several other services; and with each interaction, receives a notification message either via SMS or USSD.

With higher mobile phone penetration rates, access to subscriber data, and continuous interaction between the telcos and subscribers; telcos reach far more people offline in Africa than Google and Facebook do online. Given such high levels of engagement and reach on the continent, it baffles the mind as to why telcos are not the lion of the African advertising ecosystem.

Having the right assets for advertising is one thing, but making advertising work, is a tougher nut to crack. There is a complex value chain between advertisers with budgets to spend and the consumers they want to reach. Telcos suffer critical flaws along each stage of the value chain.

On the supply side, they suffer from fragmentation, as most African countries have at least 3 strong players that provide airtime and data.

On the platform side, they have not developed the right products to effectively harness their data and media channels in a way that meets the unique needs of advertisers.

On the demand side, telcos do not have the right distribution and sales channels to effectively monetise their inventory at scale.

So how does one awaken this sleeping lion?

To thrive in advertising, telcos need to harness the power of machine learning and other emerging technologies to transform their data assets and channels into a relevant advertising solution that can intelligently reach African consumers offline. Let's face it, this is still 60-70% of the market.

There is a need for indigenous tech companies to take up this challenge by developing purpose-built and market-fit solutions for the African market. Indeed some companies are already in on this.

The GSM Association (GSMA) 2017 Mobile Economy report says Sub-Saharan Africa currently has 420 million unique mobile subscribers. By 2020, this number is expected to hit over half a billion, making Africa the fastest growing mobile market.

According to the data, there were 731 million SIM connections in Africa at the end of 2016 which will also rise to nearly 1 billion by 2020.

Going by these figures, at a modest estimate of US$1 per SIM connections, African telcos are altogether sitting on a US$1billion dollar untapped goldmine.

By Emeka Enwere, Head, Strategy and Growth, Terragon Group.

Read more
Daily newsletter