Good growth continues in South Africa’s digital advertising industry

Key findings include: 

• Internet advertising has reached a new high of 34% of the overall advertising market.

• Digital advertising spend is between 21% and 40% of total advertising spend.

• Total internet advertising revenue amounted to US$760-million (R14.51-billion).

• Paid search dominates internet advertising in South Africa.

• Paid social advertising is the second-largest category in the local digital advertising market, with Meta a dominant player.

• Finance, FMCG and alcohol remain the categories with the highest percentage of media spend. Gaming, media and entertainment, apparel and footwear, and retail all increased.

The report also highlights key themes from the IAB SA Research and Measurement Council. Among them:

Generative AI 

The boom in machine learning and generative AI – which uses tools such as ChatGPT, Midjourney and DALL-E 2 to create images and content from text-based prompts – has the potential to have a huge impact on the digital advertising market. 

As technology advances, advertisers could use AI and machine learning to drive personalisation at scale and adapt ads based on the age, location or context of users. 

This is particularly useful in a world where it is increasingly difficult to track users online, with Google’s forthcoming termination of third-party cookies in its Chrome browser and privacy updates to Apple’s iOS.

Use of AR and VR in advertising 

AR and VR can create interactive virtual environments that allow users to explore and engage with a brand. VR also extends into the metaverse, which presents potential opportunities for personalised ads and product placement, AI brand ambassadors or influencers, and try-before-you-buy virtual shopping experiences and showrooms. 

This could significantly impact brand value, as companies can use this technology to engage with audiences in personal and contextually relevant ways, with tailored experiences for individual users.

Looking beyond the advertising giants 

Although they dominate the internet advertising market in South Africa and globally, marketers and advertisers can look beyond Google and Meta for advertising solutions. 

Publishers, in particular, provide an opportunity for targeted advertising beyond the walled gardens of Meta and Google as first-party data becomes increasingly key to the digital advertising market. 

Razia Pillay, CEO at IAB South Africa, says digital media in has increased rapidly in recent years, with the introduction of new digital innovations and technology such as the metaverse, applications of generative artificial intelligence (AI), and augmented and virtual reality (AR and VR).

“This year’s key themes dip into these innovations, running in parallel with the [our] theme of breaking barriers for business impact. We will keep these conversations top of mind as we continue to understand the evolution of the customer,” she states.