Entrepreneurship Zone: 22 November 2022 :: Digital marketing in Africa: The window of opportunity is now

Tue Nov 22 08:45:48 CAT 2022

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Entrepreneurship Zone: 22 November 2022 ::  Digital marketing in Africa: The window of opportunity is now

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Digital sales are the next horizon of business growth for all consumer-facing businesses in Africa, but only a fraction of this potential has been tapped. With competition increasing daily, those players that can make digital a strategic priority and systematically build the digital function in their organisations are likely to pull ahead, whether they are digital natives or not.

In the last five years, the share of Africans who choose to buy goods and services online has more than doubled; that’s about 10% of the entire population on the continent. And while this shift has largely been as a result of the pandemic, it’s becoming clear that even as economies return to a semblance of ‘normal’, online sales are here to stay.

The market opportunity for African businesses here is significant. Online sales in Africa are growing at around 25%, year-on-year – one of the highest rates in the world – with more than 10 million people starting to buy online each year. Yet online sales in most organisations are only at the beginning of their growth trajectory.

While bigger organisations have mostly prepared to take their sales and operations digital and have the necessary infrastructure in place to make this shift, few businesses have scaled digital sales as yet. We can see this in the numbers. In Europe, the digital sales landscape is so competitive that banks will pay, on average, about 25% of profit per client to attract a client. However, in Africa, competition is still low enough that banks can attract clients, spending no more than 10% of the profit on that client. However, this is unlikely to last.

As the window of opportunity continues to open for digital sales on the continent, we can expect competition for banks, retail, telecoms, logistics, and more, to intensify in the race to develop their digital business and transfer of familiar services to the digital field. To pull ahead, there are five key principles that African businesses could consider to develop a robust digital marketing function and claim their space at the vanguard of the digital sales frontier.

Engage global expert knowledge

Global advertising and social media platforms such as Google, Bing, and WhatsApp are disproportionately dominant across Africa, and tapping into the expertise of global specialists working with these channels will be key.

For example, in South Africa, the share of search queries on Google is 94%, followed by Bing at 5.12%. Google dominates the search market in Nigeria and Kenya, too, at 98.6% and 97.7%, respectively, according to Global Web Index (GWI) digital marketing research for African countries. Among social media platforms, WhatsApp is the most popular for networking at 93.2% in South Africa, 93% in Nigeria, 96.5% in Kenya, 83.9% in Ghana, and 73.7% in Morocco, usually followed by Facebook, Instagram, and YouTube.

Investing in developing proprietary teams of digital customer acquisition specialists that understand these channels is likely to be a key competitive edge. Fortunately, as remote working formats have become more common following the pandemic, recruiting global talent has become easier for African organisations. This can be particularly important, given that there can be a lack of specialist talent in African countries.

Account for local context in marketing strategy

Even though they are working largely through global channels, African businesses ignore the local context at their own peril, especially if they are looking to scale across the continent. Each African market has subtle differences in consumption and channel behavior, which need to be considered when planning digital marketing campaigns. For example, in South Africa, PCs and tablets register higher engagement than smartphones, and time spent daily with desktops, laptops, and tablets rose to a remarkable 5 hours and 25 minutes on average in 2021. South Africa also registers high laptop/desktop ownership (83.3% of the population) compared with most other African countries. This high concentration of internet and social media users, coupled with device penetration, makes it imperative to leverage paid and organic search, social, and display advertising as effective means to reach consumers.

By contrast, Nigeria boasts high smartphone penetration (99.2%) and the highest number of absolute internet users in Africa; 82.9% of internet users aged 16-64 said they used social media as the main source when researching brands. Both WhatsApp and Facebook could therefore be leveraged with chat support call-to-action functionality alongside Google search to deliver instant and more tailored messaging and one-to-one services to deliver impact in that context.

Activate own marketing channels

While global advertising platforms create unparalleled opportunities to grow the customer base, there is potential to grow business locally by interacting with customers on owned channels. For example, businesses could consider using mobile apps, websites, email, and social media groups or messengers to deliver targeted information and improve conversion rates. The key to unlocking these channels could be growing relevant engagement with customers.

Data is the key to success

Digital marketing deals primarily with business mathematics, where it is necessary to calculate how much each user action costs: a click, an application, or a sale. Once a business learns to measure key metrics, it becomes possible to efficiently manage channels and campaigns using these precise metrics.

To build reliable analytics, organisations could consider building effective data tracking and storage systems and ensuring regular reporting that can give everyone involved a clear picture of digital sales status. It is equally important to build cross-functional teams that include analysts so all participants can access data at any time and use this effectively to leverage customer insights to drive further sales.

Experiment constantly

The main principle of digital marketing is to regularly generate, test, and evaluate the efficiency of new ideas. These may relate to working with new channels, launching new types of communications and formats for creative solutions, and testing new audiences. The secret of success lies in the organisation of a well-coordinated team and reliable processes allowing regular testing.

While there is a common misconception that only digital native organisations – such as neobanks, fintechs, or other technology players – can be successful in this game, our experience working with more traditional banking, telecoms, and retailers suggests that digital transformation is within the grasp of all businesses. And given the tremendous growth at stake, this is not something to sit on the fence about.

The main thing is to make digital a strategic priority for your business and then work towards consistently building a digital function in the organisation, characterised by advanced market competencies and flexible methods of operation. This could allow you to attract the largest number of customers while achieving a good return on investment in marketing.

Umar Bagus is a partner in McKinsey’s Johannesburg office and leads the firm’s Digital & Analytics practice in Africa; Ignacio Crespo is a partner in McKinsey’s Madrid office and leads Digital Marketing in the EMEA region; Anton Efremov is an associate partner in the New York office and Geet Kashyap an expert associate partner in the London office.

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