Forget algorithms, the really interesting future of media is not people or processes, it is places, says Daniel Thompson
In a few years’ time all media buyers will have been replaced by algorithms and the media agency as we know it will not exist. Mobile will have taken over the world and print advertising will have been confined to the Dark Ages. Apparently. That is, if you read and believe all articles written about the future of media. However, the really interesting future of the media agency is not people or process, it is places.
By 2050 the UN estimates that the population of Africa will have more than doubled from 1.1 billion to 2.4 billion. These are relatively sparsely populated countries that with their current harvests and improvements in farming will be able as a continent to produce enough food to feed itself and have a surplus for export. While famine has not been eradicated from Africa, it now only exists in countries where political evil or incompetence let it remain. For example, Ethiopia was formerly the poster child for dictator-created famine, yet now has a healthy population of more than 90 million with an economy growing at 8 to 12 per cent per annum and an emerging middle class.
In Iran, we see the potential opening up of a market with 77 million consumers, currently restricted in the brands and products they can buy but with a GDP per capita not far short of China. Central Asia is as ignored by many as much of Africa. The natural resource rich countries of Azerbaijan, Kazakhstan and Uzbekistan are seen as more successful economies, although very much government controlled with growth stunted by repressive regimes. Uzbekistan is considered by HSBC to be one of the top 26 fastest growing economies over the next decade. While Tajikistan lags behind its neighbours, the export of labour has inadvertently created a market economy with the influx of remittances making up circa 40 per cent of its GDP and providing families with unexpected discretionary spending, albeit in small amounts. In future let us hope – for humanitarian reasons before commercial – that the 31 million population of Afghanistan find enough peace to start to rebuild their country and economy.
Our own client, Mars, is just one of many that has invested heavily in its future in developing countries. In Africa it recently broke ground on a $60 million Wrigley’s factory outside Nairobi for completion in 2017. This factory will double its current production levels to keep up with demand from East African markets, including Uganda, Tanzania, Rwanda, Burundi, South Sudan and Ethiopia.
Growth in GDP in these markets is no longer being attributed just to the plundering of natural resources by a construction hungry China, but by the increase in private consumption and investment by the expanding middle class. Fears that Africa will suffer as a result of China and the Western world’s oil price-related slump are balanced by the fact that most African nations are net oil importers and the current trade prices are actually a welcome relief.
There is no agreed definition of what constitutes middle class but Standard Bank’s (the largest in Africa measured by assets and earnings) view on the emerging middle class shows clear potential. Noting a household spending $15 to $115 a day as middle class, there are 15 million such households in sub-Saharan Africa, a tripling between 2000 and 2014. Nigeria has the highest proportion with 4.1 million middle class households (just behind the entire population of Ireland at 4.6 million) with predictions of 12 million households by 2060. Taking a more liberal view, the African Development Bank sees 70 per cent of middle class in North Africa, with Ghana, Kenya and Djibouti having 40 per cent of their populations falling into a middle class structure, with associated growing disposable incomes.
Investment into Africa means that the continent is seeing fast increases in regional and domestic air travel and is one of the key regions for investment into hotels. Ethiopian Airways is one of the aviation success stories of the last decade, with double digit percentage passenger growth in each of the last six years, and now snapping at the heels of South African Airways and Egypt Air to be Africa’s leading carrier. This in a region that industry body IATA claims will be the fastest growth region over the next 20 years for domestic and regional aviation as increased trade between nations and abroad drives the need and desire to travel.
The result is, across Africa, a constant steady increase in consumers hungry for the types of goods and services struggling to find growth, or even maintain share in developed markets. Households that want TVs, dishwashers, refrigerators, broadband internet and clothing brands that mark out their status. As discretionary income increases they will seek financial products and subsequently access to borrowing that will enable growth in higher cost items such as cars.
What this means for media is that there are millions, if not billions, of consumers who at present are exposed to very traditional, unsophisticated and unmeasurable media who our clients will need to reach and engage with early in their arrival in affluence. Possession of cars and motorbikes in Ghana has risen 61 per cent since 2006, for example, according to the OECD, and these consumers will already be connecting with brands in a way that will drive decades of consumption.
However, the media scenes across all of Africa are under developed and often shrouded in suggestions of corruption and certainly lacking in reliable data.
The future for the media industry that I’m most passionate about is how we drive success from Casablanca to Cairo, from the middle class in Kazakhstan to the potential opening of Iran. The challenges of understanding where clients’ growth will come from in markets with little data. How we connect them with big stories, when much of their connection to brands is through a small mobile phone screen. And how we take the learnings about the future from global centres of excellence, and apply them early, efficiently and effectively in emerging markets. Now, that’s much more fun than an algorithm.
Daniel Thompson is global account director at MediaCom Dubai
