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Some South African brands unlikely to survive COVID warns Havas CEO

By David Whitehouse
Posted on Monday, 24 August 2020 14:09

Billboards such as this in Cape Town still have a role in a world of digital advertising. Reuters/ Mike Hutchings

A shake-out of medium-sized South African brands is in prospect as COVID-19 prompts consolidation and localisation, Havas CEO for Southern Africa Lynn Madeley tells The Africa Report.

Property, retail and tourism are among sectors that will be affected, says Madeley, who is based in Johannesburg. Reconfiguring retail and property holdings for the new reality is a complex and costly process, she adds, citing Growthpoint, the largest property holding listed on the Johannesburg Stock Exchange, as a company that has been able to do this well.

The shift to home working has meant that commutes of up to 20km are a thing of the past for many and so a much greater proportion of shopping is done locally, says Madeley. That means that small, agile companies with local visibility are in a strong position. Companies with pockets deep enough to be everywhere will also come through the crisis better than others.

  • But among medium-sized companies in property and retail that were not “born and bred online”, consolidation is “definitely” a prospect, she says.
  • Even in larger companies, there will be greater emphasis on their main brands at the expense of smaller ones, says Madeley.
  • One client told her that 2021 will be a year of “back to basics”.
  • Industries that may grow faster as a result of the pandemic include fast-moving consumer goods, pharmaceuticals and “wellness” products relating to nutrition and mental health, she says.

Communications company Havas’s clients in South Africa include Reckitt Benckiser, Bidvest Bank and Parmalat.

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The needs of customers have been changing as a result of the pandemic, explains Madeley. Many businesses are now spending much more time grappling with issues like supply chains and distribution. So rather than simply needing help with advertising and communications, companies now need more research and strategic advice to help them cope.

Old-style adverts

Some clients have stopped advertising, while others have remained actively engaged since the pandemic started, Madeley says, adding that the ability to do this depends on a company’s financial strength. Some hotels are still advertising to maintain their presence, and tourism brands that have continued to advertise are now seeing greater uptake. Havas has been advising its clients on how to reposition their brands. “A brand that gives back is a brand that will be remembered,” argues Madeley.

She says that it is possible to overstate the importance of digital advertising channels.

  • “The number of digital users has not increased,” during the pandemic, she says. “The same people are using digital channels more.”
  • Meanwhile, old-fashioned methods such as street billboards are still in demand.
  • In Europe, traditional television is a “dying breed”, but in South Africa a TV ad campaign will still lead to a sales increase, she says.
  • General TV viewership in South Africa has increased because of lockdowns, as have radio audiences, she adds.

Madeley is not convinced that there will be a quick recovery from the recession and fears that 2021 will be as bad as, or worse than, 2020. She suspects that businesses may need to be able to survive for five years before a return to normality. “There is no such thing as a post-COVID world,” she says. “We are in a COVID era.”

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“There are no facts we can give our clients, only hypotheses,” she says. “We literally don’t know what will happen.”

The bottom line

Due to COVID-19, South African brands need to be local or omnipresent – and not in a wide range of places where people used to go.

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