With brewers and telecom companies looking to establish their
brands as national leaders, local firms and international agencies are
shaping the publicity business in East Africa
Kenyan marketing campaigns previously borrowed heavily from abroad, in particular from South African agencies perceived as the market leaders on the continent. However, in the last ten years, local advertising has taken off with the emergence and increasing popularity of creative agencies.
The success of small agencies in the country can be directly attributed to the major groups with an established reputation in the corporate and marketing world. Foremost among the advertising agencies in Kenya are Scangroup, Ogilvy & Mather (O&M), Ayton Young & Rubicam (AY&R) and Access Leo Burnett.
Over the last few years, Scanad has dominated advertising campaigns in Kenya, with a 49% market share. Its primary success can be attributed to two key factors: its successful initial public offering in 2006 and its expansion programme to buy out and invest significant stakes in rival companies.
The acquisition of a 50% stake in RedSky Advertising was significant in bringing Safaricom into its fold. Safaricom had the largest marketing budget in 2008, worth Ksh1.8bn ($23.9m) in advertising. One of the keys to Scanad’s success lies in the fact that organisations operating under it function as wholly-separate entities. With each company pitching for similar projects, this increases the chances of a subsidiary getting a contract.
Other similar agencies include ZK Advertising which has its base in Tanzania, a presence in at least 16 countries and divisions ranging from advertising to communications and public relations. Another rival is O&M, one of the world’s leading advertising agencies. ZK Advertising lacks a major client base in Kenya but had a key edge until recently with mobile-phone company Zain as one of its clients.
There is a clear correlation between multinational companies and the agencies that handle their accounts. Peter Mugutu, art director for a leading creative agency, says many companies are already represented at their headquarters by agencies that have built a presence in Africa. As a result, it is almost a certainty that the agency of choice in their home country would be their agency of choice in Africa. Larger organisations like Barclays and Standard Chartered are more likely to favour O&M, with its international presence, over ZK Advertising, which has only an African profile.
George Nyoike, head designer at a smaller agency, says local companies are more likely to hire smaller agencies than international firms. This, he notes, is not out of any local leaning but due to the perception that local is likely to be less expensive. Only those companies with huge ?media and advertising budgets are able to hire any of the top five agencies.
Companies such as Unilever, Coca-Cola and East African Breweries Limited (EABL) have a strong presence in East and Southern Africa, so it is important for agencies to provide support by having a similar strategic presence. On the other hand, ZK Advertising has an advertising base almost everywhere that Zain is situated or plans to expand. When EABL was looking to come up with an overall brand idea, London-based AMV BBDO was awarded the contract, mainly due to its partnership with Scanad, which was tasked with working with beer brand Tusker to implement the campaign.
Location has proved to be a major factor in awarding advertising contracts, as large operating costs are incurred when a company has to set up an agency in another country. However, some companies circumvent these costs through media buying or partnerships with local agencies. For organisations that have a large presence in the region and sell multiple brands, it is important to partner with an agency that will best be able to market their products.
The largest boost for the agencies has undoubtedly been the telecoms companies. Telecommunications have become the region’s top growth sector, with the biggest media spend in both advertising and public relations. In Kenya alone, the top three advertisers in 2009 were mobile phone companies Safaricom, with Ksh1.8bn (US$23m), Telkom with Ksh1.8bn, and Zain with Ksh1.1bn. Scanad’s acquisition binge has made it the biggest beneficiary; by acquiring RedSky Uganda, it brought on board big-spender Uganda Telecom. O&M’s spectacular coup in snatching Zain from ZK Advertising shows the fierce competition between these agencies.
There is also a case to be made for smaller competitors. One such example is Felicien Mangau’s company. “I worked at one of the larger agencies for a number of years. I made valuable contacts who began sending me a little work initially before taking me on as their sole agency. The fact that I am a small agency means I am able to give a client all my personal attention and this is key to the service I provide.”
Vincent Onyango, the owner of a small but vibrant agency, believes the fact that the hefty retainer fee that larger agencies charge works in his favour. “Many of our clients realise they are getting from us what they would from a big name agency, so are content to retain our services when they need them.”
Advertising created by South African agencies in Kenya has been performing better than local campaigns. But with increased exposure and partnerships with international agencies, this competition could lead to world-class advertising in the region.
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