Johannesburg - Publishers face challenges in securing advertising for their fast-growing mobile news apps but technological developments could change this state of affairs.
This is according to Gustav Goosen, the chief executive officer of 24.com’s digital media sales company The SpaceStation.
Speaking to Fin24 at The SpaceStation’s Digital Salt event in Johannesburg last week, Goosen acknowledged that audience growth for news content on apps is exploding.
But he said advertising support for such apps is “lagging because the market hasn’t adopted and adapted to it”.
A key reason for this lag has to date been the nature of apps, explained Goosen.
"In an app, you need to get to grips with the nature of consumption and the probability or not to exit the app to get to another destination,” Goosen told Fin24.
“Historically, you had to click out of an app environment into a connected digital environment to then engage with whatever it was that wasn't housed in the app,” Goosen said.
A key performance indicator for some advertisers is still centred on the number of ‘clicks’ they get to their websites, said Goosen.
But Goosen said that just as publishers have had to become comfortable with placing their content on channels like Facebook, advertisers have also had to become comfortable with their content being consumed solely in the publisher’s app.
And technological developments are starting to help publishers in this regard with the likes of Google’s ‘DoubleClick for Publishers’, or DFP, service.
"We now have advertising technology via DoubleClick’s DFP which enables us to do in-app to app advertising,” Goosen told Fin24.
"We can run an ad that clicks out of our app, straight into the client's app if you've got the app installed on your side as the actual user, and we can track it.
"So, if you don't have it, it puts you into the store, immediately to download the client's app and we can measure that conversion, which leaves the advertiser a bit more assured that they understand where their money is being spent," said Goosen.
But Goosen said that while Google is opening itself up to cross-app advertising, other internet giants are building more closed gardens.
One such example is Facebook, which has launched its Instant Articles technology earlier this year.
Instant Articles allows publishers to publish full articles directly to Facebook, meaning that users get to see articles without ever leaving the Facebook mobile app.
Some quarters of the publishing industry, though, have expressed concern that Facebook then takes all the advertising revenue linked to Instant Articles at the expense of content producers.
But Goosen told Fin24 that publishers still need to play in the Instant Articles space for their content to be seen.
"You lose some control, but you're in the game at least,” said Goosen.
“And you've got to go through that process of getting grips to it, understanding what that means and am I comfortable with that,” he added.
Realistic about SA growth
Looking more broadly at South Africa’s digital market, Goosen said the industry is “fast growing” and has “massive potential”.
According to a PricewaterhouseCoopers (PwC) report on the entertainment and media outlook for the period 2015 – 2019 , South Africa’s entertainment and media (E&M) market recorded an 11.5% growth to reach R112.7bn in revenue in 2014.
The report said that this double-digit run is forecast to end in 2016, but that the country is still forecast to have a compound annual growth rate (CAGR) of 9.4% to 2019, reaching R176.3 billion in that year.
“It is digital growth that will fuel the overall rise, with internet access and advertising combined rising at an 18.8% CAGR to account for the majority of the R64bn improvement,” said the report.
“Internet access and advertising revenues as a percentage of total E&M (entertainment and media) revenue will rise from 31% in 2014 to 46% in 2019,” added PwC.
But Goosen said that South Africa’s struggling economy, which is forecast to grow less than 1% this year, means the media industry has to adapt.
“I think less money has got to work harder and it's across all media types, and I think that's the challenge we have as a collective,” Goosen said.
*Fin24 and The SpaceStation are both part of Media24 owned 24.com.