SA’s advertising boom raises questions over who benefits

South Africa's advertising industry is booming, yet questions remain about who stands to gain most from the trend. A new report from global marketing intelligence firm WARC indicates that major companies are allocating a smaller share of their revenue to advertising, even as the global market approaches a record $1.34 trillion. While consumers are spending more on advertising, tech giants such as Alphabet, Meta, Microsoft and Netflix are spending a smaller slice of their revenue on advertising, despite a 146% increase in combined revenue.

The report highlights an increasing reliance on digital platforms such as Google, Meta, Microsoft, TikTok and others, which hold a dominant position in the global advertising landscape. For South African media companies and agencies, the shift raises concerns about their viability in the face of growing international competition.

The South African Competition Commission's recent inquiry into media and digital platforms found that these tech giants have become gateways through which South Africans access news and information, undermining traditional advertising revenue models and contributing to the closure of local newsrooms and broadcasters. While retailers are emerging as significant media owners, they offer advertisers a unique opportunity to reach consumers at the point of purchase.

The challenge for South African businesses is adapting to the changing advertising landscape and finding new ways to engage audiences in the digital age.