Naspers spreading its web
The new portal claims to capture 60% of South Africa’s online audience, a depth of penetration unmatched in other media categories.
24.com’s proclaimed aim is to "dominate the digital arena in Africa by offering the best online content and services". Tools and services include free e-mail, instant messaging, photo albums, blogs and online shopping.
Despite early doubts, advertising has become a key driver of the online medium. That’s the good news. The bad news is that not many ad agencies have woken up to that fact.
Revenue, says 24.com’s commercial CE Russell Hanly , is based on the advertising model used by most traditional media. "That’s driven by search and classified.
"We have a search engine that offers greater local relevance than international search engines. For advertisers it can be a no-risk medium, where you only pay per click-through."
Crucial to the expansion of digital is the availability of affordable broadband. The formation of 24.com anticipates that future.
"Massive advertising growth in the world’s more mature markets has been driven by broadband penetration," says Hanly.
"Broadband changes the amount of time people spend on line, which makes the medium more attractive to advertisers."
However, online expert Arthur Goldstuck , of World Wide Worx, says it will be a while before broadband becomes a significant ingredient. "Cost is the main hold-up, but its geographical availability is also limited. Government and Telkom are paying only lip-service to cost reduction."
Nevertheless, Goldstuck says the creation of 24.com "is a recognition that the Internet is coming into its own as a media channel".
But it’s necessary to understand the nature of its growth. "The new user base isn’t growing fast any more, but those with five years’ experience of the medium are increasing their usage rapidly. So it’s starting to approach critical mass among experienced users. That trend will intensify quite significantly by 2008."
For marketers, what this means is the prospect of more sales to existing users rather than to new users.
Online advertising is growing rapidly, though it’s still a small medium: bigger than leaflets and flyers but smaller than cinema. The static banner ad now accounts for just under 50% of all online revenue, down from two-thirds in two years. Growing fast are rich media (interactive) banners and payment for content.
The medium has also become profitable, moving from an overall loss of R18.7m in 2003 to a forecast profit of R19.6m this year, says World Wide Worx.
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