Here’s a little spoiler ahead Africa Startup Funding Report (Released Soon!) – Marketing Technology has had a big year from an investment perspective in 2022. While that fact may be buried among larger headline numbers, the future looks bright for an increasingly important sector.
Twelve marketing startups raised capital last year, up 20 percent from 2021, and between them these startups spent $34,725,000. This represents 1 percent of the African total and was up 242 percent in 2021. It maintains strong growth in this regard within the marketing space, with 2021 up 281.5 percent from 2020.
So why do we hear so little about space? First, it’s still very early days, and marketing in Africa is still very much analogue, with television taking up a large chunk of the budget.
Chibuike Goodnews is the co-founder of a Nigerian company doshasA cross-channel digital advertising platform for emerging markets. The platform allows companies and advertising agencies to reach their target audiences by leveraging data, technology and artificial intelligence. Companies use Dochase to create awareness, engage customers, increase online sales, and install apps.
Goodnews says the focus on TV is because its top spenders are traditional companies whose main goals are awareness. He says the space has been ripe for disruption for a while now.
“Disruption should be a massive technology solution with the ability to aggregate first-party audiences, leverage deep targeting techniques, and produce better performance. These have huge capital requirements and visionary entrepreneurs,” he said. “Martech is a huge capital-intensive space, and no There is currently no African giant in space due to high technical requirements and financing gaps. But the market is huge and promising.”
Another challenge beyond financing is the penetration of the Internet. With more than 60 percent of Africa’s population still offline, it makes sense for companies to focus primarily on offline channels such as direct-to-customer marketing, flyers, radio and television to reach customers. Digital alternatives have been weak on the ground, too. However, Goodnews says there has been an increase in uptake since the pandemic, a period when, as we’ve seen, funding has also increased.
“Digital technology solutions to marketing become mainstream when people can no longer go outdoors,” he said. “Many of those who have explored digital technology solutions since then have continued to use them. Often they realize they can reach more people, measure performance, be creative, and access features they can’t see offline.”
Digital solutions like Dochase will tell you the source and cost per user you got it.
“The target audience has moved online, and every current and potential customer can be reached on websites, apps, social media and mobile,” Goodnews said. “So companies that want to reach them need to use digital technology solutions. Technology will continue to grow in share of the marketing portfolio as more companies hire young people, demand performance for every dollar spent, and benefit from the growth of the Internet in Africa.”
One of the main benefits of online marketing is cost, which means startups in particular are more likely to adopt a digital-first approach to marketing. So, demand is growing, and while investor interest is still nascent, there have been notable rounds for the likes of Adzily, Terragon, and Wowzi in the past couple of years.
“Local investors do not understand martech and so they have taken cautious steps. With limited funding, most investment interests are moving into fintech and other less complex sectors,” Goodnews said.
The entire advertising market in Africa is about 5 billion US dollars, a figure that is not large enough to entice most venture capital firms. However, there are signs of development, and the good news has positive hopes for the future.
“Investors’ interest in marketing technology will change as more investors see success stories. They will also realize that the big non-ad companies like Jumia, Amazon, Netflix and Opera have all become huge advertising companies.” Transsion, which owns 70 percent of the mobile phone market in Africa, has become a huge advertising company; Amazon has generated more than $6 billion in advertising in just three years. More global digital companies have seen that the future will have their own advertising revenue to run free internet.”
He says the space needs visionary founders and investors.
There is a huge financing gap for marketing techniques despite the huge opportunities. But when investors see the success stories, they’ll look at more detail. Digital technology thrives on top of basic direct user or first party solutions such as search, news aggregation, e-commerce, social media, data or mobile devices. “
If African startups can build these solutions, to a greater extent than they already have, the signs are that customers – and investors – will follow.