Africa: the New Springboard for Growth for French Media Groups

AFRICA: THE NEW SPRINGBOARD FOR GROWTH FOR FRENCH MEDIA GROUPS

Strengthened African schedules on TV5 and France 24, the launch of A+(a dedicated African channel from Canal+), and Gulli Africa (a French children’s TV network owned by Lagardère), or the dedicated versions of Le Point (a current affairs magazine published by Le Monde): could Africa be the new Eldorado for French media companies?

While some media groups have been established for a number of years, the growth in French activity in the African market in the last two years is driven by a definite «Afro-optimism». This CONTACTS reflects both a recognition of the continent’s, patchy but undeniable, economic dynamism, and the opportunity that French-speaking Africa represents in the medium to long term. It also reflects an urgency among media groups to find new sources of growth, as they face the transformation of their traditional segments in the domestic market.

This article assesses the opportunities for broadcast and print media groups in sub-Saharan Africa, and sets out the key success factors for such growth initiatives, in an environment that remains complex and uncertain. PHILIPPE PESTANES [email protected]

SARAH PEREZ [email protected] reaching 350 million by 2017), and the avai- of new digital activity, catalyzing the lability of a choice of data bundles. consumption of services and the develop- THE DRIVERS OF ment of the user-base in the medium term. The penetration of mobile internet « AFRO-OPTIMISM » Moreover, the digital transformation is lowe- ring structural barriers to entry, freeing its players from the conventional and often Afro-optimism seems to be firmly complex physical distribution networks rooted in the minds of economic that have to be negotiated in Africa. Some decision-makers and is mirrored in a French press titles have therefore capitalized raft of growth initiatives from media on the opportunity to address a connected groups. What are the key reasons for audience by positioning themselves online, this confidence, which, it seems, nei- limiting the investments and uncertain- ther Ebola, nor the risk of terrorism ties involved in traditional go-to-market or political and military conflicts have strategies. dented? In Africa, digital could also contribute to developing a French-language meta-market for the media sector and French cultural A TRIPLING OF THE FRENCH- Source: World Bank SPEAKING AFRICAN POPULATION products. Focused on France to-date, this market could benefit from global French- BY 2050 language distribution platforms and eco- With products like Klif, Orange’s new Africa- nomies of scale that cannot be realized in According to the International Organization wide bundle (which offers a smartphone and the French domestic market. of La Francophonie, the number of French a package that includes 500MB of data, calls, speakers, worldwide, will triple between 2015 and SMS, for €35), the emergence of offers and 2050: from 275 to 750 million people. and devices enables the rapid acceleration The main engine of this growth: African demographics. Overall, by 2050, nine out An overview of 4G in Africa in July 2015 of ten French-speakers will be African.

The continent’s demographic dynamism and its consumer base have been cited as the main reasons to invest now, coming ahead of capitalizing on rapid urbanization and positioning for the future, according to a study by Havas Horizon and the Choiseul Institute.

While the media sector continues to contract in France’s domestic market, French- speaking populations, particularly in Africa, represent a potential consumer-base for print and broadcast products: a natural market for media groups to exploit.

THE DEMOCRATIZATION OF INTER- Countries that have launched 4G (following

NET ACCESS AND DEVELOPMENT OF initiatives by the regulator and/or operator[s])

THE DIGITAL ECONOMY Countries that have partially launched 4G, in a test phase or with limited coverage (following Africa is a mobile-centric continent seeing initiatives by the regulator and/or operator[s]) very rapid democratization of internet Countries with plans to launch access. This is driven by a combination 4G in the short and medium term (following initiatives by the regulator and/or operator[s]) of 3G networks today, and 4G tomorrow (Morocco has now allocated frequencies to Countries with no plans to launch 4G at present (or where information is not national operators), the arrival of low-cost available) smartphones (expected to double in number, Source: Wavestone 2 AFRICA: THE NEW SPRINGBOARD FOR GROWTH FOR FRENCH MEDIA GROUPS

Estimated average GDP growth between 2012 and 2017 KEY SUCCESS FACTORS IN A COMPLEX ENVIRONMENT

MARKET STRUCTURE IS STILL TO BE DEVELOPED IN MOST OF FRENCH-SPEAKING AFRICA

World Pacific A lack of qualified and reliable data Southern Asia central Asia Caribbean Middle East East Asia and the As Olivier Hessikaya, CEO of the Senegalese Sub-Saharan Africa Central Europe and North Africa and the Latin America and the office of the advertising agency, McCann, notes, «the availability of good-quality mar- Source: World Bank ket data is very limited.» All players agree that the lack of reliable data is now one of ECONOMIC DEVELOPMENT AND Estimated advertising spend by media type in French-speaking sub-Saharan Africa* the main barriers to the development of THE EMERGENCE OF THE MIDDLE marketing activity and advertising in Africa. In €m and % of total market CLASSES: A MOTOR FOR ADVERTI- Metrics on the consumption of TV, radio SING and print media remain a long way behind European standards of measurement. TNS- Demographic drivers, the democratization Sofres’s «Africascope», an established mea- of digital activity, investment, and confi- sure in the French-speaking market, pres- dence in the continent’s future seem to be ently covers only the capitals of the major the synergistic ingredients for sustained countries in the region, and data remains economic growth. World Bank forecasts reported (in the form of face-to-face inter- affirm Africa’s dynamism, especially in the views in participants’ homes). sub-Saharan region, an area currently going through a catch-up phase. The development of mechanical measurement techniques, for example, recording The advertising market, traditionally highly boxes of the type used by Médiamétrie (a correlated with GDP growth, should also French audience measurement company) see sustained growth. The emergence still comes up against complex financing of a middle class - with rising purchasing issues: «media companies are skeptical power, allowing more leisure spending - and about the quality of results and national the growth of local and regional SMEs can channels won’t invest in uncertain measures. now generate communications budgets, They often prefer to rely on more advanta- leading to higher spending on advertising geous ad-hoc studies», says Hessikaya. and increasingly structured markets. This Sources : Havas Africa, Zenith Optimedia, eMarketer Global Media could reach €360 billion in 2020 for French- Intelligence, Wavestone In a market that is still embryonic, there speaking sub-Saharan Africa. are few, or no codes of practice covering advertising activity. Such codes enable good practice to be defined and the sharing of key information between authorities and advertisers, as happens in France with the Union des annonceurs (the industry body for French advertisers).

3 Nevertheless, the emergence of data col- digital, should nevertheless encourage wider THE IMPORTANCE OF TAILORING lection by telephone in English-speaking access to quality varied broadcast-content. THE MODEL TO AFRICAN NEEDS African countries like Kenya or Cameroon, This market opening, destined for private suggests there are opportunities to improve sector broadcast players, is a major issue for Despite French media groups’ proximity levels of representativeness and regularity in growth. Despite the underlying political and to African markets, their activities in Africa the medium term. regulatory complexity, international opera- are all too often targeted at economic elites tors, broadcasters, and content publishers and African expatriates. Other European The need to enhance and differentiate are taking positions on the allocation of DTT players also perpetuate this elitist approach, content offers frequencies. for example, the Financial Times, with its African consumers suffer from limited avai- London-based bimonthly publication, This lability of quality broadcast content. The is Africa. French media groups will only be television offer, for example, still amounts to able to fully realize the potential that Africa a national public channel in many countries, offers if they adopt a mass-market approach with the schedule limited to general progra- and a model adapted to the reality of African ming and news. This lack of differentiation markets.. acts as a brake on better exploitation of audiences by advertisers. Developing a tailored offer with locally-targeted and differentiated Diversity and quality in programing are content essentially only available to satellite TV subs- African consumers want high-quality - and cribers, a relatively affluent consumer seg- African - content. The success of Nollywood ment, able to afford a subscription of €15- TV is an important example: it is the first 20 per month. The alternative, for the less African channel to offer dramas specifically well-off, is often a more affordable «pirate» aimed at women. Nollywood rapidly attrac- subscription. ted an audience and the interest of adverti- The liberalization of the TV market in many sers, who see it as clearly targeted and, the- African countries, and the transition to refore, highly valuable. Media groups must gear up to meet this demand, by producing Mobile money accounts by world region (December 2014)

Source : GSMA 4 AFRICA: THE NEW SPRINGBOARD FOR GROWTH FOR FRENCH MEDIA GROUPS

or acquiring local content. The recent acqui- is needed at present is for players to take consideration of how to develop a local pre- sition of stakes in African production or a segmented approach offering a low-key sence, either in-house or through partner distribution companies, such as Lagardère service, accessible to a maximum number networks. Publicis (a French multinational with Keewu Production and Diffa, shows the of people. This is the case for Le Monde’s advertising and public relations company), importance, for broadcast media companies, responsive-design website (tailored to suit for example, recently acquired a stake in AG of strengthening local rights catalogs. a range of devices and connection types) or Partners’ network of 15 agencies in French- France 24’s site, which is available in seve- speaking Africa in order to benefit from their And Digital allows companies to position ral versions, including one suitable for low- market proximity and strengthen its pan- themselves in the market while limiting speed connections. African footprint. financial and operational risks back in Paris. However, to capture the growth potential For the same reasons, unlimited strea- of national markets - including increasing ming models, now a mass-market product advertising revenues - companies should, in Europe, are still a long way from being wherever possible, adopt a strategy of a norm in Africa. This is why the develop- regional clusters, or national, rather than ment of partnership strategies with telecoms pan-African models. operators seems inevitable, sooner or later, if the distribution, adoption, and use of digital Such approaches require detailed analysis content offerings are to develop. both of the value of target segments by market, and how initiatives will be implemented In a highly competitive telecoms market, operationally. This can happen, for example, which is mainly mobile, prepaid and oppor- by strengthening a local presence through tunistic, operators are looking for the dif- Jeune Afrique Pictures, a resale platform for editorial content aimed strategic partnerships, like Euronews, which ferentiating elements that strong media at businesses has partnered with TV Congo (The Republic brands can bring, in order to improve custo- of the Congo’s public television station) to mer acquisition and retention. Co-branding launch - in Brazzaville - AfricaNews, its new and inclusion models should be conside- pan-African news channel. This approach is red, going forward, such as the partner- designed to achieve savings in terms of tech- ship between Trace and Airtel which tar- nical teams, editing, and production facilities. gets a young audience with music-themed competitions. Adapting access and go-to-market strategies to the constraints of the Capitalizing on European diversifica- market tion and transformation initiatives Already, some 62 million sub-Saharan Digital transformation and diversification ini- Africans regularly pay to use mobile devices tiatives, especially those pursued by French generating a total transaction volume that print-media groups, can also act as addi- reached about €600 million in 2014 and is tional springboards for growth in African expected to reach €1.2 billion by 2019, accor- markets. ding to estimates by the research firm, Frost Following the type of approach seen in the & Sullivan. Le Figaro’s diversification beyond its tradi- While most African households remain tional media - into classified advertising and constrained in terms of leisure spending e-commerce - companies can capitalize on and are reluctant to take on commitments, the platforms and the skills developed and the simplicity and immediacy of mobile pay- use them in African markets, helping to off- ments merits (re)analysis of the patterns of set the investments already incurred in the consumption this involves. This is something domestic arena. particularly relevant to print-media players The diversification of advertising agencies who could enhance advertising or subscrip- more and more toward event management tion models, and encourage ongoing use and and marketing consultancy are all rele- attachment to media brands. vant options for attracting African adver- While 3G and broadband networks are tisers looking for better-targeted services. growing rapidly, 80% of mobile usage in Pursuing them successfully requires the col- Africa still operates on 2G. It seems that what lection and use of data and, again,serious 5 Finally, a B2B approach that develops the catalog of professional and quality content sought in Africa can also be a source of additional income. This is the route taken IN A NUTSHELL by Jeune Afrique [Young Africa] which has secured €150,000 in funding from Google to // Africa is, undeniably, a springboard for growth for French media groups create a resale platform for French-language // The French-speaking population will triple by 2050: nine out of ten editorial content about Africa. French-speakers will be African

The economic potential of Africa for French // Solid economic and digital development are the main drivers of an emerging middle class with increasing purchasing power... media groups, especially in the French- speaking sub-Saharan region, is certain. // ...which encourages higher spending by pan-African and, especially, na- Recent activity in this area demonstrates it. tional advertisers // ...provided models are adapted to local economic and institutional rea- However, to fully exploit the region’s growth lities potential, we think it essential to conduct a // Go-to-market strategies must be adapted to take account of high levels rigorous analysis of the models that will best of mobile use, offering access to as many people as possible meet expectations for the greatest numbers // A tailored offer is needed, with locally-targeted and differentiated and the organizational implications they content carry for French groups that are still largely focused on domestic markets. // Institutional issues will need to be addressed through appropriate enga- gement and «soft-power» activities, to lay firm foundations for long- The media groups that can rapidly and effec- term growth tively implement a mass-market approach will be best placed to participate and enjoy the returns of the region’s anticipated growth.

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