THE INFLUENCE OF DIGITAL ADVERTISING ON PERFORMANCE OF PRINT MEDIA COMPANIES IN KENYA CONSTANCE FRIDAH NYAMAMU A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF MASTER OF BUSINESS ADMINISTRATION, SCHOOL OF BUSINESS UNIVERSITY OF NAIROBI DECLARATION This research project is my original work and has not been submitted anywhere for examination in any other university or institute of higher learning. Signature _______________ Date _______________ CONSTANCE FRIDAH NYAMAMU D61/67773/11 This research project has been submitted for examination with my approval as the university supervisor. Signature _______________ Date _______________ DR .R. MUSYOKA Lecturer, School of business University of Nairobi ii DEDICATION This research project is dedicated to my family for their encouragement, support and understanding my absence while undertaking my research project. For this I say thank you all and God bless. iii ACKNOWLEDGEMENTS I wish to thank the Almighty God for giving me wisdom to conduct this study. I also appreciate my supervisor for his guidance in conducting the research, my family for their moral support and the management of Nairobi University for their understanding and support. iv TABLE OF CONTENTS DECLARATION........................................................................................................................... ii DEDICATION.............................................................................................................................. iii ACKNOWLEDGEMENTS ........................................................................................................ iv ABSTRACT .................................................................................................................................. ix CHAPTER ONE :INTRODUCTION ......................................................................................... 1 1.1 Background of the Study ....................................................................................................... 1 1.1.1 Digital Advertising ......................................................................................................... 3 1.1.2 Concept of Performance ................................................................................................. 4 1.1.3 Print Media in Kenya ...................................................................................................... 5 1.2 Research Problem .................................................................................................................. 7 1.3 Research Objective .............................................................................................................. 10 1.4 Value of the Study ............................................................................................................... 10 CHAPTER TWO :LITERATURE REVIEW .......................................................................... 11 2.1 Introduction ......................................................................................................................... 11 2.2 Theoretical Foundation ...................................................................................................... 11 2.3 The Economics of Advertising ............................................................................................ 13 v 2.4 Performance of digital and print Advertising Markets........................................................ 14 2.5 Adoption of digital advertising ........................................................................................... 17 2.5.1 Digital Advertising for Customer Acquisition ............................................................. 17 2.5.2 Brands, Trust and Customer Relationships .................................................................. 20 CHAPTER THREE: RESEARCH METHODOLOGY ......................................................... 22 3.1 Introduction ......................................................................................................................... 22 3.2 Research Design .................................................................................................................. 22 3.3 Target Population ................................................................................................................ 23 3.4 Data Collection .................................................................................................................... 23 3.5 Data Analysis ...................................................................................................................... 23 CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION OF RESULTS .......... 25 4.1 Introduction ......................................................................................................................... 25 4.1.1 Response Rate............................................................................................................... 25 4.2 Adoption of Digital Technologies ....................................................................................... 25 4.2.1 Extent to which digital advertising has affected print media revenues ........................ 25 4.2.2 The proportion of digital advertising revenue in the overall business performance .... 26 4.2.3 Rating the newspaper advertising revenue share .......................................................... 26 vi 4.2.4 Key determinants to the reducing newspaper advertising revenue share ..................... 27 4.2.5 Impact of digital advertising on organizational performance ....................................... 27 4.2.6 Strategies for improved overall digital performance .................................................... 28 4.2.7 Digital advertising uptake by the print media companies ............................................ 30 4.2.8 Challenges of digital advertising .................................................................................. 31 4.2.9 Impact of digital advertising on the future performance of the industry ...................... 31 4.2.10 Perception on digital advertising in Kenya ................................................................. 32 4.2.11 Benefits of digital advertising ..................................................................................... 32 4.2.12 Digital and traditional advertising on customer reach ................................................ 32 4.2.13 Satisfaction with the organization’s adoption of digital platforms ............................. 33 4.2.14 The frequency of using digital advertising ................................................................. 33 4.2.15 Digital platforms/technologies adopted in its print media activities .......................... 34 CHAPTER FIVE SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ............. 35 5.1 Introduction ......................................................................................................................... 35 5.2 Summary ............................................................................................................................. 35 5.3 Conclusion ........................................................................................................................... 39 vii 5.4 Recommendations ............................................................................................................... 43 5.5 Areas of further studies ....................................................................................................... 44 REFERENCES ............................................................................................................................ 46 APPENDICES .................................................................................. Error! Bookmark not defined. APPENDIX 1: LETTER OF INTRODUCTION .......................... Error! Bookmark not defined. APPENDIX II: INTERVIEW GUIDE ..................................................................................... 57 viii ABSTRACT The rise of digital advertising has had a huge impact on traditional print media. Schlosser et al. (1999) defined digital advertising as “any form of commercial content available on the Internet that is designed by businesses to inform consumers about a product or service”. The purpose of the study was to determine the influence of digital advertising on performance of print media in Kenya. The research design employed in this study was a descriptive cross sectional survey design. The target population of this study was all the staff in the advertising department of all the four print media companies in Kenya (Nation Media, Standard Group, MediaMax and Radio Africa). The study used an interview guide for data collection. The study used content analysis for data presentation. The study established that digital advertising significantly affected print media revenues given that most people are moving away from the traditional methods of buying printed newspapers to reading news online, which generated significant revenues for the print media companies, digital advertising uptake by the print media companies was affected by social-cultural, economic and legal factors and that the high cost of acquiring the digital facilities and lack of adequate IT infrastructure in the country were barriers to adoption of digital advertising. The study concludes that digital advertising will have a huge impact on the performance of the print media companies in the next 5 years and that the digital platform is likely to be the next frontier