Marketing tech set for accelerated growth in Africa as internet penetration, funding grows

Here’s a little spoiler for the upcoming movie African Tech Startup Funding Report (coming soon!) – 2022 was a big year for marketing technology from an investment perspective. While this fact may be hidden among the bigger headline numbers, the future is bright for an industry that is growing in importance.

12 marketing technology startups raised funding last year, a 20 percent increase over 2021, and between them these startups raised $34,725,000. It accounted for one percent of Africa’s total and grew by 242 percent in 2021. It maintains strong growth in this area of ​​marketing, increasing by 281.5 percent in 2021 from 2020.

So why do we hear so little about outer space? For one, it’s very early days and marketing in Africa is still largely analog, with television taking up a huge chunk of the budget.

Chibuike Goodnews is one of the founders of the Nigerian company Dochas, a cross-channel digital advertising platform for emerging markets. The platform enables businesses and advertising agencies to reach their target audience by leveraging data, technology and artificial intelligence. Businesses use Dochase to build awareness, engage customers, increase online sales and app installs.

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The good news is that the focus on television is a traditional business whose main goal is to raise awareness. The space, he says, has been ripe for disruption for some time.

“Operational disruption must be a massive technology solution capable of integrating first-party audiences, leveraging deep targeting technologies, and driving better performance. These have huge capital requirements and visionary entrepreneurs,” he said. “Martech is a huge investment-intensive space, and there are currently no giant African spaces due to high technical requirements and lack of funding. But the market is huge and promising.”

Apart from funding, another challenge is internet penetration. With more than 60% of Africa’s population still offline, it makes sense for businesses to focus on offline channels such as marketing, advertising, radio and television that directly reach customers. The digital versions were also thin. However, according to Goodnews, usage has increased since the pandemic and funding has increased as we see it.

“When people can’t go outside anymore, digital marketing technology solutions become popular,” he said. “Many people who have explored digital technology solutions have continued to use them ever since. They often realize they can reach more people, measure performance, be creative, and access features they can’t see offline.”

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Digital solutions like Dochase will tell you the source and cost of each customer you acquire.

“Target audiences can reach every customer who has gone online, whether it’s current or potential, through websites, apps, social media and mobile,” Goodnews said. “Therefore, companies looking to connect with them must go digital with technology solutions. Technology’s share of the marketing wallet will continue to grow as more companies employ young people, demand performance for every dollar spent, and drive Internet growth in Africa.”

The main advantage of online marketing is cost, and startups in particular are more likely to adopt a digital approach to marketing. So demand is growing and investor interest is growing, but the likes of Adzili, Terragon and Vowzi have caught the eye in the past couple of years.

“Local investors don’t understand martech, so they need to tread carefully. With limited funding, most investment interest shifts to fintech and other complex sectors,” Goodnews said.

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The entire African advertising market is $5 billion, not a big enough number to attract most VC firms. However, there are signs of development and Goodnews gives positive hope for the future.

“As investors see more success stories, investor interest in marketing technology will change. They will also realize that big non-advertising businesses like Jumia, Amazon, Netflix and Opera have all become advertising giants,” he said. more than $6 billion in ad revenue. More global digital businesses have seen their own ad revenue support the free internet.”

He said the space needs visionary founders and investors.

“Despite the enormous potential, there is a huge funding gap in marketing technology. But investors will look more closely at the success story. Digital martech thrives on core direct-to-consumer or first-party solutions such as search, news aggregation, e-commerce, social media, data or mobile hardware.”

If African startups can build these solutions more than they have done before, it’s a sign that customers and investors will follow.

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