Saracen OMD: One of East Africa’s Largest Independent Media Specialists

Interview with Lenny Ng’ang’a, CEO for East Africa at Saracen OMD

What is your assessment of the sector? What are the latest trends?

The sector has become extremely complex because Kenya went through the digital migration where we moved from an analog signal to a digital signal in 2015 for TV. When that happened, the average household in Kenya went from access to about 26 TV channels to 332 channels watched or mentioned as watched by a research panel. Radio, which is a key medium in this part of the world, has also grown tremendously. At the moment, the capital of Nairobi alone has about 67 radio stations, with 268 radio stations nationwide. It is very fragmented and very complex. Unfortunately, a sector like print, such as newspapers, is actually declining or stagnant. People are not really getting into the reading culture or buying papers. The only papers that we see showing growth are the free distributed papers. We have two free papers and they are showing growth because of the distribution model and the fact that people are not paying the cost outlay to purchase the paper. Cinema is actually showing a resurgence which is basically being driven by 3D because the 3D experience is not something you can get at home. Blockbusters are really driving the revival of cinema because of the visual feast that people experience when they go to a 3D theater. 3D saved cinema in Kenya because before that there was a proliferation of pirated content and DVDs, but 3D has really worked well for that industry. In digital, the growth is phenomenal. In Kenya, because of access to cheap data and data bundles, about 90% of all online interactions happen on the mobile phone. But the amount of content consumed is restricted by the affordability of the data bundles. Not everybody can afford to be on YouTube all the time or to download video clips. You find that platforms like Facebook have gone into things like Fakebook Lite and Facebook Messenger which make it a lot easier for the normal customer on that platform to interact with that medium throughout the day at low cost. Secondly, driving that is the entry into the market of lower cost smartphones. Now, the number one selling phone brand in Kenya is Tecno. It is a phone brand out of Hong Kong. They are bringing in smartphones that are quite affordable, at about the $50 level. Being able to get a smartphone for that amount of money is really helping the interactivity with the internet on the phone.

Is there advertising through Facebook Messenger?

Messenger does not have advertisements, but if you go onto Facebook Lite there are advertisements on that version. The other platform that has gained a lot of traction is the number one platform now that people are using which is WhatsApp. There is no advertising on that but there is a lot of content that is shared between people. If they find an ad or something interesting, they share it.

What is the state of the sector with media and advertising agencies?

Our key local client is Safaricom, which is a teleco. We also have a local electric company called LOTO. We have international clients such as Uber and Google. We also have international banks like Stanbic Bank which is the Bank of South Africa.

The sector at the moment is undergoing a revamping. Before, the trend across the world was to separate services. You would have your creative agency, your media agency, your PR agency, and your digital agency. We have returned now to the holistic, 360-degree service offering and that is what clients are beginning to demand. We believe that managing all these different agencies has become quite a tough task for many of the clients. That is why they are starting to demand a rebundling of all of these services back into one. The digital component has grown quite significantly but the traditional offline media is still very strong in this part of the world. That still continues to be one of the key focus areas, especially for brands which are looking at mass market. At the bottom of the pyramid you still have to use mass media to communicate.

Is there a competitive market? Are there a lot of media agencies here?

All the major advertising groups globally are represented here in Kenya because they know Kenya is a hub for East Africa. The three key hubs for advertising in sub-Saharan Africa are Johannesburg in South Africa, Nairobi in Kenya, and Lagos in Nigeria. All the major groups are represented here in Kenya: Omnicom, WPP, Publicis, Interpublic. It is quite competitive.

How do you differentiate yourself from other companies?

Our competitive advantage is being veterans of the industry. I have been in this industry for 24 years. My other partners have been active about the same length of time. We have worked across East and West Africa so we have a deep knowledge of consumers in this particular part of the market. We understand the consumers’ point of view and how to motivate consumers and how to reach consumers for our clients’ benefit. That is one of the key advantages we have. The second one would be, true to the ethos of the Omnicom Media Group and OMD, that we focus on our clients. Now, we are really driving towards return on investment and performance marketing. It is making sure that with everything we do with our clients we start tracking the return investment, whether it is in terms of hard measures or soft measures like empathy and emotion towards the brand or the product or even changing habits in terms of social marketing programs. We are really focused on delivering for our clients the outcomes of any marketing investment. We look now beyond just advertising. We look at holistic solutions to help our clients achieve their goals. For example, we had one client who was selling satellite internet connectivity, which is not affordable for most companies and only used by companies who are in very remote places where there is no infrastructure. They came to us and they wanted to run a campaign above the line on traditional media. I told them no. Despite the fact that we were not going to earn a commission, we told them that it just did not make sense. We told them it was better to do a face to face selling or a series of breakfasts. We profiled for them that there were only about 32 companies that can afford their service. If they did a breakfast with each company, they could meet everyone and it would be the best way to go about their marketing. We do not just look at the traditional options, we look at total solutions for our clients.

What results do you provide for clients?

Because we are part of OMD and PHD, we have tools that enable us to put in our clients’ marketing objectives and current market realities and model and see what kind of return investment they are getting. We have a tool called Investment Planner that can actually help generate outcomes. If we put in this kind of investment, based on what happened in the past and the inputs we are putting in now, this is the type of sales uplift you can expect, or based on whatever results we are tracking we can see what you would expect to get back. For the soft measures, we work together with a research agency and benchmark before we start an advertising campaign that this is where the brand is currently, this is what the brand measures are, this is what we want to track, and this is where we want to get them. Then, during the campaign, we keep checking on that.

How does the Investment Planner tool work? Does it use Google Stats or a server?

It is a tool developed by the Omnicom Product Lab. It was developed specifically for Omnicom Group agencies. The client will have their data on their product sales and we have the data on the media performance: how many people did you reach or how many times did you reach them? And then, we collaborate that together with the product sales information and we are able to see if you reach X amount of people, your sales went up Y amount in this region, etc. We do use a lot of Google Analytics, but that is more for the digital campaigns.

What is your international reach?

We cover Kenya, where we have our headquarters in Nairobi. We also have an office in Dar es Salaam, Tanzania and Kampala, Uganda. In terms of market coverage, we also do work for our clients and provide media planning and buying services. We also cover Rwanda, Burundi, Malawi, Ethiopia, and South Sudan.

Do you see changes and different attitudes between these different countries in the way clients behave or what they expect? Do you have the same approach for each of these markets?

There are definitely differences in the local clients for how they approach marketing and advertising. For the multinationals, it is pretty consistent across the different countries. For example, in a country like Tanzania, there is quite a bit of a desire to be on radio, especially. In Kenya, there is a stronger desire to be on TV. Depending on the medium and how the medium is perceived in that particular market, that is where you find the different attitudes. In Kenya, advertising is actually seen as a progressive thing to do, whereas in another market like Tanzania, some clients might see it as just an unnecessary expense which they think might not really help them grow their business and they would rather use their money for something else.

What are some of your success stories?

There is one campaign that we conceived and executed for Safaricom. It is in its third year now. We built a youth network for them called Blaze. This was specifically because at the time, the youth were not feeling like Safaricom was really talking to them. It was like a big brother and not something they could relate to. So, the challenge was to come up with a key brand that would keep the youth engaged and in the network. Blaze is a whole network of empowerment. Around Blaze, there was mentorship. We have camps called “Be Your Own Boss” where mentors come to have sessions across the country and teach youth about different industries to help them see how people can be successful and have them believe in themselves to become successful as well. That has delivered very good results for Safaricom. There are upwards of 2 million young people on the network and participating in all the activities around that. There was even a TV show for it along the lines of The Apprentice called Beyond Boss. They would come up with ideas and try to execute their ideas through different projects and at the end, one entrepreneur would get their business fully funded. Another success story is a small local moving company. They were just starting out and they came to us saying they believed in advertising, but they were not known in the market and that they wanted to make a name for themselves and build their business. We helped them to conceive an on-air campaign. They called us after three weeks to stop the campaign because they could not handle the huge increase in business.

Who are your clients? What is the share of international and local clients?

Our key local client is Safaricom, which is a teleco. We also have a local electric company called LOTO. We have international clients such as Uber and Google. We also have international banks like Stanbic Bank which is the Bank of South Africa.

What are the major challenges that you face?

One of the biggest challenges we have in this market is the cash flow. Things like credit periods and getting paid on time have become a problem because in the economy now, the cycle of payments tends to get longer and longer, but the agency gets caught in the middle. You have to service your clients but still pay the media. The media is very strict on their payment terms. Agencies have to finance their cash flow at some point which is quite tough. The tax is also a challenge. Sometimes, we pay withholding taxes and VAT and we cannot claim that back. What the agency retains as its portion of the VAT is not as large as what is being deducted from the total amount of money that you are moving. Agencies end up being in a very tight situation where you owe or are owed a refund on taxes that is not forthcoming very quickly. It makes it difficult to operate smoothly.

Project yourself into the medium term, three years’ time or longer. What is your vision for the company? What do you want to achieve?

We want to change the company and move more in the direction of being business partners for our clients and helping them to solve actual business problems rather than just being one component at the end of a whole business discussion. We are also acquiring new skills to be able to help in that role and to learn that role of being business consultants to our clients. The second area we are doing for the companies is ensuring that we are able to deliver for our clients holistic brand experiences, not just media. We are moving now into the areas of brand experience creation with events, brand activations, etc. It is an area which we have been involved in previously through sports associations and sports marketing in Africa, but it has been a bit risky in the past. But that is something that we continue to do.

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