Are Cheki, OLX & Rupu TV Ads On Tusker Project Fame (TPF) 6 Evidence Of A Rising “.KE” Bubble?
Like many possibly millions(?) of viewers in Kenya, Uganda, Tanzania, Rwanda, South Sudan and Burundi last night I tuned in to watch the currently on-going Tusker Project Fame (TPF) TV Show which I normally catch every Sunday evening. Its been something of a ritual for me during the past few years to watch and listen to the contestants who range from the very good to those who clearly will never make it. Whatever the case, there is no doubt that TPF is East Africa’s biggest reality TV Show. Therefore, it was something of a surprise last night when I saw not one or two ads but actually three different TV ads for e-commerce startups in Kenya.
The first ad I spotted was for Rupu which is a daily deals web site that has been operational in Kenya for 3 years or so. I have to admit that their ads seem to be one of the cleverest ones in terms of its use of simple slapstick humour that anyone can get. They are short and to the point. The next ad I saw is for Cheki which is arguably the leading web site in Kenya for buying and selling cars goes into a humorous and digitally animated short clip that shows you how to use their web site – its very practical. Lastly, the big daddy of all the ads has to be OLX which has signed up popular comedian Eric Omondi as their brand ambassador who has different long form ads every week on TPF. The OLX ads are elaborate and focus on testimonials as well as how their web site works, in detail. The amount of money all of these e-commerce players must be spending to advertise on TPF must be a fortune and especially OLX who have a spot that runs for significantly longer than Cheki’s or Rupu’s – ALL the big boys of e-commerce in Kenya are slugging it out on TPF with the exception of Jumia.
This TPF TV Ads trend as explained got me thinking about the dot-com bubble in the US when e-commerce startups spent upwards of US$ 1 Million each to buy slots during the Super Bowl 2000. Below is an except from the web site Motleyfool on this phenomena:
The Super Bowl is more than just a championship sporting event. It’s also a national holiday of sorts, and for dozens of companies, it’s the perfect annual showcase for their brand. The Super Bowl is the one time of the year when millions of viewers actually pay attention to the commercials. On Jan. 30, 2000, at the height of the dot-com bubble, those millions who tuned into Super Bowl XXXIV were treated to one of the most start-up-saturated ad blitzes ever seen. During breaks in the action, a cavalcade of dot-com darlings paid $1.1 million per 30-second ad spot to sell a nation of newly minted market millionaires (and many more who had missed out) on all manner of dubious enterprises.
Now, I am not saying explicitly that this is exactly what is happening in Kenya but for sure we are seeing a situation where there is a massive land grab of sorts for the digital consumer in Kenya. One thing to note though is that Rupu, OLX and Cheki are all part of much larger global businesses that have deep pockets to invest in the long haul so as to effectively lock-in Kenya’s e-commerce consumers. Rupu is owned by Ringier which is a Swiss based company with a global presence in publishing and digital content. OLX is owned by South Africa’s MIH with investments in digital content businesses globally. Lastly, Cheki is owned by One Africa Media which received major funding earlier this year from SEEK, Australia’s and New Zealand’s largest careers web site.
Going forward, the caveat for Rupu, OLX and Cheki is whether or not they will be able to generate revenues that are anywhere near what they are currently spending on marketing both offline and online to grow marketshare. At the moment, it seems that their marketing costs to drive growth must seriously outweigh revenue as it stands which sounds very similar to the dot-com bubble of 13 years ago. On the surface, it would appear that Kenya could be headed for its very own “.KE” bubble on this basis and perhaps it may take a few years to see whether this is indeed the case at hand. However, one thing is certain, the TV Ads from Cheki, OLX and Rupu are certainly as entertaining as they get on TPF and I am happy to watch them when they do come on, just like the now legendary annual Super Bowl TV Ads in the US. Game. On!
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Timely article Moses – only one missing last night was http://www.brightermonday.co.ke which is also running TV campaigns on all the major stations!
Its a strong indicator that the online sector here in Kenya is coming of age with serious consumer brands emerging. This is simply what it takes to build large consumer brands that all Kenyans know and understand. I’ve often said that building a website is not the same as building a business, and to build a large scale consumer business you need a large scale consumer brand. Which means a lot of investment generally.
It was hard to imagine only three years ago that there would be very strong online brands dominating the advertising media space, and the fact that strong investors have backed these brands is testament to the fact that the online sector here in Kenya is maturing rapidly, and following paths well trodden in other markets where online brands also feature heavily on TV to this day.
All of these brands are probably experiencing the same issue which is that we’ve all max’d out on being able to grow brand awareness and traffic through more tactical means of building awareness through all the internet users in Kenya.
One cannot visit any website or Facebook without a guarantee of seeing an online Kenyan brand advert from either Cheki, BrighterMonday, OLX, Rupu, BuyRentKenya, PigiaMe or Jumia, or some of the other emerging brands. Between these companies, we have literally bought all the ad space online that’s available! At a high level, last year Cheki had well over 1 million unique Kenyan visitors, and when you think about the number of cars on the road – 1.2m – and all the people over say 23 on Facebook that might buy a car any time soon, we’ve pretty much got 100% penetration of the online consumer market, and not far off the same penetration in the volume of ads in the cars category. So the only way we can realistically grow the audience is to get those car buyers and sellers who are not online to move online. And Facebook ads are not going to achieve this.
Offline, Cheki for example has its brand on pretty much every single car dealer in the country, we have fleets of Cheki branded cars in every urban centre, we’ve run campaigns on the front pages of the major newspapers. The only way we can realistically reach the remaining Kenyan prospective car buyers who don’t know Cheki is through TV.
So this is a symptom of the rather limited media options available in the country to reach a mass audience and the early stage of our market where a relatively small percentage of the actual population is transacting online.
I should also point out that there’s very little substantive overlap between Rupu, OLX and Cheki. The former two – without speaking for them in any way – are in the run up to Christmas which should be their core peak of activity, being heavily focused on the retail and consumer marketplace spaces as their core long term business. November and December are the peak car buying months in the year, and the peak consumer shopping time of the year. So there are very strong seasonal reasons for us all being on TV at the same time for different consumer segments.
Lastly, and most importantly, this collective spend is rapidly growing the awareness across Kenya for the entire internet category, validating online as a trustworthy and “normal” channel for e-commerce. The fact that we are all spending on TV is great for us individually and great for all of us collectively.
We rather enjoy the fact that when one of our unnamed competitors drops a large investment on wall-to-wall TV, Cheki’s traffic always jumps – thanks guys, you know who you are 🙂
On a final note, regarding the “bubble” aspect, you’re right that some of these spenders are pouring very,very large sums of money with no current revenue model, and even if they had a revenue model, it is hard to understand how this level of spend by some in the industry will ever be recovered given the basic facts of internet penetration, population, propensity to spend, ad volume and time.
At Cheki we have a strong revenue model where advertisers pay us – not to mention some other revenue streams that get directly driven by increased consumer volume – and whilst we’re happy to spend some up-front capital on building a long term sustainable brand asset, we fully expect a return on that investment and have a pretty well thought out strategy to achieve that.
I actually thought I was the only one who noticed the same thing and Carey November and December are the peak months for almost all businesses and thats why the ads are all over!
PS: Pesa imemwagwa….I wonder how much OLX has spent on their campaigns!
The competition around these industries have resulted to this companies spending big. Obviously with the muscle of the big brands behind them, just like amazon their main goals is to monopolize the market. As anyone which website they would use to go to buy, sell or trade a cars for sale in kenya and they will mentions one of the above.
But kenyan firms are strong and with innovation and creativity will pull through. One website that has caused panic in the car market is http://www.simbacar.com .
Have you seen the rebrand on cheki . All the new features in their new website were first implemented by simba car supermarket a year ago. Therefore, my point is MONOPOLY in the car industry is being disrupted so watch this space. Young kenyans are bringing their best out.