Regional players have come and gone but Facebook and Google are Africa's dominant social media players. The only platform really giving them any serious competition is a Lithuanian mobile social platform called Eskimi. Russell Southwood spoke to its CEO Vytas Paukstys about how it has made the transition to smartphones and is diversifying its business offer.
Facebook dominates the African social media market and has the numbers by country to prove it. But there are no African numbers for Instagram, WhatsApp or Twitter. For all its famed talk about online market transparency, Google gives out few user numbers for Google Search, You Tube or Google+. From market research Balancing Act did in 2013, it appears that the latter has a foothold in only a limited number of African countries. Elsewhere in the world, the pattern seems to be that there is usually a local challenger often in a vernacular language. Nothing like this has yet emerged in Africa.
Local contenders have come and gone. South Africa's MXit once had everything to play for but has disappeared. South Africa's 2Go was once a promising contender but now seems out of the race. BiNu was focused on low-bandwidth featurephone users but failed to get multi-country traction so also looks like it's out of the race.
Lithuania's Eskimi has had to diversify to survive. According to Paukstys:"Today we have 3 business lines. Three years ago we had only one." Eskimi launched seven years ago and globally has gone from 9 million users in 2012 to 21 million members today. 80% of those members are in Africa. The major countries are: Nigeria (7 million); Ghana (slightly less than 1 million); South Africa, Tanzania and Kenya (each between 0.5-0.75 million). The rest are scattered across Africa, India and South East Asia:"We are a strong portal and social network."
Eskimi has adapted and survived the transition from basic and featurephone to smart phones:"Eskimi is now multi-platform including old featurephones, Android, Windows and Blackberry. The Nokia Asha and old Java apps are still there. We've successfully moved to smartphones. 40% of our users are now on them. It was the biggest risk along with the threat of competition from the global players. We experimented with the product and retained our customers. In some metrics (Alexa and Effective Measures) were in the top 3-5."
The second of the three business strands Eskimi has built out is around advertising. It has built its own programmatic mobile advertising platform "with our own technology. Eskimi DSP can reach users browsing outside the platform. It can reach 165 million users a month across the continent. Advertisers in South Africa and Kenya can run campaigns and the programmatic platform allows them to target demographics and location. There also many other targeting layers including operating system, time of day, age and gender". He gives the example of being able to tag by consumption habits: for example, in Nigeria the people who consume alcohol vs the 35-37% who don't."The aim is to be the one-stop solution for online advertising with reach, video and native adds".
The third revenue strand of the business model is a carrier billing system focused on Africa and some parts of Asia: overall, it's working in 20 different markets:"It provides billing solutions for carriers wanting to sell online. For example, you can sell music in Nigeria, Ghana, Cote d'Ivoire, Kenya, South Africa, Zambia, Egypt and several other countries.
"It's not a mobile money solution. You can't spend more than N100-200. If you're in Eskimi's social network and you want to buy a gift for a friend, you can pay N30-50 for virtual items. Eskimi still has all these virtual goods including Nollywood trailers, music and football products".
So why does Paukstys think that Eskimi is surviving and flourishing?:"There were two potential scenarios. Firstly, our users might die off because our users found other products. Secondly, the users on Eskimi don't want to leave". They seem to have achieved sufficient critical mass and networking size for the second scenario to be working.
"The market has grown a lot. There are three times more Internet users in Nigeria over the past 4 years. We lost people but also grew. The network effects and loyalty were strong. There was a lot of friend discovery and content on Eskimi. The Eskimi fan clubs (microblogs) have grown: there are 100,000 of them in Nigeria. There are user generated ones but there's also a separate function for curated fan clubs. Some of the football fan clubs have 2.3 million fans."
So what has he got planned over the next 18 months?:"The programmatic business will focus on adding agencies. We're currently focused on buying (inventory from) sites...We want them to embrace a new way of media buying."
"On carrier billing, we want to build more connections, more operators and be in more markets. We're looking at Sudan, DRC and Ethiopia. We want to have coverage in more markets in the next couple of years."
"With Eskimi Social, we want to sustain our position and build tools for advertisers. We will be marketing the product in other markets like Francophone Africa. We want to be there when they explode."
According to Paukstys, he growth in African digital advertising is continuing. "Globally FMCG, now spends 7-10% of the overall budget on digital. For device manufacturers, it's as high as 75%". His best guess is that digital is now around 15% of total budget outside South Africa:"It's growing a lot even with the current economic crisis. More expensive media has lost revenues."