More and more companies from developed countries are outsourcing to South African marketing agencies to run their campaigns, due to tightening margins from competition and the increasing cost of employing local talent, says Justin Lester, owner of Ruby Digital and co-founder of Smart Marketing Podcast.
The biggest digital marketing trend we’ve seen recently is a shift by English-speaking first-world companies towards South Africa. Ruby Digital has seen a five-fold increase in enquiries from abroad over the past 12 months. Specifically, we’ve seen the most enquiries from East and West Coast America, the UK, Israel, Australia and New Zealand.
Initially, companies from those countries were faced with two choices: they could use local marketing agencies or outsource to, typically, South-East Asian countries. Their home countries produce excellent content, but their prices tend to be exorbitant. In contrast, South-East Asian marketing companies, although much cheaper, tend to produce lower-quality output, particularly when it comes to creating good English content. These agencies tend to be found wanting when it comes to taking on more competitive campaigns.
But now these companies have a third option: working with a South African agency. South African marketing agencies offer high standards of work, but at a much lower cost – sometimes up to 50 percent less than what these companies would pay locally.
What is causing this trend?
There are multitudes of factors at play when it comes to any digital marketing trend. But for foreign companies choosing South African agencies, we can expect the causes to be as follows:
The weakening Rand
As of December 2019, $1 is worth R14,58. This time last year, it was worth R14.00. Therefore, the fact that the rand continues to depreciate against other currencies means that foreign companies can take advantage of the exchange rate, and use their higher buying power to get more value for what they spend on advertising.
Ease of communication
South Africa is located in an advantageous time zone. For example, South African agencies are able to communicate with Australian clients in the morning. Then, during the course of the day, they are able to liaise with clients in the UK and Israel, followed by American clients towards the end of the day.
Additionally, the fact that South Africa is largely an English-speaking country, and shares many cultural similarities with other Western countries means that communication is effective and both parties are able to understand each other well.
South African agencies with international recognition will more easily attract foreign clients than those without.
How have South African agencies reacted?
South African agencies have certainly caught on to the fact that there is a large segment of the international market that they should focus on, and have reacted accordingly. Several agencies have begun to target Australia in particular, and have become quite well-established there.
South African agencies are focusing on Australia and not other countries like America, because there is a lot of saturation in those markets. There are many more competitive companies that are already established there, making it harder to gain a foothold.
There are a lot of opportunities for South African marketing agencies looking to expand their operations – though they may want to look beyond South Africa for potential clients.