But the industry matured and people started charging per impression (number of times an ad shows up on any given site). This type of pricing is called cost-per-impression (CPM). This was better than the monthly sponsorship deals. CPM is usually priced at 1,000 impressions. So when a sales person mentions a $1.00 CPM, it means that an advertiser pays $1.00 for 1,000 impressions of an ad regardless of how many clicks are generated within the 1,000 impressions.

This model was later surpassed with the cost-per-click (CPC). Google has built its whole advertising business on CPC. An advertiser only pays once a click has been generated and traffic sent to their site. CPC are valued more than CPM deals and generally are priced per click. Advertisers prefer CPC to CPM deals as they actually purchase for the traffic that arrives on their site.

Another pricing model is the cost-per-action (CPA) model which has taken off in the last few years. CPA deals are usually set up for affiliates. This system pays a publisher or website once a targeted action such as a sale actually occurs. This model is akin to having a publisher act as sales representative for a company. CPA campaigns work best when they don’t fit the traditional banner ads running on most publisher sites. These campaigns are quite effective whenever ads or links to products are placed within regular site content. Surfers are more skeptical purchasing from an ad than clicking on a product review that directs them to the manufacturer/store website. While a lot of ecommerce stores love this model, publishers shy away from it since an enormous amount of traffic is sent to ecommerce sites without publishers receiving remuneration for it.

In Kenya, leading local websites still price advertising according to sponsorship. Since most advertisers are used to paying advertising on sponsorship deals instead of CPA, CPC or CPM deals; they normally guard campaign targets and information to their detriment. I have been in a number of meetings whereby advertisers will expect a proposal for a campaign they seek to run. Once the proposal it presented, they usually shy away due to the suggested campaign amount as being too high.

At this point, I usually mention that the total amount is not what is important but rather the CPM or CPC rate since the value of the campaign is usually determined by this amount. Some clients comprehend it and are therefore able to move on to the next point in setting up a campaign. On the other hand, others remain skeptical, withhold the target budget amount and mention that this is an entirely new method of pricing advertising and they are not sure they will receive the right value for their money.

For the ones that proceed with placement, we run various optimization tests to ensure that they get the best performing creatives and landing page matched up with the right sites. Constant optimization of a campaign ensures that the goals of a client are met and they in turn want to spend more money with you.

Granted, only 5.6% of the African continent is online. Africa is the second fastest growing market in terms of connectivity at 1,100%. When most African corporations think of the web, they don’t see the potential markets this space holds for them. There are two very important aspects of online marketing that I point out to any potential customer looking at the reach an online market:

1. The web allows a company to reach Africans in the Diaspora effectively
2. Within Africa, the greatest concentration of online traffic is based on specific cities within a country and amongst the middle and upper class

Diaspora Africans
I once talked to an entrepreneur who wanted to reach Africans in the Diaspora. I told her that the biggest connection an African has with the continent whenever they are living in Europe, the Americas, the Middle East, Asia or Oceania is online. This is the ready access we all have when we think of Africa. We can read the news, find out which broadcasters have new content, connect with family and friends and keep abreast with conversation regarding Africa or our specific countries.

The Diaspora is a ready market for any product that can be sold or delivered online. Key hurdles often times are based on logistics or payment systems. Most African companies are either restricted within their corporate processes or international procedures and laws that place hurdles in their way of quickly utilizing available opportunities.

As is the case with most business models, success online depends on having the right strategy, knowing where and how to get your audience and figuring out a way to efficiently deliver on your brand promise. The web provides most corporations with an impressive reach into new markets either locally or globally. Africans in the Diaspora are already used to online shopping and have proven to be a constant source of remittances to their respective countries. Companies that utilize the opportunities a Diaspora market offers will be in a good position to reap great benefits.

An Urban Online Audience in Africa
So far, the web is an extremely urban affair within Africa. For instance, In Kenya 80% an internet study by the Communications Commission of Kenya (CCK) in 2006 found that the capital city Nairobi had 80% of all internet customers followed by Coast province with 9%. Kenya has 3 million internet subscribers as of 2008.

Kenya Internet Subscribers by Province

Source: CCK (Internet Market Study)

Nairobi Province’s population is estimated at around 3 million unique machines by Wikipedia. 80% of 3 million internet subscribers equal 2.4 million people*.

This is an extremely high reach for any company looking to sell its products within the urban areas of Nairobi and Mombasa which is within the Coast Province. When a company looks at its marketing targets and the audience they seek to reach, online marketing provides the right reach for them within key specific sectors. While the web is not the right platform for marketing to a rural or lower class audience, it is very effective in selling goods and services to middle and upper classes within any African country.

*The last study done by CCK was in 2006 when Kenya had around 1 million internet subscribers. The number of internet penetration within other parts of Kenya has grown but Nairobi still accounts for the lion’s share.