By Collins Hinamundi
On 30 November 2022, Next Media Services (NMS), the company that owns NBS TV, laid off more than 30 employees amid a global trend of downsizing at tech and financial startups. The move coincided with a similar announcement by Nation Media Group (NMG), the largest multimedia company in East Africa, which revealed plans for layoffs, new jobs, and business realignments.
The industry faces job cuts due to declining commercial advertising revenues, forcing media companies to restructure and downsize. A report by DW Akademie and Aga Khan University School of Media and Communication revealed that commercial advertising remains the top source of revenue for many news media organisations in Uganda, Kenya, and Tanzania.
In response to the changes, NMS CEO Kin Karissa called the decision to lay off employees “painful” and blamed it on changing consumer habits. He emphasised the need for the company to remain relevant in a highly competitive environment. Less than two days later, NMS announced several new digital jobs and emphasised its commitment to digital transformation.
For over a decade, digital media has been a mainstay for media publishers, with platforms such as Ultimate Media’s Ug Pulse and Chimpreports becoming popular online and earning revenue through display ads on their platforms and Google AdSense. Advertisers also began hiring digital media specialists and agencies, as running online ads on Google was more effective and cost-effective than traditional banner ads. Media executives paid attention to digital transformation as a buzzword but did the bare minimum when it came to taking advantage of the platforms; eventually, many media houses struggled to find successful business models.
“It is why the top 10 most engaging brands are dominated by media houses and the telecoms that are big spenders in advertising. Media houses started jostling for supremacy as far back as 2009,” says John Babirukamu, a digital media consultant helping media houses reap the benefits of their investment in digital teams and content.
“The media industry has been disrupted by the very people it was designed to feed,” says Daniel Odaka, a former digital media specialist for major advertisers in Uganda. “Media houses have made spirited attempts to use the internet to their benefit; however, many of them are reacting to the internet and are not taking bold moves to use it to drive conversations, processes, and even the business model.”
The key challenge for media houses has been monetisation, according to Babirukamu. “This is the key area that has failed them, except for Daily Monitor, maybe. But even then, it is heavily reliant on revenue from its web advertising and paid PR,” Babirukamu adds.
Online publications have struggled to monetise premium content, with recent attempts by The Observer website and Chimpreports falling flat. Babirukamu believes this is partly due to the difficulty in labelling the quality of the content as “premium” and the lack of adaptability of monetisation platforms to meet the needs of Ugandans, who primarily use mobile money and cash for transactions. However, this is starting to change as the cost of transactions for customers and content providers is lowered.
In a problematic article for the Sunday Monitor last year, journalist Timothy Kalyegira who has tinkered with online publishing in different versions for over 10 years, offered a cartel format solution modelled on the Oil Producing Cartel OPEC for Uganda newspapers if they are to survive.
“If the newspaper and magazine industry got together into an OPEC-like cartel and agreed starting on day X to pull all their content from social media and put it behind paywalls on their websites, and, equally important, made it as easy to pay for access as it currently is to pay one’s water or electricity bill using even a basic mobile phone, at last, the crisis of steeply falling newspaper revenue would be halted,” Kalyegira wrote.
But according to Odaka, this suggestion demonstrates the media industry’s misguided approach to finding a successful business model on the internet.
“The media houses have always been the voice of society, and they are struggling because, with the internet democratising information, they are no longer a monopoly for information. They need to join the present conversations, assimilate to the trends and start to have conversations with the audience,” he adds.
Odaka is referring to the 18 million or so Ugandans who are able to access the internet, the majority of whom are not on social media, according to the Uganda Communications Commission. At least five to six million of these, according to data analytics company Eskimi, are using smartphones to access the internet. These are the people media houses need to reach and create content for.
The current challenge is for media houses to understand why digital channels like TikTok have become so popular and refocus their resources on digital-only content. From producers to news anchors to cameramen, there must be a deliberate effort to switch to creating content for digital.
“Media houses have not really tapped into their full potential when it comes to content creation for digital. Most traditional media houses are still developing content for their traditional channels and merely repurposing it for digital channels. And many are still failing at this,” said Babirukamu.
From creating digital-only content for their millions of social media followers to developing content for the social channels of corporate customers to commercialising live sessions like Facebook Live, Twitter Spaces, and LinkedIn Live Events, there is potential for monetisation. “Once this is done, monetisation will be extremely easy,” said Babirukamu.
According to Babirukamu, there is money to be made in online advertising beyond Google ads, direct web ads, and syndicated links. Popular YouTube channels in other countries are now doing in-video ads with affiliate marketing and generating significant revenue. “This is an extra revenue source I have not seen Ugandan media houses, and even celebrities, exploit. Yet it is massively beneficial if you can get millions of your customers to buy into a product or service,” he said.
These numbers and the conversation about going digital are familiar to journalists, especially those on digital desks. The only thing that has changed is the creation of digital jobs and consumer-focused teams like community managers within media houses. This is a far cry from the beginning of most digital careers in journalism when executives in newsrooms treated the internet as a passing trend and assumed they would still be there when it passed. So what changed?
When demographics and the economy came for the media
In a classic case of trying to bolt the door after the horse has escaped, online media publishers threatened to block google ads on their platforms in 2017 if big local advertisers did not return to advertising with locally owned online platforms.
“The association reached this unanimous decision in the interest of safeguarding members’ commercial interests in light of a growing trend by local companies to redirect digital advertising to ad-serving operations, notably Google Ads. This has led to a loss of significant amounts of revenue for OMPA [Online Media Publishers Association] members,” Giles Muhame, the association’s president at the time, was quoted as saying.
This statement, coming from online media publishers who had started eating into the revenues of traditional media houses by transferring that business model online, was hypocritical at best and sourgraping at its worst.
Advertisers were using the full capabilities of online advertising platforms that were getting smarter and easier to use, and the online publisher’s solution was to ban them instead of figuring out how to take advantage of the same measurement and targeting capabilities of these platforms to serve their customers.
But this was 2017, and that year the economy, according to the World Bank, recorded a miserly 3.1 per cent growth rate, the same growth rate the economy recorded in the middle of the Covid-19 pandemic.
The layoffs by are a direct result of this economic situation. According to Babirukamu, the government’s decision to tighten its purse strings affected most private sector players, yet they are the key source of revenue for media houses.
“This has forced them to re-evaluate their current staff and take the now long overdue measure to go all-out to monetise their digital channels since that is where the growth is coming from,” he says.
Layoffs as a reaction to this economic situation from the media, as it was then, were the wrong prescription. Yet, the economic situation was not the only threat to the media.
The consumer was also changing, and the new consumer was too young with too many alternatives and a short attention span, so the people in media houses could not keep making money off him/her.
More than 70% of Uganda’s population is below the age of 35, which should make it the perfect media target. Still, that audience is educated and likely more exposed than the journalist writing for them. So how do you engage such an audience to grow your newspaper or TV audience and get them to spend money on your product?
The obvious answer is digital
The media industry has long recognised the importance of digital platforms, but many media houses have yet to effectively monetise these channels and adapt to the shift in audience behaviour. To survive in this market, media houses must first ask themselves if the topics they cover, such as politics, drive conversations on digital platforms.
A casual check of some of the biggest digital platforms in Uganda shows that the content produced by media houses may not be in line with the conversations happening on these platforms. In the past, traditional media drove conversations online, but now it is often online content creators who drive conversations on traditional media. To stay relevant, media houses must be willing to experiment and adapt, even if it means facing casualties along the way.
As Gerald Businge, the founder of Ultimate Multimedia Consult, said, “It is always a sad situation when jobs are lost. But disruptions are happening in many industries, the media and communications inclusive. In experimenting with the new or seeking to transform, there are bound to be casualties.”
Does money grow on online trees?
In order to remain competitive and successful in the media industry, media outlets are turning to innovative solutions such as investing in the training and development of their journalists, supporting independent media, leveraging technology, and collaborating with other organisations.
Media houses and creators are currently facing the challenge of finding a financially viable business model. Currently, options such as Google AdSense, product endorsements, and public relations are available, but these may not fully compensate creators for their investment in producing high-quality content.
One of the ways through which this attempt is being driven is by improving the consumer value proposition.
To improve the consumer experience, traditional media houses are beginning to focus on building consumer-focused marketing teams. For example, NMS announced the hiring 15 community managers to manage online relationships. NMG in Kenya alsoannounced the hiring of a chief commercial officer responsible for revenue and customer experience. These efforts show that media owners and executives are finally prioritising the consumer experience.
While consumers have many alternatives to traditional media, they still often turn to these legacy sources to verify the information. This is why some of the biggest online platforms in Uganda are owned by NTV Uganda, Daily Monitor, and NBS Television. The challenge has been to monetise and turn this credibility into actual revenue.
The initial attempt at generating consumer revenue online was the use of a paywall for e-papers which is now giving way to paywalls for online news websites and video-on-demand content platforms.
Some telecom-owned platforms like Airtel TV are offering content creators revenue based on the money generated from data used by consumers to compensate for the content. This may put telecom platforms at the centre of a new revenue model for TV stations if successfully adopted. In its financial statements, New Vision also announced the creation of a foundation through which it would partner with grant-making foundations to help fund its content.
The focus is on the content, as it is now on the consumer, and moving away from the guilt-tripping that always went along the lines of “save us, we are important” to hard-nosed business decisions that offer consumers convenience and value.
Perhaps we finally have the answer.
About the author: Collins Hinamundi is a journalist and digital media specialist with a bias for monetisation models. He previously worked as a News Producer at NTV Uganda, and is currently the Digital and Social Media Manager at Airtel Uganda.