5 May 2022
Written by:
Uchenna Uzo, Faculty and Academic Director, Africa Retail Academy
Nancy Njiraini, Marketing Professor, Strathmore Business School
Dr Frikkie Herbst, Head of Research at Milpark Business School (MBS), Capetown
Emmanuel Adediran, Business Lead at Mediareach OMD
Experiential marketing is on fire all over the world. This type of marketing allows customers to directly use or interact with brands through experiences such as online and offline events, sampling, contests, roadshows and sponsorships. The fire is seemingly spreading so fast that Global marketing trends in 2022 predict that brand owners, businesses and retailers will embrace experiential e-commerce at an unprecedented rate. Yet, Africa’s reality paints a different picture.
Think of Angela Gugu’s case in Nairobi. She is the proud owner of a fintech startup in Nairobi that invested thousands of Kenyan shillings for roadshows and other experiential activations to launch a new service. Over one thousand people attended the experiential events, but less than 5% of attendees patronised the new service. Customers are happy to experience brands for free during trials and shows, but very few patronise the brand subsequently. The big question is, why is experiential marketing failing to deliver the expected return on investment for African brands? When 80 per cent of the Western world’s consumers say the ability to sample or see a product or demonstration is a critical purchase factor and 98% say an activation experience made them more inclined to purchase, why is the experience failing to promote sustained brand patronage among Africa’s consumers?
Insights from our strategic survey and consulting expertise reveal four fundamental flaws businesses and brand owners make when deciding on experiential marketing.
Assuming that experiential activations will keep the customer: Brand owners often think that well designed experiential activations attract and retain customers once they get introduced to the brand. Findings from our research reveal the opposite. While 77% of sampled consumers in Nigeria made their first purchase after participating in an experiential activation, only 30% made new purchases after the first one. Another important finding was that 60% did not endorse the brand or recommend it to their peers after an experiential activation. These findings reveal that incredible activations may entice customers to try a brand but are not enough to generate brand loyalty.
Confusing experiential with event marketing: While some brand owners are unclear about the meaning of experiential marketing, others assume it is all about selling products and services during events. The situation is not entirely surprising because the experiential marketing industry is still nascent in some parts of the continent. In South Africa, experiential marketing agents do not exist, and activations are executed and monitored by brand or advertising agencies. Kenya’s agencies focus more on branding, while Nigeria has experiential marketing agencies and a professional association for practitioners in the space. Experiential marketing activities are not regulated in some parts of the continent, and agencies hire inexperienced models or performers to execute activations at short notice. Limiting this marketing field to managing events leads businesses to fixate more on the event experience than on creating real value for the customer. Companies on the continent need to understand that experiential marketing is not just about planning events but is also about fusing high-value experiences into a customer’s entire buying journey.
Experimenting with experiential marketing: Brand owners in Africa often play a hit and run game when involved in experiential marketing. They recruit agencies at short notice, offer few guidelines for action and expect significant returns on their investment. In some cases, brand owners shut down their thinking and expect agencies to produce magical results. Hit and run or try and see strategies typically produce dismal results because they focus on short term gains. Long term strategies have higher chances of success.
Narrowing the scope of experiential marketing: Brand owners use experiential marketing agents mainly for product or service launches but do not involve them in other stages of the offerings’ life cycle. A good example is a case of a mobile payment app in Nigeria that launched a new service through activations in a reality TV show. The campaign yielded 1 million app downloads but very few active users. Experiential marketing activations can quickly generate leads but often fail to deliver high conversation rates when disassociated from the customer lifetime value of the brands they sell.
Some African agencies are aware of these flaws and support brand owners to overcome them. Other agencies capitalise on the ignorance of brand owners to charge high fees based on subjective and vague terms of reference. The consequences are limited returns on investment, high execution costs and possible brand damage. How can brand owners in Africa profit from experiential marketing? Here are five valuable strategies.
Experiential marketing can deliver superior financial results in Africa for brand owners who patiently rethink their strategies to focus on strategic alignment, intimate engagement and customer lifetime value.