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South Africa’s mobile space is becoming more and more exciting. With a growing middle class and cheaper hardware diversifying the market, the country should take a healthy slice of Africa’s mobile ad market, which is expected to reach a massive US$1.3-billion by 2016. Whether this bulk of cash will be dominated by a few digital giants or by the many upcoming startups remains to be seen, however.
In an attempt to get in on the action, South African mobile ad startup Vouch is on a mission to change the way brands engage with customers. It wants to do this by introducing a moments-based reward system in apps to improve the user experience.
Taking on the dominant Ad Sense, Google Ads and the South African-based digital ad marketplace Ad Dynamo, Vouch has managed to engage with a variety of clients across different industries, from retail to academic so far. What’s the catch?
“In the age of smartphones, it’s universally acknowledged that impression-based advertising is bad for business,” argues Vouch co-founder Chad Williams. “Take banner ads for instance. Banner ads have dismal click through rates of 0.1% and worse yet, 38% of those clicks are the result of fat finger syndrome. Through moment segmented advertising, we guarantee effective and trusted engagement rates.”
A Vouch moment is described as the instance where the app user is “most engaged following an existing activity”. This is also “a precursor to an existing reward”. For instance, being rewarded a coupon from your local cafe when you reach a high score in a game, or participate in the South African language sourcing platform, Aweza:
The founders note that they’ve discovered some really impressive stats regarding moment-based rewards. After running a heuristic analysis study with complete strangers to test the Vouch engagement rate, they found a 40% engagement rate — users indicating that they wanted to interact with the brand.
So far, Cape-Town based Vouch has scooped up clients such as restaurants, bars and video rental stores in the city, and is going to push big campaigns for December. “We plan to move into other areas across South Africa from January onward,” Williams says. It has integrated its system into the Point of Sale of a “national retailer”, though it wasn’t willing to reveal exactly which.
It’s also partnered with the likes of edtech sartup Funda, which would enable brands and advertisers to reach students by rewarding them for their academic performance.
Similar to Google’s popular Ad Sense advertising model, Vouch’s services work with a Cost Per Engagement model (CPE), based on a two-tier system.
“Brands pay an upfront fee of R0.50 (500 CPM) per reward or interstitial served. On top of that we charge R1 if the user chooses to engage with the brand (accept the reward). We share 50% of our revenue with developers or apps that publish the rewards,” explains Williams.
Williams has a lot of experience as a developer focusing on user experience, while co-founder Joshua Kgwathla has a history of working in the digital agency and innovation space.
The developer notes that, “We looked at the current form mobile advertising and we found that people generally don’t like pop ups and banner ads that appear mobile platforms,” because they usually find these obtrusive and distracting. “As a result it can’t be optimally effective for a brand to relay their message, and that is where we saw an opportunity,” Williams argues.
A research study done by Effective Measure found that almost half of the country’s smartphone owners are exposed to mobile-based ads. Of these, 20.6% recall adverts on a mobile website, 19.2% recall ads from an app and 10.3% from a mobile game. South Africa has a mobile penetration rate of 128%. Moreover, of the country’s 52 million citizens an estimated 8.4% use smartphones.
In essence, Vouch’s moment-based rewards sets out to empower brands to create emotional campaigns, developers to increase user retention and consumers to have better experiences.
“We will change the world by changing the prevalent view of the mobile advertising, so brands/advertisers can see that success of campaigns is about engagements, not impressions. Engagements build stronger relationships between brands and consumers,” says Williams.
While it all sounds good and well, the founders do note the main obstacles have been finding brand acceptance. “Large brands are reluctant to work with Vouch because we are new and they have current contracts with digital agencies that don’t cover the services we do.”