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Having been behind the launch of one of the first video ad exchanges, Adap.tv — which was then later acquired by AOL for over US$400-million — Chris Smith has a strong background in video products and solutions. Today, with South African serial entrepreneur Vinny Lingham on board as advisor, the startup founder is looking to Africa’s growing video market as the next big thing.
Ventureburn sat down with Smith from Stitch Video to talk about how an American came to set up a startup at the very tip of Africa.
Stitch offers a programmatic ad platform that connects video publishers and brand advertisers. The platform will not only offer publishers more flexibility, it will also give online platforms monetisation rights. YouTube, for instance, works great as a global platform but takes up to 45% of the ad revenue. “Up until recently most publishers have been forced to rely on platforms like YouTube to help setup their video infrastructure,” the founder argues.
According to Smith, most local media and tech companies are looking into this field, and given the fact that the country’s so mobile oriented, the market is becoming huge.
eMarketer projected that the ad expenditure in the Middle East and Africa would amount to US19.28-billion in 2013, only to grow to US25.35-billion by 2018.
With data costs on the inevitable downward slope, video is only going to become bigger and its market more competitive. The problem is that publishers in South Africa sit on masses of content but have little control in monetising it.
“Even though the continent is behind with what the US is currently doing in the video and mobile advertising space, there’s going to be a lot more growth here,” Smith says. He predicts that within the next five years, most people will probably be watching TV on their smartphones.
To give you an idea of how big the global market is, Facebook recently announced that it’s 1.4 billion users are watching about 4 billion native videos daily. That’s about one billion more than what the ten-year-old company measured in January 2015.
Video ads are becoming one of the company’s main revenue drivers. It’s thus quickly catching up with the Google-owned YouTube, which manages around 4 billion views in 2012 and today an estimated 7.9 billion.
Both of these tech conglomerates have set up shop in Africa to grow their global market share. Memeburn revealed that Facebook is setting up shop in Johannesburg, which we can only guess is to be used as its headquarters for regional expansion.
Moreover, major Norwegian software giant Opera earlier this year acquired AdVine to help secure its foothold on an estimated 259 million monthly users in Africa.
With major tech companies such as these increasing their presence in South Africa, Stitch hopes to beat them to the chase. Smith predicts that we’ll see many more media companies come to Africa within the next two years.
“Most publishers will need to find ways to modernise their inventory,” Smith says. He further notes that he realises most South African publishers want to have their own video strategy in place. “They want to have their own video player because they can be able to control the video environment. I see [South Africa] as an opportunity for most marketers to reach their audiences with all devices.”