Racism in the Advertising and Marketing Industry: hearings

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
6 November 2001
RACISM IN ADVERTISING: PUBLIC HEARINGS

Chairperson:

Department of Communications Submission
Submissions by GCIS
Submissions by the Quadriplegic Association of South Africa
CJ Moerdyk (Advertising Standards Authority) Submission
Advertising Standards Authority of South Africa Presentation
Association of Advertising Agencies Submission [see Appendix 1]
YFM Written Submission
National Association of Broadcasters Presentation [see Appendix 2]
Association of Marketeers Submission
The Agency Presentation
Media Directors Circle Submission

SUMMARY
Submissions were heard from a range of advertising and marketing associations as well as the national broadcasters association. The Committee raised questions relating to the internal governance of the associations, for instance representivity of the board, and measures set in place to effect transformation. It also raised questions related more broadly to the industry. For instance, whether there is an effective regulatory body with sufficient clout. Also with respect to steps being taken to increase representivity within the industry, especially the number of black students entering the industry.

The presentation by YFM raised the issue of reflecting youth culture in advertising and
the classification of "black media".

The influence of clients on the placement of advertisements; and the question of whether the advertising industry could successfully regulate itself was raised in questions to the Association of Marketeers.

MINUTES
The Chair said that the purpose of these public hearings was to allow benefactors of the advertising and marketing industry to raise their frustrations and anger. In so doing, the following key questions need to be answered, namely:

-What is non-racialism and anti-racism?
-What does the concept of multiracialism imply?
The Chair added that a probable solution could only be arrived at once the industry took cognisance of the fact that it was not immune to racism.

Department of Communications
The Deputy Director General, Mr Pongwana Phakanile, said it was the responsibility of the Department of Communications to embark on policy considerations, to draft legislation and to ensure linkages with other sectors of the industry. More importantly, he alleged that the Department’s key function focused on gender policy and the advent of technology and its impact on the industry as a whole. This could only be achieved through enhanced advertising and an escalation of players in the broadcasting industry. This was inherent to achieve diversity within society.

The public hearings would allow the Department to assess competition within the industry. Mr Phakanile focused on the following key issues, namely:

-Policy focus.
-The role of radio and television.
-The role of advertisers in the broadcasting dispensation.
-Hearings into advertising practices.
-Allegations and problems within the broadcasting industry.
-Statistical analysis of expenditure on advertising over the past 5 years.
-Radio advertising expenditure analysis.
-Results of analysis.
-Key findings of the analysis of television advertising expenditure.
-Growth rates.
-Future scenarios such as lifestyles, language, changing demographics, economic activities and audiences.

He concluded that the changing nature of society demands:
-An advertising industry that is responsive to change.
-A diverse advertising industry.
-Diversity to include ownership and control from all genders, racial and cultural backgrounds.
-Diversity to include proportional representation at all levels of the value chain.
-Diversity to translate to fair representation of all languages of choice.

Recommendations made by the Department included the restructuring of the complaints forums, periodic enquiries by ICASA, the establishment of public and professional awareness campaigns and annual indicator of the advertising industry.

GCIS
Their submission addressed three concerns:

-Transformation in the industry.
-The nature of decision making.
-Patterns of government expenditure on advertising.

To enhance its participation in this dialogue, GCIS commissioned qualitative research to supplement statistical data in order to clarify the underlying dynamics of the media selection process. This, he advised, would help identify a course of action that would inform the direction of change and transformation in the advertising, media and marketing industries.

GCIS’s submission aimed to focus on both research directions for discussion that focuses on:
-Transformation in the industry.
Decision making processes.
-Advertising expenditure in the private media sector.
-Advertising expenditure by government.
-Segmentation tools.

GCIS’s recommendations included an advertising and industry indaba, the strengthening of regulatory bodies and self-regulation by agencies to celebrate diversity in society.

CJ Moerdyk (Advertising Standards Authority)
Mr CJ Moerdyk, a marketing and media consultant and representative of the Advertising Standards Authority stated that the submissions placed before the Committee were idealistic and reminiscent of the 1960’s and the apartheid ideology.
Regarding racism and its practise in South Africa, he identified three key areas:

-The way in which the country’s mass media markets itself and the media research process their support is unquestionably racist.
-The lack of will by the advertising industry to accelerate the development of blacks.
-White media buyers are forced to resort to racism by having little alternative but to use research tools to select media in which to place advertising.

Mr Moerdyk averred that racism could and would only be eradicated when race disappears. As a recommendation and way forward, Parliament should establish a task group made up of independent specialists not directly employed by the media, marketing or advertising industries, to establish guidelines and best practice.

Discussion
Ms Smuts (DP) referred to Mr Moerdyk’s submission which alleged that Lifestyle Measurement Survey (LSM) was discredited whereas GCIS averred that LSM 4-6 were not properly exploited by marketers and media industralists. She questioned how effective the use of LSM’s were in the process.
Mr Moerdyk said that due to the complex nature of LSM, it would be discussed more comprehensively at a later stage.

Mr Abrahams (UDM) focused on the differentiation between racism and culturalism. He used the example of Lotus FM radio station which targeted a specific culture of people which could not be classified as race.

Mr Moerdyk replied that confusion between racism and culture could only be eliminated once race, itself, had been eradicated.

Ms Newhoudt-Druchen (ANC) asked if the Labour Courts have ever been required to investigate complaints of discrimination within advertising industries.
This was unanswered due to a lack of knowledge on research into this aspect.

Advertising Standards Authority of South Africa (ASA)
Ms D Beukes, Executive Director of the Advertising Standards Authority of South Africa (ASA), dealt comprehensively with the written presentation. She informed the committee that the ASA Code of Advertising Practice (the Code) does indeed accommodate cultural offence on a widespread or sectoral level, and the ASA deals with such complaints on a daily basis.

Association of Advertising Agencies (AAA)
The Chairperson of the Association of Advertising Agencies (AAA), Nkomo Nkwenkwe, was present and Dr N De Klerk, Executive Director of AAA, raised the following concerns. They had a number of general concerns with steps taken to increase representivity within the industry, especially the number of black students entering the industry. The interests of the disabled within the advertising school and the industry at large; and the reason for the popularity of the media management courses amongst the black students.

Discussion
Mr A M Maziya (ANC) directed his question at AAA, and inquired whether their target of 40% black representation by 2004 within their corporate framework related to the employment or equity structure.
Mr Nkwenkwe told the Committee that the 40% was agreed upon as a reasonable target set for the industry within the specified time frame. Furthermore, this consists of two major areas of transformation, namely, equity and the level of meaningful involvement in the running of the business. The 40% includes both these factors from the top management structure down to the first rung on the corporate ladder.

Secondly, are the "board members" referred to in the report merely occupying these positions, or are they actively involved in the decision-making process and controlling the corporation?
Mr Nkwenkwe responded that the members referred to occupy the top management positions within the corporation, and are indeed integrally and actively involved in the management of the corporation.

Thirdly, the statistics provided in the report show that 70% of the advertising industry remains White, which is the "inverse" of the spirit and purports of the new democratic South Africa. What is the reason for this, and is the AAA currently searching for a remedy to this problem, because it clearly indicates blatant defiance by the advertising industry to effect transformation?

Dr De Klerk responded to the last of Mr Maziya’s questions by recognizing that the advertising industry remains predominantly white. But the AAA has made steady progress in effecting transformation by increasing its representivity from 23% in 1998 to 30% in 2001. This was achieved despite the shrinkage currently experienced by the advertising industry, and AAA has achieved above average levels of transformation in the areas of profit management and gender representivity. Furthermore, AAA recognizes that there remains scope for improvement, but the purpose of today’s presentation is to inform Parliament of the progress made by the AAA thus far, and that it remains committed to transformation.

Mr FT Maserumule (ANC) asked the AAA whether it is at all possible for the advertising industry to change itself, or to initiate transformation from within.
The Chairperson, Mr Nkwenkwe, said that the advertising industry has a duty to live up to its commitments, and it will do this with the assistance of its business partners who are similarly committed to transformation.

Secondly, the second paragraph on page 1 of the ASA written submission needs elaboration because the current formulation does not seem to make any sense.
Ms Beukes stated that a letter was addressed to this Portfolio Committee to clarify the jurisdiction of the ASA with regard to racist advertising, because the ASA does not and cannot "control" the industry. It merely regulates the content of advertising before its publication. The ASA can, however, provide information on the content of the advertisement regarding its discriminatory effect, and thus its powers are purely declaratory in nature.

Thirdly, why was the complaint regarding the Landrover advert even considered?
Ms Beukes replied that advertising agencies have a guaranteed constitutional right to freedom of expression, and the ASA does not have the authority to prejudge or interdict an advertisement. Furthermore, the ASA is subject to the Administrative Justice Act, and it therefore has to abide by proper procedure in exercising its functions and duties. A fundamental principle of administrative law is the maxim audi alteram partem, which essentially requires both sides of the matter to be heard before a legitimate decision can be made.

The Chair, Mr Kekana, inquired of the ASA whether it feels confident that it has the respect of the advertising industry and the media players, in the sense that its recommendations would be taken cognisance of and duly heeded. Also, is the ASA of the opinion that it could be trusted as the custodian of the public interest, because this interest far too often conflicts with the interests of the media players and indeed the advertising industry as a whole? Does the general population and, more importantly, members of the advertising industry know of the existence of the ASA and its role and purpose within the industry.? The question therefore is whether the ASA has the necessary stature and recognition in the industry to effectively exercise its functions because, if not, these concerns would have to be enacted via legislation.

Ms Beukes responded to the first question by informing the Chair that any body that has contravened the Code could attest to the undeniable fact that the ASA does indeed "have teeth". Once an offensive or discriminatory advertisement has been identified an "ad alert" is communicated to all media forms notifying it of the problematic advertisement in question. Should the body responsible decide not to withdraw the advertisement, it would not be broadcast or published under any circumstances. It is clear that this is indeed a powerful sanction to impose on such advertisements. Furthermore, several bodies are working closely with the ASA in pursuance of the common goal, which clearly indicates that it has the recognition and respect of members in the advertising industry. Furthermore, the Code of Advertising Practice does indeed have legal support, as evidenced by express recognition of it in the Independent Broadcasting Act.

Secondly, is there no possible way in which the ASA powers could be reformulated to now allow it to advise advertising agencies on their products before they are published or broadcast, so that the current "post facto inquiry" system is steered clear of.
Mr Maziya also enquired whether the ASA has a monitoring system in place to allow it to identify irregularities in the advertising industry and thus prevent the broadcast or publication of discriminatory or offensive advertisements, rather than merely dealing with complaints.

Ms Beukes responded to both questions saying that, unfortunately, the constitution does not allow the ASA to monitor advertisements prior to their publication or broadcast.

The Chair reminded the ASA that the constitution does not elevate certain rights above others, and therefore the advertising industry’s right to freedom of expression is not indefeasible.

Ms W S Newhoudt-Druchen (ANC) requested AAA to indicate the amount of student applications received annually, and the ratio of black to white students that are accepted and rejected each year.
Dr De Klerk responded that a "healthy number of applications" are received annually, and these are evaluated in accordance with a selection procedure that is fair and equitable.
Mr R Cory, executive director of the AAA, added that approximately 150 applications are received annually from black students. The requirements or "barriers" employed here do not set higher standards for black students, nor is it that white students are preferred.

Secondly, the AAA is asked to indicate the precise number of disabled students that have been accepted by the AAA school.
Mr Cory replied that both the Cape Town and Johannesburg campuses do presently have facilities that fully accommodate the needs of disabled students, but neither school has any disabled students at present.

Thirdly, the Sanlam advertisement degrades those who are confined to a wheelchair, and ASA is asked to explain how it monitors advertisements to ensure that they do not unfairly discriminate against the disabled. Furthermore, are any active steps taken by ASA to ensure that a positive image that reflects the employability of the disabled is portrayed, and that such stereotyping is steered clear of.

Ms M Smuts (DP) informed AAA that a few years back a representative from the advertising industry contended that the reason for the low number of black students allowed into the advertising industry is due chiefly to the fact that these are "bad at mathematics". Has this position changed since the statement was made, or does it still ring true?

Dr De Klerk was unsure, but thought that the Media Directors Circle (MDC) would be better suited to answer this question because they are responsible for the formulation of the training programmes and compilation of these figures.

Ms S C Vos (IFP) inquired of ASA whether many complaints were received regarding sexism in South African advertising, because several advertisements have and are being screened that blatantly commit this offence and yet nothing seems to be done about it.

Ms Beukes responded that very few complaints are received regarding sexism in advertisements, with significantly more complaints being received regarding the depiction and treatment of animals in advertising. Yet the ASA has well established and developed rules in place to deal effectively with complaints regarding sexism, it just seems as though sexism is not as problematic as, for example, the depiction of animals in advertising.

Ms N S Mtsweni (ANC) asked ASA why the Charlize Theron rape advertisement had been so hastily taken off air, whereas other advertisements with an even more severe effect are still being screened.
Ms Beukes stated that the Charlize Theron advertisement was classified as a "red liner", which effectively meant that the agency had only 24 hours to respond to the ASA before the advertisement would be taken off air.

Secondly, the AAA is required to provide clarity on the precise reason for the overwhelming popularity of the media management course offered by the AAA school with black students.

Dr De Klerk thought the MDC would be better placed to answer this concern.
Mr Cory said the fact of the matter is that the low level of applications is due primarily to a lack of information provided to scholars about a career in advertising. AAA is currently part of a huge nationwide campaign to correct the misperception that advertising is not a lucrative or rewarding profession. Furthermore, the advertising industry has been mandated to bring 400-500 black students through the ranks by the end of 2004. But due to the low popularity of the visual courses, it is doubtful whether this objective would be reached.

Thirdly, the AAA report states that R300 000 is set aside to provide financial assistance to black students who wish to study at the AAA school of advertising. Is this the only effort currently undertaken by the AAA to encourage the introduction of black students into the advertising industry?

Mr Cory said the problem was with the accommodation of students, because the AAA school of advertising only has campuses in Cape Town and Johannesburg. The result is that the students outside the Cape and Gauteng provinces have to relocate to either campus. This is costly and not all families can afford the relocation with the result that many, largely black, students cannot further their studies at the AAA school. The AAA has thus decided to accept 15 such students per year, despite the fact that no fees have been paid, in the hope that during the course of the year someone comes forward and sponsors them. Yet this course cannot be followed in terms of the intensive one-to-one courses where interaction between student and teacher is vital, and in this case such students are not taken on a contingency basis.

The Chairman of AAA added to this response by acknowledging that the advertising industry "has to do more to encourage young black people with talent" to enter the market. The Creative Directors Forum (CDF) has established a project to deal with this precise goal. Member agencies also have their own training programmes in place, and each shares this common goal with the AAA itself. Furthermore, the AAA schools are not the only way to enter the advertising industry, as AAA has established a mentor programme for young people who show tremendous initiative, talent and passion for advertising. These are taken on for one or two years, despite the fact that they do not possess the necessary qualifications, and are provided with a monthly allowance of approximately R2 000 to R3 000. This shows the commitment of the AAA to effecting transformation.

A delegate with GCIS agreed that there is a definite need for more black members in the advertising industry and this is exacerbated by the fact that, for the first time, black consumers are now "outspending" their white counterparts. Therefore, to encourage and sustain the effectiveness of the advertising industry in the long term, more black members should be introduced into the industry to provide some sort of commonality between the industry and consumers. Secondly, AAA is requested to indicate how many of its graduates are employed within the industry of by AAA itself, and whether their developments are tracked.

Dr De Klerk replied that approximately 90-95% of the graduates from the AAA school of advertising are placed in the industry after completion of their internships with advertising agencies.

M Cory added that it becomes increasingly difficult for the AAA to monitor the progress of all the graduates, as any institution in this country would attest. This is further complicated by the fact that graduates do not necessarily move on to advertising agencies but could pursue the freelancing field, join a media group or even start their own advertising business, as two recent graduates have done.

The Chair then asked how many members occupying the top management positions are women, and how many are black. "Black" here includes members of the Indian and Coloured and African communities. Further clarity on the AAA programme of transformation is requested.

YFM
Mr R Abrahams, YFM station manager, presented the YFM written submission.

National Association of Broadcasters
Mr O Isaak then dealt comprehensively with the report of the National Association of Broadcasters (NAB).

Discussion
The Chair noted that the South African Advertising Research Foundation (SAARF) has now been mentioned in several of the presentations made today, and they clearly have an important role to play here.

Mr S Abram (UDM) referred YFM to the last paragraph on page 3 as well as page 4 of its written submission. He enquired whether the shortcoming outlined there is attributable to the fact that the vast majority of the decision-makers within the marketing and advertising industries are white and are therefore inherently racist in the placing of their business. Or is it due to a lack of transformation within the industry? Are there other reasons that better explain this shortcoming. What needs to be done, according to YFM, to remedy this situation?

Mr Abrahams (YFM) replied that this definitely has a substantial impact on South African businesses, and that the collective will of all the players in the advertising industry have to be focused on changing the antiquated mindsets that still remain and are thriving within the industry.

Mr Maserumule directed his question at YFM and inquired whether the "new culture" mentioned in the report refers to the unconventional -and far too often inappropriate- conduct of contemporary youth culture, and whether this should be reflected in the advertising industry.

Mr Abrahams responded that programmes and advertisements that showcase the youth culture in all its complexity and dynamic nature are specifically targeting that age group. If Mr Maserumule confesses that their antics far too often "traumatise" him it is because the honourable Member comes from another time. He would also do well to bear in mind the enormous task that has to be faced by the poor station planner who also falls outside this target market and does not identify with the target audience. YFM acknowledges that the advertising industry is undergoing change at a tremendous pace, and it is doing its best to keep up.

Mr Maserumule asked whether the "black representivity" mentioned by the NAB in its submission also reflect patterns of ownership?
Mr Isaak said that more than 80% of the commercial private stations are black owned, and in most cases the top management, equity and shareholding structures are also black-owned.

Mr Maziya asked YFM whether its use of the English language primarily still allows YFM to call itself a "black radio station". Secondly, the reference made by the NAB to classification of the media as an indication of the black and white audience succeeds only in further masking the pressing issue facing this committee: racism in advertising.

A member of the YFM delegation then responded to the first question by stating that YFM does indeed consider itself a "black radio station", because the nature of the market in which it operates is predominantly urban. Furthermore, the substance and not the mere form of the radio programming should be focuses on, for the English language could indeed be used -very effectively- to convey traditional African and South African values.

Mr Isaak responded to the second question by suggesting that various factors could be used to determine whether a particular radio station is "black". These could range from patterns of ownership, the recipients of its profits, the representivity of the staff, the target audience and various others. Yet no single factor is decisive, and using language as the sole criterion does not make sense because by that reasoning the Sowetan cannot be regarded as a black news publication. It would be heinous to punish the current management structures for the "sins of the past". All that can now be done is to remain committed to transformation and effect change.

Ms Mtsweni requested YFM to clarify whether its 93,5% black ownership was sufficiently gender-representative.

Mr D Hartford, YFM Executive Director, responded that the executive team consists of only one woman, while four women occupy management positions, and, out of a total of 48 employees women comprise 38% of the workforce.

Secondly, the NAB was requested to identify and explain any problems experienced with the community radio broadcasters, and whether it remains economically viable to retain these.

Ms L Kantor, NAB Executive Director, contended that the problems experienced essentially consist of three separate enquiries. Firstly, the general regulatory issues regarding the delays in the granting of licences, as well as ensuring sustainability during the "window period" in which the station has not yet received the licence but needs financial support. In this regard NAB has lent such support during the run-up to receiving their licences, by hosting workshops on how to survive this period. Secondly, problems are also experienced with the skills levels of the management and technical structures, and the NAB is piloting a technical skills course in the early part of next year to address this issue. Thirdly, financial sustainability is the primary concern here, and the NAB is looking into this matter. A workshop was held on this issue and it was discovered that the reason for this problem is the fact that members of the top management structure do not possess the requisite knowledge and resources needed to market themselves successfully.

Association of Marketeers (AOM)
Mr H Gabriels, Executive Director of the Association of Marketeers (AOM), presented the written report to the committee.

The Agency
The Chairman presented the written submission.

Discussion
Ms Smuts asked AOM whether it could quantify the effects that a possible ban on liquor advertising would have on the South African advertising industry. Could it indicate how far down the track this is?

Mr Gabriels replied to the first question by informing the honourable member that such figures could be provided, and that it would possibly be similar to those relating to the tobacco industry.

Secondly, clarity is requested regarding the reference to "cross holding" in point 4.1 of the report.
Mr Gabriels stated that the introduction of new media forms as well as the Internet into the advertising industry has caused the fragmentation of the market. This was caused by the need for marketers to increase the range of all media types within the advertising industry.

Mr Maserumule postulated that a failure to regulate the advertising market would inevitably result in a "free-for-all", and this has to be avoided at all costs. Secondly, when will programmes be developed and introduced to increase awareness of the South African advertising industry? The question was not answered.

Thirdly, AOM is requested to indicate whether the percentage of newspapers and radio stations referred to in its report only cover those that are predominantly English and, if so, what measures are being taken to incorporate the rest?

Mr Gabriels stated that the percentage merely reflects the fact that audiences have shifted and changed in terms of previous perceptions of "white versus black media". This shift is attributed to the fact that the audiences now relate to newspapers and the SABC in a different way, and it does not seem appropriate to engage in a discussion regarding the political ramifications of this shift in this briefing session. The reality of the matter is that the market is changing rapidly, and that a more sophisticated and refined understanding of what precisely constitutes a "black market" has to be sought and what is needed to successfully target this audience.

Mr Magashule referred The Agency to a statement in its report that identified certain advertising agencies that have "rented or token black partners", and inquired whether anything is being done to expose these fraudsters. Secondly, in its report AOM stated that there are educational institutions that provide training courses for entry into the advertising industry. Which institutions are these exactly?

Mr Gabriels said that these include various South African institutions, such as universities, technikons and advertising schools.

Mr Maziya stated that the AOM report fails to recognise the harmful effects caused smoking and liquor, and which is perpetuated by its advertising campaigns. These have to be addressed and awareness of the danger has to be increased.

Mr Gabriels responded that the aim of the report is not to initiate a debate on the moral issues regarding the advertising of liquor or tobacco products, or the economic advantages or the benefits of smoking. Rather, the report is merely informing this committee that the advertising industry has undergone a loss of R300m because of the serious impact of this ban on both the industry and the media players. Furthermore, in response to Mr Maserumule’s second question as well, initiatives have been taken by the advertising industry –without any external pressure- to increase awareness regarding the dangers involved, such as the "Arrive Alive" campaign and liquor advertisements that now display the "not for sale to persons under 18" message.

The Chair asked whether the members have any influence over the placement of the advertisements.

Mr Gabriels informed the Chair that the client, after identifying the target market, employs the services of an advertising agency to add content and finalise the advertising campaign. The services of another media planning agency, or the same agency, is then enlisted to fully develop the project to reach the target audience. Thus a triangular relationship is created between these parties in which responsibilities are shared, and the client ultimately has the final say and therefore plays a very important role in the process. Indeed, it is the client who can exert pressure on the advertising agency to deliver the specific product the client has in mind.

The Chair noted that the questions regarding the dangers of an unregulated market have not been addressed, and could this be attributed to a feeling amongst the industry representatives that the industry is unable to achieve its objectives by effectively regulating itself?

Mr Gabriels said there is consensus that the advertising industry can indeed achieve its goals, and that the ASA would play an invaluable role in this regard. The real benefit of the ASA sanction lies in the fact that the notice immediately notifies the offending party, and the matter is then dealt with efficiently and rather expediently. The legal procedure, however, is protracted and unnecessary and often the desired result is not attained. .

Media Directors Circle
Ms S Walker presented the Media Directors Circle (MDC) report.

The meeting was adjourned until the afternoon session.

Appendix 1:
THE ADVERTISING AGENCY INDUSTRY –
TRANSFORMATION PROGRESS TO DATE

A Status Report by the Association of Advertising Agencies, in anticipation
of the Portfolio Committee of Communications’ hearings into
racism in the advertising industry – November 2001.

1. Introduction

When this report was prepared, the AAA had not yet been officially notified of the hearings, the date, or the issues under consideration. The only information available was based on media reports and speculation amongst colleagues – some more informed than others.

On 12 October 2001, a meeting was organised by the Association of Marketers (ASOM) for representatives of the media, the AAA, Print Media Association of South Africa (PMSA), National Association of Broadcasters (NAB) and the Media Director’s Circle (MDC) with senior representatives of Government Communication and Information System (GCIS) From this meeting the AAA understood that:

1) The hearings would probably take place on 6 and 7 November but official notification is delayed by the fact that the Parliamentary Committee on Communications is still heavily involved with the finalisation of the telecommunications legislation.
2) GCIS’s role should be seen as "independent" from Parliament, and that they, like other stakeholders, are also expected to make a presentation at the hearings.
3) That the issues under consideration are expected to include media ownership, black employment, and allocation of adspend (including how to reach the right audiences, composition of media-planning, how decisions for media are made, how media-reps sell their media to media planners, research done by independent companies, how segmentation tools are determined, new channels for adspend etc.) Content issues and training were also added to the list. The Media Development and Diversity Agency, according to Mr Nat Kekana Chairman of the Portfolio Committee on Communications, as quoted in FM 26 October 2001, will also be discussed.
4) The principal "stakeholders" at the hearings are expected to be the marketers, the agencies (including media buying companies) and the media-owners.
5) That these stakeholders will have to "fashion their own agenda" for the hearings, i.e. that no formal notification of the issues or charges under consideration should be expected prior to the hearings.

(Subsequently, On 29 October 2001, the AAA was officially notified of the hearings to be held in Parliament in Cape Town on 6 – 7 November, and to focus on "racism in the industry, transformation, and other related matters".)

For the record, the AAA is of the view that the procedure leaves much to be desired. Unless we are mistaken, it is our understanding that if this a "hearing", it is a basic democratic right that any person or party must be given official notice, and granted sufficient substantiation of any allegation or complaint and that a reasonable time must be allowed to respond to those allegations or complaints. Secondly, we find the scope of the hearings too broad.

Since no formal complaint has been received, the AAA views its participation as a participation in discussions only. Our presentation for the purpose of these discussions, is based on data collected annually from our members for the purpose of monitoring transformation progress amongst our members. In some instances, reference will be made to some of the expected issues referred to at the 12 October meeting and in the media.

From the outset the following needs to be made clear:

1. The AAA is a professional body that represents the collective interests of member advertising agencies that are relevant to their business opportunities in a great number of areas.

2. The AAA does not represent all advertising agencies in the country. It is estimated to represent roughly 75 – 80% of total annual adspend by clients.

3. In referring to the "advertising industry" the semantics must be made very clear. The "advertising industry" is often confused with "advertising agencies". However, the latter are - as the name implies - companies which create advertising and promotions on behalf of advertisers within a fixed, limited budget. The advertiser has to approve all the recommendations made by the advertising agency.

4. Advertising agencies are primarily responsible for 5 key functions viz. account management, strategic planning, creative planning and visualisation, production, and media planning and buying. Media planning and buying is a highly specialised and research based function; which, as is happening everywhere in the world, is increasingly "outsourced" to separate media buying companies which are either media dependents (i.e. a subsidiary of an agency group) or media independents (i.e. an independent company). Although membership of the AAA has been open to independent media buying companies since 1998, none of these companies have to date applied for AAA membership.

5. The advertising industry, in the context of these discussions, should therefore include the tripartite of these stakeholders – the advertisers, the advertising agencies and the media buying companies who are jointly responsible for the financing, the planning, creation, production and the placement of advertisements in the media. The advertising research companies could possibly be included.

2. Background

The AAA has for a long time been aware of the need for meaningful transformation in the advertising industry, as often voiced by the media and the only Black AAA Board member until 1996, Peter Vundla. Criticism was, and is, therefore, not new.

From 1996 the AAA Board has actively addressed the issue. It was acknowledged that the AAA Board did not adequately reflect changes in society and reeked too much of an Old Boys’ Club. In view of this, the Board was also concerned about the continued relevance of the AAA as a body. Among those who worked hardest to effect change were Tim Bester, Reg Lascaris, John Little and the late John Sinclair.

By the end of 1996 eight new Board members were democratically elected to an expanded 26 member Board. These included names such as Happy Ntshingila, Tso Modise, Mpho Makwana, Abdulla Miya, Beatrice Kubheka, Philip Zondo and Nkwenkwe Nkomo. Many of these still serve on the AAA board (Nkwenkwe Nkomo has been AAA Chairman from 1999 – 2001), whilst others such as Mpho Makwana, Happy Ntshingila, Sipho Luthuli, Andrew Fasedemi, Dudu Msomi, Ayanda Mbanga, Nunu Ntshingila, Bryan Slingers, Noma Simamane and Maserami Tshoaedi have since made a major contribution to both the direction and momentum of transformation amongst our members. (It can be added that whereas the Board had only 1 female member in 1996, 38% of AAA Board members at present, is female.)

In 1997, transformation became the no. 1 priority on the list of AAA Board Portfolios, and the Transformation Task Team, better known as the TTT, (consisting of Mpho Makwana, Happy Ntshingila and the Executive Director) was born.

Conscious of the need to facilitate transformation where it matters most, at employee level, and in changing the culture and climate in which agency employees operate, 10 of our largest member agencies, at the recommendation of the TTT, voluntarily joined the Breakwater Monitor Project in 1997, a recognised research initiative ran by the University of Cape Town which benchmarked progress in corporate transformation. The results were not encouraging. The point is, AAA members were willing to participate in such measurement and effect a plan to rectify the situation.

In early 1998, the TTT organised a Workplace Transformation Summit, together with the Department of Labour and the Black Management Forum. A number of recommendations resulted from the Summit, and crystallised in a formal transformation proposal approved by the AAA Board at the end of 1998. Amongst others, the proposal included the identification of measurable transformation targets for AAA members, an award for the most transformed agency and the promotion of advertising as a career amongst the previously disadvantaged.

One of the first things the AAA did in 1999 was to run a series of workshops for members, using the services of Dawn Mokgobo and MBM Change Consultants. It was during one of these workshops that the idea of a Transformation Charter was born, and the TTT (then consisting of Nkwenkwe Nkomo, Sipho Luthuli, the Executive Director and Prof. Piet Delport as legal advisor) devoted the rest of the year to the development of such a Charter as well as a practical implementation policy - the Charter was certainly not intended to be just a nicely worded declaration of intent. In the process, the formal inputs of the Communication and Advertising Forum for Empowerment (CAFÉ), an interest group aggressively lobbying for the rights of young black employees in the advertising and media industry, were also involved. Since then CAFÉ has also been represented on the Executive Committee of the AAA Board, as well as the TTT.

The Transformation Charter and the Practical Implementation Policy was formally approved at the end of 1999. On 23 February 2000, the Charter was officially launched and signed by every AAA member agency.

3. The AAA Transformation CharterThe Transformation Charter and Practical Implementation Policy are attached as Annexure A.

It is important to briefly discuss the following key foundations of the AAA Transformation Charter:

3.1 Membership of the AAA is conditional on commitment to the letter and spirit of the Charter.

3.2 The practical implementation policy provides the AAA Board with the discretion to set transformation targets. A self-imposed quantitative industry target of 40% black representation by the year 2004 has been set. This self-imposed target was identified by the AAA even before the inception of the Employment Equity Act (EEA). A second qualitative target was set; to create an environment within agencies which is conducive for black people to make a meaningful contribution.

3.3 Progress in terms of transformation targets is monitored and evaluated once a year (see implementation below). In the first four years after the launch of the Transformation Charter, agencies are encouraged and assisted in their progress. After 2004, sanctions such as termination of membership and "blacklisting" may be applied.

4. Implementation of AAA Transformation Charter

The practical implementation of the AAA transformation policy takes place on three levels; i.e. at AAA member agency level, in the AAA as a body corporate, and in the AAA School of Advertising.

4.1 AAA member agencies

In order to evaluate progress against the set targets, AAA member agencies are expected to submit annual figures with regards to employment demographics. This has been a mandatory requirement of membership since 2000. These are obtained through the annual AAA Employment Cost to Agency Survey. In addition to race and gender demographics, cost to agency data for defined agency-specific job categories are also produced.
At the request of the Media Directors’ Circle (MDC), an independent forum representing the interests of the media planners and buying companies, the AAA agreed to expand its survey in 2001 to include the demographics of independent media buying companies who are not members of the AAA. We have subsequently been informed that the MDC has approached Brewers to assist them in producing an independent survey amongst their members.
In addition to employment data, the AAA has in 2001 also conducted an Empowerment Equity Survey to get an overview of shareholding demographics amongst its members.
The employment and shareholding demographics for AAA member agencies are shown below.

4.1.1 Black Shareholding: AAA members
Table 1 provides an analysis of AAA members with black shareholding. (Black shareholding includes African, Coloured and Indian shareholding)

The AAA has 30 group members representing 85 trading agencies. Within the groups specialist agencies such as media, recruitment, design and below-the-line agencies etc. are found.

16 of the 30 groups (i.e. 60 of the 85 agencies) have shareholding held by either black employees/directors, or empowerment companies or a combination of both. Included in these are 3 wholly owned black agency groups. Shareholding varies from 1% - 100%.

On average, 21,7% shareholding across all member agencies is held by either black employees/directors or empowerment companies or a combination of both.

An analysis of the top 7 agencies (representing roughly half of the total measured annual adspend by clients), shows that 24,3% of shareholding on average is held by black persons (incl. black staff/directors and empowerment companies).

14 of the 30 groups have no black shareholding at present. However, 7 of these groups employ 25 or less people, whilst 5 of the remaining groups have indicated that they have already opened negotiations with empowerment groups.

Table 1
ANALYSIS OF AAA MEMBERS WITH BLACK SHAREHOLDING