Racism in the Advertising and Marketing Industry: hearings

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07 November 2001
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

7 November 2001


Mr N Kekana

Relevant Documents :
Freedom of Commercial Speech Trust Submission (see Appendix 1)
Johnnic Publishing Submission (see Appendix 2)
South African Broadcasting Corporation Submission (Awaited)
New Africa Publishing Submission (Awaited)
Media Monitoring Project Submission (Awaited)

Freedom of Expression Institute Submission

Among the views expressed was that the perception of racism was premised on a number of observations, such as South Africa's history of apartheid and the growing view that media have to rely on racism for survival. Some suggested that the problem was not advertising itself, but the views and perceptions of the public at large.

Problems discussed included advertising and its effect on the public, ignorance of marketers who fail to foresee what is actually covered by the media and the failure of agencies to assist community radio stations to enable them to function effectively.

Media Monitoring Group
The Chair handed over to William Burn of the Media Monitoring Group to conduct his presentation.

The Media Monitoring Project is an independent non-governmental organisation founded in June 1993 with the purpose of monitoring the 1994 elections. As a result of the success of this project, it then broadened its research to monitor issues of racial, media and gender discrimination. In making their submission, Mr Burns reminded members to take cognisance of South Africa's history.

Certain issues raised by the Media Monitoring Project were based on the premise that advertising does not exist in isolation in society and that advertising agencies rely solely on advertising revenue for survival and therefore would resort to racism to successfully achieve this goal. The proposed way forward and ultimate solution to this problem could be achieved through the endorsement of the media indaba, added Mr Burns.

Freedom of Expression Institute
The Chair called on Mr Consul Kulani of Freedom of Expression Institute to make his oral submission. Mr Kulani stated that the perception of racism was premised on a number of observations, namely:

-South Africa's history of apartheid.
-The growing view that media have to rely on racism for survival.

He suggested that the only way to overcome these two problems was to eliminate racism from society, as proposed by Mr CJ Moerdyk, representative of the Advertising Standards Authority. He emphasised that the problem was not advertising itself, but the views and perceptions of the public at large.

Mr Kulani identified a number of other categories which he believed were problematic within the advertising and marketing industry and which required address, namely:

-advertising and its effect on the public.
-ignorance of marketers who fail to foresee what is actually covered by the media.
-the failure of agencies to assist community radio stations to enable them to function effectively.
-differential treatment amongst black and white community forums.
-failure of the government to support community radio stations.
-the preconceived notion that no problem exists within the market industry.
-the blatant fact that advertising practice is racist.

Mr Kulani recommended ways to overcome these problems, namely:

-the development by GCIS of a comprehensive strategy to assist community radio without having to rely on advertising to increase its listenership.
-the enactment and enforcement of legislation to govern Black Economic Empowerment.
-the tightening up by Regulatory Bodies such as the Advertising Standards Authority.
-the development of strategies by a Committee for the whole phenomenon of advertising.
-the introduction of members of society in such debates.

Freedom of Commercial Speech Trust
The Freedom of Commercial Speech Trust was established to enshrine and defend the right to freedom of speech as contained in our Constitution. The Trusts' main objectives, stated Mr Delport were to (a) negotiate openly and in good faith on issues of commercial speech; and (b) ensure that the consumer is provided with more information about products. Mr Delport categorised racism as follows:

-target racism
-systemic racism
-content racism

In summary, systemic racism, he advised, related to a designated group composition of the advertising agencies, as opposed to target racism which related to the target market by the media placement. However, the most contentious and most problematic of all was content racism which related to the transformation of the content of advertising.

Mr Delport's theoretical solution to the problem is to enhance and embrace diversity. It is this diversity and portrayal of racial interaction that would normalise the process.

New Africa Publications
Mr Mervin Heath, a spokesperson for New Africa Publications, commenced with a statement that with democracy came democratic dispensation, black empowerment and affirmative.

Since 1994 the majority of black persons have engaged in tertiary education and presently black people have a growing share of income which is set to continue. Additionally, home ownership amongst black people has increased substantially, as has vehicle ownership.

New Africa Publishing alleges that since 1994 there has been an emergence of a viable and potential growth market which was previously untouched. In the same instance, media consumption amongst black people has shown dramatic growth since 1994. By contrast, media consumption amongst whites has shown a decline.

Investments in white media has grown drastically since 1994 as opposed to black media which has remained static. Two such categories are (a) cellphones; and (b) food and groceries. Firstly, cellphone usage amongst black consumers has shown phenomenal growth. However, the distribution of adspend does not reflect shifts in the market. Secondly, regarding the food and grocery market, a survey revealed that the majority of bulk shoppers are black people. However, food and grocery advertisers still continue to invest in white media.

New Africa Publishing also mentioned a third category, namely the government and its role in media advertising. Statistics have shown that the government medium of advertising is in "white" newspapers and not "black" newspapers.

The recommendation and proposed way forward by New Africa Publishing entailed the implementation of legislation or policy within government as well as parastatals.

Johnnic Publishing
Johnnic Publishing is the largest black empowerment media company in the country with holdings in newspapers, magazines, online publishing, books, television and radio. The spokesperson of Johnnic Publishing also emphasised four contentious factors which he believed was the effective cause of changes within the advertising industry. They are as follows:

-the weakening advertising environment.
-the loss of advertising through regulatory action.
-the flight of traditional advertising to other media forms.
-rise in newsprint costs.

The role of the media to accede to transformation could be achieved through the following:

-by producing accessible pitched editorial products that communicate knowledge and enable people to make life-informing decisions.
-by creating a credible and friendly environment.
-to ensure the growth of diversity.

South African Broadcasting Corporation (SABC)
The SABC representatives present included Mr R Khumalo and Mr M Takins.

They argued that the historic significance of these hearings was deeply underscored. Some of the reasons he believed which attributed to this factor included:

-the fact that these hearings were the first real opportunity made by the government to conduct an -interrogation into the conduct of advertising and marketing in the media industry.
-the exclusion of expenditure patterns and trends in the South African media industry.
-the exclusion of "high audience attraction equals high revenue" in South Africa.

Mr R Khumalo continued with the remainder of the submission which consisted of an in-depth analysis of the following areas, namely:

-the media operating business climate.
-the media buying process.

The recommendation and proposed way forward by the SABC included the formation of an official Advertising, Media and Marketing Association ("AMMA"), which would serve as the official "watchdog" body for the industry. The main function of this regulatory body would include the following:

-the drafting of a transformation charter committed to change within a prescribed period.
-the creation of strategies to improve research tools to reduce race segmentation.

In concluding, the SABC emphasised that they were fully supportive of contributing to meaningful and constructive change in a manner that credible media owners are supported in a fair and equitable way.

Ms Smuts (DP) directed her question at New Africa Publications. She asked how they defined a black publication and why no reference had been made to LSM's in their presentation.

New Africa stated briefly that the "black media" referred to media rooted in Afro-centrism and not Eurocentrism.

A Member directed a question to the industry players in general. She enquired if any mechanism had been deployed within the industry to eliminate sexism and to protect women's rights.

Mr Abrahams (UDM) asked the FXI if they could provide statistics that outdoor advertising was taking over conventional advertising, as referred to in their submission.

Consul Kulani of the Freedom of Expression forum replied that he merely noted an observation in the industry and that no official research or testing had been done to confirm this assessment.

Conclusion of the public hearings
The Chair thanked all the representatives from the advertising industry who contributed to the discussions on this topic, and assured them that their input would be used to identify ways to remove the barriers of entry into the advertising market. The primary concern is ensuring equal access to opportunity in the current war being waged against racism and, indeed, the industry has a responsibility to "move beyond racism". Indeed, this is not a problem unique to the advertising industry and means now have to be identified to ensure access to the market so that quality products may be provided, and that advertisements that discriminate unfairly against others are not aired. The "pot is still cooking", and now that the problems have been identified the next step is to ascertain viable and enforceable solutions to them.

The Chair agreed with the call for a task group to address these concerns, because civil society is looking towards the advertising industry as a "window for change". Transformation of this market is critical in building the confidence and reflecting a healthy self-image of South African society. In this regard the contribution from all members of the advertising industry is necessary, from the small businesses to the influential national agencies, and the smaller agencies should not be intimidated or prevented from contributing. This portfolio committee is thus only a catalyst to effect change, but the real work has to be done by the industry players themselves.

The task group thus has to be established before an indaba is resorted to, so that consensus may be reached on fundamental issues. One such issue is the defining characteristics and meaning of "black media", because the proposed clarification by the industry members has been very disappointing.

In conclusion, sincere thanks were extended to the industry representatives for their presence and presence at these discussions, and a second meeting could be scheduled for next year to track the developments made and to discuss means to further advance the advertising industry.

The hearings were thereby concluded and the meeting was adjourned.

Appendix 1:


The Freedom of Commercial Speech Trust was formed to defend the right as enshrined in the Constitution to freedom of speech in the commercial sense on behalf of the marketing and communications industries in South Africa. We are also supported through association by a variety of organized business and consumer bodies as Associate members.

The Trust has as members, inter alia, the Association of Marketers (ASOM), the Association of Advertising Agencies (AAA), the Print Media Association (PMA), the National Association of Broadcasters (NAB) and the Outdoor Advertising Association of SA (OAASA).

The Trust exists to defend a principle not individual products and to defend the legitimate business interests of its members.

The Trust operates on two basic beliefs:
· to negotiate openly and in good faith on matters of freedom of commercial speech with all relevant parties including government, and
· to ensure that the South African consumer is provided with more information about products, rather than less, on the basis that the legal right to produce gives the right to promote responsibly.

The High Court has accepted that freedom of commercial speech is a separate right that falls under the freedom of expression category in section 16 of the Constitution Act 108 of 1996 and which is therefore afforded constitutional protection. However, it is also accepted that no right, including the right of expression, is absolute, but that all restrictions on this most basic right must be within the boundaries as stipulated in section 36 of the Constitution.

The "advertising industry" is criticised because of perceived or, in some cases, an actual reluctance to transform. These are serious allegations and in some instances the reluctance to transform is equated to "racism".

There is frequently no consensus as to what is meant by "transformation in the advertising industry". While one interpretation is meant by the person making the allegation, it is often understood in a totally different context. It's therefore necessary to define the concepts of "racism" and "the advertising industry" so as to clearly demarcate the issues and the responsible parties. The possible areas of racism will also be identified and the incidence of "racism" within these areas will be evaluated.

The term "advertising industry" like with any other industry, is a colloquial and practical term that is not capable of a precise definition. It merely serves to indicate a group of persons associated for a common goal. This group is not homogeneous and the rights and duties of the different persons differ vastly. The members of this group are, in the most simple example, the marketers and the advertising agencies. The relationship between the marketers (from manufacturers to service organizations) and the advertising agencies can be very complex but, in essence, the marketer briefs the agency to advertise a certain product. The agency, by using chosen in-house or external means, develops the advertising campaign. This campaign can be broken down into three stages, namely, the creative stage, in which the advertising concept is created in terms of the brief received from the marketer; the production stage, which might involve the making of TV commercials, and/or developing newspaper advertisements and/or producing radio commercials; and, finally, the appropriate media placement (i.e. deciding on the print or electronic media stations to flight the "commercials" to reach the required market - which process can be undertaken "in-house" by the agency or by an independent media (placement) company).

In terms of the industry-standardized contract between marketers and agencies, the marketer has the final say in approving or rejecting the advertisement. This, therefore, implies that the final rights and duties in respect of the commercial rest with the marketer. The agency acts as an independent contractor. In certain instances as can happen with media placement the agency or independent media company may act as an agent for the marketer, which has the effect that the marketer has all the rights and duties, but this relationship increases the duties of the agency or media company as compared to the position of an independent contractor as all actions undertaken by it must in law be bona fide and to the benefit of the marketer.

Therefore, if the placement in a particular medium would not be for the benefit of the marketer, the agency or media-company will be liable to the marketer for losses or costs. The legal duties on the agency or media-company in this instance are extremely onerous, and indicate that it is not possible for either to go "on a frolic of their own". It is the money of the marketer that is being spent and the agency or media company must account in law for the way in which the money is spent.

Therefore if an allegation of "racism" or "lack of transformation" is made it must be clear who is the principal in the relationship because only the principal has the final rights and therefore the final responsibility.

Racism is defined in the Oxford dictionary as:
"discrimination against or antagonism towards other races"

Discrimination is regulated rather than prohibited and therefore The Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000 ("Equality Act") prohibits discrimination only if it is "unfair" (section 7). It defines "discrimination" as any act or omission that imposes burdens obligations or disadvantage on or withholds benefits, opportunities or advantage from any person based among other things on race (section 1). To determine whether the discrimination is "unfair" the context of the particular action will amongst other criteria, be taken into account and also if the discrimination reasonably and justifiably differentiates between persons according to objectively determinable criteria, intrinsic to the particular activity (section 14).

"Antagonism" in the context of race and advertisements may be equated to racial hate speech. Hate speech is defined in section 16(2) of the Constitution and consists of two elements, being advocacy of hatred based on race and that it constitutes incitement to cause harm. The harm is not restricted to physical harm but also encompasses emotional harm in the form of impairment of human dignity. The speech itself and not the likelihood of harm, determines if a particular communication is hate speech. Therefore the critical element is "incitement" which is taken to mean "intended". Innocent or even negligent actions can therefore never be classified as hate speech.

Hate speech will always be "unfair discrimination" (section 15 of the Equality Act) and is also expressly excluded from protection under the freedom of expression section of the Constitution (s 16(2) of the Constitution).

If "racism" is therefore defined according to the Equality Act for present purposes as an omission that imposes disadvantages on a particular race or, as hate speech in so far as it relates to communications. it becomes possible to apply it to the different sectors in the "advertising industry".

The first context in which racism is alleged relates directly to the designated group (including race and gender) composition of the advertising agencies. This is not the purpose of the discussion, and only the following may be highlighted:

· Positive steps have been taken by the industry association, the Association of Advertising Agencies (AAA), with a transformation charter signed by all members in February 2000. According to the Charter, all agencies committed themselves to a transformation process with a goal of 40% black representation by 2004

· This transformation process was conceived long before the Employment Equity Act and its targets, and operates over and above the requirements of the Employment Equity Act.
Objective criteria will illustrate the efficacy of these measures.

The allegations are that since 1994 the media placement and therefore the target market of advertising have not changed. This allegation can, as is the case with Systematic Racism, be evaluated on objective criteria as well as against the background of the particular relationship between the agency or media-company and the marketer. The advertising agency or media company is merely the agent for someone else, namely the marketer or advertiser. As such the agency must in law act in the best interests of its principal, failing which the principal has a claim for damages against the agency. If the available research data shows that the target market is white, and there is no reason to doubt the correctness of the data, any placement which does not address this market is a breach of duty by the agent. "Sympathetic" media placement to support certain media types or a particular section of a medium is not excluded, but this must be with the express authority of the advertiser. The counter argument here, however, is that the research data is not always correct, an allegation that can be easily answered with empirical scientific evidence by research institutions.

The integrity of the research data is also important as it will exclude a possibility of unfair discrimination if an advertising campaign targets only a section of the public or a particular race. As seen, the Equality Act does not prohibit discrimination per se, but only discrimination that is unfair. In determining fairness, one of the aspects that will be taken into account is whether the differentiation is "reasonable and justifiable according to objectively determinable criteria, intrinsic to the particular activity". Therefore, a scientifically justifiable target market consisting only of Indian males who earn more than R200 000 per year cannot be unfair discrimination to those excluded from this category.

The most contentious and also the most problematic is the transformation of the content of advertising. Although this is closely linked to media placement transformation, it nevertheless deserves a category of its own.
South Africa has diverse cultures and languages and coupled with that a history of inequality and oppression. All this makes for a confusing mix of factors that must be taken into account in the creative stages of an advertisement. It is therefore also not surprising that the regulation of this type of content in advertising is extremely complex.

In the first instance there is the Advertising Standards Authority Code of Advertising Practice ("ASA Code"), a self regulatory Code to which the advertising marketing and media industries are signatories.

Discrimination is expressly addressed in the ASA Code and the provisions precede any statutory measures to prevent racism. In terms of clause 3.4 of section II of the ASA Code "No advertisements shall contain content of any description that is discrimination unless in the opinion of the ASA such discrimination is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom".

Clause 4.16 of Section I of the Code defines discrimination on exactly the same principles of the Equality Act, but does not require the discrimination to be unfair. It merely excludes discrimination that is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom.

It should be noted that the ASA Code does not require the intention to discriminate on the part of the advertiser, which makes negligent or even innocent discrimination possible. In fact clause 3.2 of Section 1 of the ASA Code clearly states that:

"In assessing an advertisement's conformity" to the terms of this Code the primary test applied will be that of the probable impact of the advertisement as a whole upon those who are likely to see or hear it. Due regard will be paid to each part of its contents visual and aural and to the nature of the medium through which it is conveyed."

Sanctions for non-compliance are severe and include exclusion from a particular medium and pre-clearance. Due to the severity of the sanctions the ASA Code is studiously adhered to by all signatories.
These provisions operate within the framework of and in addition to the law and in this regard there are the Constitution and the Equality Act. Section 16 of the Constitution guarantees freedom of expression, which includes the freedom to receive or impart information or ideas. This freedom, however, does not extend as far as the advocacy of hatred that is based on race, ethnicity, gender or religion and that constitutes incitement to cause harm ("hate speech"'). Even if this is not the case, the freedom of expression is not absolute, and can be limited within the boundaries of section 36 of the Constitution, which requires that limitation to be reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom. The right is clear, but the difficulty lies in determining the exact boundaries of the limitation.

Apart from the Constitution, the Equality Act also contains important provisions to stop purported discrimination and to effect equality. In this regard the preamble to the Equality Act is particularly informative. Its states thus:

"The consolidation of democracy in our country requires the eradication of social and economic inequalities, especially those that are systemic in nature, which were generated in our history by colonialism apartheid and patriarchy, and which brought pain and suffering to the great majority of our people.
Although significant progress has been made in restructuring and transforming our society and its institutions, systemic inequalities and unfair discrimination remain deeply embedded in social structures, practices and attitudes, undermining the aspirations of our constitutional democracy"

One on the measures introduced by the Equality Act to achieve these aims is section 12, which provides that no person may publish or display any advertisement or notice, that could reasonably be construed or reasonably be understood to demonstrate a clear intention to unfairly discriminate against any person. Bone fide engagement in artistic creativity, academic and scientific inquiry; fair and accurate reporting in the public interest or publication of any information, advertisement or notice in accordance with section 16 of the Constitution is not precluded by this section.

Originally, all that was required for a contravention of section 12 was an act that 'indicates or could reasonably be understood to indicate an intention to discriminate' (a purely objective test). The final version of section 12 requires an act that indicates or could reasonably be understood to indicate a clear intention to unfairly discriminate. Although still an objective test the burden of proof becomes more difficult because if the act depending on the objective circumstances merely indicates an intention it is not enough as a clear intention is required. Also if the facts indicate more than one intention for instance if it is intended also as a parody or a joke there is not a clear intention. What is needed for an advertisement to be "racist" is therefore a clear intention. Accidental racism is not possible.

It is patent that the provisions of the ASA Code as well as the statutory provisions aim to eradicate all forms of discrimination and therefore racism in the advertising content. Although the aim is laudable and worthy of support, some caveats may nevertheless apply

South Africa has many diverse cultures religions races and convictions, which makes it truly a rainbow nation. This rich diversity however also makes for manifold difficulties in devising advertising content. It is not necessary to enter into the creativity versus effectiveness debate in advertising here but suffice it to say that creativity in advertising cannot purely exist for the sake of creativity. Creativity serves the purpose of advertising - it must sell the product. However it is ventured that advertising also serves other purposes, and those are to entertain, to inform and because an advertisement is an uninvited guest it can also educate. If the total mix between all these elements is in harmony a successful advertisement is born.

It is this perfect mix of ingredients that is so important in the South African context with its diversity of peoples. While it is important to make advertisements that are not offensive to the susceptibilities of certain consumers be they black or white and that do not transgress the explicit provisions of the Constitution the Equality Act or the ASA Code, the power of freedom of commercial speech and the effect thereof should not be underestimated. It is of paramount importance, as the Equality Act states, to eradicate the inequalities of the past and to move towards a non-racial and non-sexist society, because only if the South African society, is unburdened of the inequalities of the past, and becomes a normal society, an otherwise "racist" advertisement would be seen as non-racist.

The important role of advertisements in this process and their function as educators and informers, can be illustrated by some examples. The "Castrol" advertisements, which are regularly judged the best-loved commercials, use a trio of actors two white and one black in a series of situations were "racist" taboos are joked at and as a result, these taboos become desensitized and become non-racist. A result that will be virtually impossible to obtain if it was attempted from a political platform or by way of legislation. One aspect that is said to accelerate racial acceptance and tolerance, is understanding the cultures of the different peoples in South Africa. In the latest "Castrol" advertisement the theme is the "tikoloshe", a mythical figure in certain black cultures. Through this theme the advertisement creates a knowledge and understanding of this element of the black culture, which naturally leads to tolerance and in the context of the advertisement, a healthy respect by the white actor. In the FNB advertisement a black lady shows a stressed-out white women how to carry her obstreperous toddler on her back, a practice that is well accepted and practiced by blacks, and a young "male and pale" benefactor helps a "gogo" over a busy street. This illustrates the South Africa that we are all striving for and has therefore a powerful message not only for the advertiser, but also for all the peoples of South Africa.

It should be mentioned that racism could also work in reverse, but to a certain extent illustrates that the seriousness of "racism" is in the eyes of the beholder. A Nando's advertisement portrays the reverse of the traditional South African situation, with the black people in the front of the "bakkie" and the white men in the back and a Toyota advertisement portrays a white farmer as a copy of his dog. This type of creative license capitalizes on one of the greatest assets of South Africans of all races, their sense of humour and ability to laugh at themselves. And a sensitive joke about a very emotional issue is very effective in desensitizing and normalizing an otherwise explosive situation. In the same context the MTN advertisement portrays the unlikely success of "Fanie's Biltong". It also shows black people in the "traditional dress" of the conservative whites of the sixties and seventies, the Safari -suit complete with the comb in the sock. An entertaining and effective advertisement with the added value of breaking down the barriers that were artificially erected between peoples.

These advertisements and many more like them have one thing in common - they potentially fall foul of the Equality Act and the ASA Code but by treating a very emotional and potentially explosive subject with care and utmost sensitivity, they achieve much more than is "budgeted" for. Apart from an effective selling mechanism for the advertiser they pave the way towards a truly normal South African society and should therefore not only be tolerated but actually encouraged.

A high degree of sensitivity is needed in creating a 'non-racial' racial advertising like the examples discussed. That advertisers and advertising agencies are willing to grapple with the complexities of this issue is irrebuttable proof of the importance for advertisers and agencies of a truly non-racial and normal South African society based on human dignity equality and freedom.

South Africa is rich in diversity and it is this diversity that should be used to create a competitive advantage for South Africa and South Africans. It is this diversity says Thomas Oosthuizen of 02 Communications that spurs creativity. The use of this diversity in advertising will also create a truly South African product that according to Nkwenkwe Nkomo Chairman of the Association of Advertising Agencies will tell the viewer something of the soul of South Africa and will be 'smack in the face' South African. The Sasol advertisement of the white ladies in the 'bakkie' and the black schoolchildren being rewarded with a piece of their precious cake for pushing the 'bakkie' gave us a look into the soul of the real 'pIatteland'. A 'platteland' not based on racial discrimination but based on good-natured co-existence and acceptance the elements that were the cornerstones of the miracle of 1994.

6. Conclusion
The beneficial social engineering that is achieved by advertisements portraying racial and cultural diversity should be accepted in a bona fide manner and should be acknowledged for the good they. aim to achieve. In our highly complex situation with the legacy of our past there are bound to be mistakes but these will surely be bona fide mistakes and not intentional racism as it is inconceivable that an advertiser or agency will wilfully make a discriminatory or racist advertisement and thereby alienate the majority of consumers or potential consumers of their products. To outlaw or criticize
all of these advertisements per se would only emasculate the creative spirit and leave us with bland and unimaginative advertising in our rich multicultural society. In Marketing through Mud and Dust Muzi Kuzwayo says that political incorrect words are unacceptable and advertising that is politically too correct can ruin good advertising. We need the diversity and portrayal of racial interaction because that is the soul of South Africa and to be overly critical and pedantic about this type of advertising would severely hamper an important element in the normalising process a process for which the sands of time may well fast be running out

3 November 2001

Appendix 2:


Chairperson and honorable members of the portfolio committee.

I bring you greetings from Mr Connie Molusi, CEO of Johnnic Publishing, who wishes you well in your deliberations. We thank you for this opportunity for Johnnic Publishing to make a submission to this committee.

First, a bit about ourselves. We are the largest black empowerment media company in the country. We have holdings in newspapers, magazines, online publishing, books, maps, television and radio content provision and we have interests in various online businesses in the education and career development sphere. We count ourselves to be a 21st century multi-media company of world stature.
When we initially saw the brief for this inquiry, we were unsure whether we as a media owner could make a meaningful contribution to this discussion. After all, we are merely a supplier in the value chain: we do not make buying decisions for agencies or clients although we obviously attempt to influence them.
On reflection, however, we decided we could perhaps give some insight into our perceptions as a major player in particularly the newspaper arena. Advertising is the lifeblood of our industry and our business. Upon its success rests ours. Its challenges, ultimately, are ours.
Let me briefly sketch our perception of the industry at present to perhaps assist the committee in understanding the context in which we operate.
The traditional value chain for advertisers used to be linear. The client sought to sell a service or product. The agency was commissioned to execute a creative advertising product and place it in the most appropriate vehicle. The media was the last stop in the chain before the end-user, the consumer. All rather neat and simple.
In the last decade things have changed enormously, here and abroad.
We believe three factors are of importance: 
The first is the tremendous fragmentation of media and the consequent explosion of opportunities for clients. I am sure you are all familiar with the statistics so I will not bore you other than to say that this very plethora of opportunities open to the client has forced media owners to focus much more intently on the client and his or her needs.
The second factor is the growth of the major media buying houses. This concentration of more and more buying spend in the hands of fewer and fewer specialist agencies has also greatly increased the pressure on media owners to differentiate between each other. Merely trading off the rate card or offering a few gimmicky "value adds" does not work. Again, this forces media owners to pay even closer attention to the interests of the clients.
The third factor is the growth of the new genre of communication: below-the-line, sponsorship, promotional, call it what you want. The growth of this non-classical advertising form is driven by some clients belief that one-to-one marketing is more appropriate to the new environment of the "sovereign" purchaser. The new forms of communication, they believe, is more spontaneous, personal and cost efficient. Again, media owners have to focus very carefully on the client's needs.

The combination of all three factors has led, we believe, to a redefinition of the linear relationships of old into a new triangular one: this is the client, the agency and the media owner. Each component is crucial to the success of the project. Communication between all parties is central. An understanding of each other's business is the key determinant as to whether a campaign will work or not.
The critical point here is the close interconnectivity between media, advertiser and client. Precipitous intervention in one area can only have a knock-on effect down the chain.
Overlaying these structural changes in the advertising and media world are a number of pressing contemporary factors.
The first is the weakening advertising environment. Again, I do not wish to bore the committee with statistics but I would refer it to the Print Media SA's response to the Government draft policy document on the proposed Media Diversity and Development Agency. That spells out the increasing pressures on media owners and their margins. The situation since then has worsened with the global economic slowdown and the uncertainties created by the September 11 attacks on the United States. Throughout the world media companies are posting profit warnings. It would be naive to believe South Africa can entirely escape. Only in very few cases of exceptional editorial and managerial innovation is the picture brighter.
The second contemporary factor is the loss of advertising through regulatory action. The ban on tobacco advertising is an example. Threatened actions on liquor advertising is another. The net effect has been further erosion of margins.
The third is the already mentioned flight of traditional advertising to other media forms.
The fourth is the pending massive rise in newsprint costs which will have a profound effect on all publishing business models.
Taken collectively, considering both structural and contemporary factors, the single most important point is that the media industry down the entire value chain: client, advertising agency and media, is under pressures unprecedented in its history. Again, precipitous action at any point could have a knock-on effect which could imperil the media at the very point where there is wide agreement between both government and media that a central challenge in the building and consolidating of the democratic project is the growth of accessible media and the embedding of a reading culture.
Let me now move to the question of alleged racism in the media industry. Let me not seek to speak for either the marketers or advertisers. They are quite capable of doing so for themselves. Let me simply observe that the flagship of Johnnic Publishing, the Sunday Times, is a black-owned, black-edited and 70 per cent black-read newspaper. The representation of the black community among Johnnic newspaper readers is as follows:
Sunday Times 72,9%
Business Day 58,6%
Daily Dispatch 76,7%
EP Herald 59,6%

If ever there was a suitable target for racism by the advertising industry, it should surely be the Johnnic Group. We have not experienced any such racism.
So what role can the media play? 
The first is to produce accessible and appropriately pitched editorial products which communicate knowledge, enable people to make life-informing decisions and at the same time providing entertainment and information.
The second is to create credible and friendly environments for the purveyors of goods and services to engage consumers. In this regard we are no more than a willing host.
Thirdly, we believe the print media in this country has a broader social obligation to assist with the growth of diversity and the extension of the printed word as widely as possible. Print media SA has accepted the challenge: firstly, by creating the Print Development Unit within PMSA to assist small-scale and emergent media entrepreneurs and, secondly, engaging in good faith with the Government on ways to establish a credible, effective and independent Media Diversity and Development Agency. In this regard considerable progress has been made.
I need also to mention here that Johnnic Publishing has been intimately involved in attempting to move this initiative forward: a senior executive serves as chair of the Print Development Unit, the CEO of Johnnic Publishing, as President of the PMSA, has been closely involved in the consultations with the Government and, finally, Johnnic Publishing has funded investigations into developing business models for emergent businesses: critical research which will be put at the disposal of the MDDA once it is formed.
Let me conclude by attempting to summarise our view of the industry.
Structural and contemporary factors have put the entire chain under great pressure.
Ill-advised attempts at intervention outside market forces could further damage this fragile industry at the very time when strong, sustainable media are critical.
Print media owners are merely end points in the value chain. They cannot dictate to clients or advertisers how, where or when advertisers place their advertising. Least of all can we prescribe to advertising agencies how they should fulfil their fiduciary responsibilities to their clients.
Finally, as the largest back empowerment media enterprise in the country, we have not experienced any indications of racist considerations by clients or agencies in placing material in our various media and operations.
I hope this will of assistance.




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