Transformation of Advertising Industry: public hearings

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
13 November 2002
TRANSFORMATION OF ADVERTISING INDUSTRY: PUBLIC HEARINGS

Link to GCIS website with all related hearings documents
Communication and Advertising Forum for Empowerment ( CAFé ) presentation
Industry Image Report
Committee Report on the hearings (see Appendix)

SUMMARY: Here follows the second day of hearings.

MINUTES
Transformation Issues in Education and the Advertising Industry
Mr Ian Sutherland, of the Durban Institute of Technology (DIT), cited following hindrances to previously disadvantaged individuals (pdi's) who wish to study for a career in the industry: too high costs, no guarantee of employment upon completion, limited access to art and design education, and lack of career guidance, amongst other things.

Discussion
Ms M. Magazi (ANC) asked for a 'ball park' figure of how many young people the industry could absorb each year.

Mr M. Lekgoro (ANC) wanted a game plan. The House had heard of the difficulties of getting learners from the previously disadvantaged sector into learning institutes, but what were their plans to alleviate this? He wanted facts and figures.

By way of response, Mr Sutherland explained that because art was not being taught in schools, learners were not encouraged to explore their creative skills, whereas the industry is a creative and culturally sensitive one. Currently however, certain NGOs are making such education available through community art centres. These organisations are not receiving the financial support required to continue with their valued work. Nevertheless, Mr Sutherland added that these were 'band aid' measures, and not the real solution. Education is a long-term process. Artistic subjects have to be provided in primary schools, so that young people's talents can be nurtured.

He added that learnerships were very limited, but that they could be helpful in encouraging learners to pursue their talents all the way into university level.

The way forward was through: reviewing teaching methodologies, curriculum changes, and financial support for disadvantaged learners.

Ludi Koekemoer of the School of Advertising (AAA), said that education is very different from training. The advertising industry is heavily involved in training: short-term programmes, and developing skills on a short-term basis. This involved identifying people with raw talent. He said unlike in other fields, with more obvious talents, it is difficult to recruit people with artistic skills unless these skills have been taught and nurtured in schools. This means these learners have no way of getting into advertising, which relies heavily on creativity. The School of Advertising identifies and encourages talent by running workshops in schools, and through competitions. He raised the problem of funding, saying many public institutions have access to bursaries, which private institutions do not have. Five years ago, less than 5% of their students were from historically disadvantaged institutions. Today, these students constitute more than 30%. However, these are more typically the students with no access to computers, the Internet, and electricity. The School has to create the necessary infrastructure for these students, at high cost. As a consequence, tuition is high. Every cent coming into the institution, was ploughed back into infrastructure, facilities, and bursaries.

He added there were approximately 3000 people in the advertising industry, with 300 graduates going into the industry each year.

Mr M. Mmutlane, SABC Airtime Sales, reminded the House that South Africa is still a mixture of First and Third World, with a great backlog on education. He added it should be remembered that, while there is formal education, there is also informal education. The Loerie Awards should be used as a tool to promote and exhibit black people in the industry. He spoke on the limitations that white people in South Africa have, in that they are in many instances mono-cultural. Many black people have a multi-cultural aspect. Considering the creative nature of the industry, it must be considered how this realisation could be used to benefit the industry. Mr Mmutlane further stated that the industry itself needed to be educated to the reality that many black people, while they may lack formal education, lack nothing in terms of creativity. The industry must somehow make room for that fact.
Mr M. Hagan, of the Cape Technikon, in response to Mr Lekgoro's challenge, stated that educational institutions have been attempting to come to grips with the call to transformation. He added that they were not only supplying the advertising industry. The graphic design field is quite broad. More than 300 students were, in fact, being produced each year, and the numbers were being absorbed.

Ross Charles, Chairperson: Creative Directors' Forum, felt strongly that the industry needs to have the input of more people of colour, and not enough was being done to achieve this objective. He suggested the enforcement of hiring quota's would largely eliminate the problem within five years. He felt the industry does not suffer so much from a racial issue, as it does from a familiarity issue. Working along with people across colour lines, would help to change this occurrence.

An industry representative from UCT stated that Mr Sutherland's report encouraged over-production of entrants into the industry, if it talked of producing 300 students per year, and created false expectations. The industry could not absorb them all. There were presently graduates from within the field who were without jobs.

Mr N. Nkwenke, Director, Advertising Standards Authority (ASA), countered that those people who had entered the industry 20 or 30 years before, did not have the advantages of the AAA. While it might be true that creativity was not presently detected at primary school level, anyone with creative talent, was able to do the work. Although he conceded that formal training was imperative, this industry would not be sustained through that channel alone. He was encouraged to hear talk of enforcing quota's, but cautioned the House that as a growing industry, it was volume-sensitive. The industry should guard against the creation of false expectations that the industry was able to continuously absorb more and more people. As long as budgets were not increased, he encouraged everyone to remain realistic.

Mr Mpho Makwana, Association of Communication and Advertising (ACA), felt the need to mention some figures with regard to adspend. Eighty-five percent of what a client spends per annum on marketing, went to production houses. Of that, 15% remained with the media owners, and then got broken down into manpower, and operational costs (incl. Rent). The remainder was profit. With this breakdown, Mr Makwana pointed out that not all the money stayed in the industry, although it spoke of high figures. Profit margins, in fact, were very small.

At this point, the Chairperson summed up that there was a need for awareness towards targeted recruitment, and a need for some form of partnership between the various stakeholders in the industry, with regard to training. There needed to be a co-ordinated, integrated approach into how people were trained. While it was true they would not all be absorbed into the industry, those who didn't get in, could at least seek other avenues in which to offer their acquired skills. The Chairperson stressed the importance of bringing other stakeholders into the debate, especially those from the arts and culture sector.

Corporate Image of the Industry
Mr Mohale Ralebitso, Chairperson: Communication and Advertising Forum for Empowerment (CAFé), made the point that old patterns in the industry are still the order of the day, whereby only those people who are in the industry, serve as a major access point to others who wish to enter in. This perpetuates the situation where the industry is very closed to non-whites.
Key findings of Mr Ralebitso's report were that the industry has a very poor image, because few South Africans are aware of the industry as an employment option. Pdi's continue to be marginalized as role-players, while the industry continues to lose credibility. This will further set back transformation.
As a corrective measure, he recommended that the industry should embark on an awareness drive to sensitise pdi's to the possibility of employment within the industry, using role models from the disadvantaged communities. Black lecturers are needed at marketing schools and technikons.
He concluded with a statement the following statement by Ms Brenda Wortley, "I wouldn't like to be black in this industry".

Discussion
Mr F. Maserumele (ANC) commented on the fact that although the industry is massive, it has largely operated in isolation. He conceded that from where the industry stood with regard to transformation in 2001, there had been some improvement, but he was not prepared to wait another 10 years for more. He was not satisfied with the argument that 70% of the industry preferred to be self-regulated. How, then, should we deal with questions of ownership and representivity?
On school visits to promote the industry amongst pdi's Ms M. Magazi (ANC) asked if rural schools would be included.

Mr V. Gore (DA) commended Mr Ralebitso on his impressive presentation, saying that he was looking at the root causes of the problem. However, he pointed out that in mentioning pdi's, he did not include the disabled.

With regard to ownership, Mr E. Magashule (ANC) said legislation could ensure that ownership changed, so that if ownership did not reflect transformation, punitive measures could be taken.

Mr Ralebitso said that those players in the industry whose responses did not correspond with the force of movement towards transformation, would be left behind.

On the issue of incentive versus stick, Mr Ralebitso said that the industry has had many encouragements to change. Those who do not conform to the call for change, need to be called upon to account, and duly penalised.

Regarding Mr Gore's assertion that the term 'previously disadvantaged individual' was not inclusive enough, Mr Ralebitso conceded that the focus should not only be on correcting progress along racial lines, but that the disabled also should be included.

He agreed that rural schools absolutely had to be visited, as well.

As to whether the industry would be transformed within the next 5 years, the previous day's research statistics had shown that it would not be. However, the onus to achieve that goal was on those stakeholders who were in the House. Some role-players were doing what they could. He concluded by saying, "Maybe some of those pillars are not being broken, because some of us are those pillars".

Mr J. Mjwara (Deputy Director-General, Dept. of Communications), commented that the barriers experienced by the black population on entering the industry were, at times, demoralisingly extensive. What was the industry's commitment in terms of dates and figures? Honest discussion was necessary as to how the situation was going to be changed.

Reports from Industry Bodies:
Advertising Media Forum (AMF) (see GCIS website)
Ms Brenda Wortley presented a progress report to the Committee, which dealt with the role of the AMF both within the advertising and marketing fraternity, and with regard to the process of transformation. It also addressed the organisation's activities since November 2001.

She commented that the few blacks who were in the industry, had a huge burden in terms of being the role models for other previously disadvantaged youth. It was important that blacks participated in programs run by the AMF. The AMF was committed to participating in future initiatives that would move the industry forward.

Association of Communication and Advertising (ACA) (see GCIS website)
Speaking on behalf of the ACA, Mr Makwana stated the Association was a mirror of our society, and of ourselves as a people. He encouraged the adoption of a shared vision of the future, which the industry wished to create. Black leaders in the industry should lead differently to the way in which previous leaders had done. "We have to be an embodiment that transforms ourselves, if we hope to lead transformation". He said that the South African industry should adopt a new mindset, in order to set a trend for others to follow, adding that people are hungry for a new energy from Africa, especially in the light of the establishment and aims of NEPAD.

He suggested the way forward could be with a Commission for the Industry, to direct it into the mechanics of how it could work towards transforming itself. Through studying what had been done in other countries, it could consider how to link growth with advertising, and how that could contribute towards nation-building.

Marketing Federation of Southern Africa (MFSA) (see GCIS website)
Mr Davy Ivins, MFSA CEO, shared the Federation's vision to become the voice and home of marketers in Southern Africa. The focus of his presentation was on governance, operations, and procurement.

He stated that MFSA supported the Transformation Charter for Marketers, adding that the organisation would also implement an internal corporate Transformation Charter.

He said the organisation was aware that it had a transformation problem, and it was also aware that it had to deal with that problem.

In closing, he made his personal address and contact details available, inviting those who were present, and who wished to interact with him with regard to the above, to do so.

National Association of Broadcasters (see GCIS website)
Mr Ivan Rensburgh, Executive Chairperson, SABC, submitted the NAB's presentation to the Committee, which stated that it supported the transformation process, and that it had already called upon the advertising and marketing industry to do the same.

In upholding fairness and furthering transformation in advertising and marketing, the roles of the still-to-be-established role of the Media Development and Diversity Agency (MDDA), and that of the Advertising Standards Authority (ASA), would be crucial.

Print Media South Africa (PMSA) (see GCIS website for document)
Ms Natasha Strickland, General Manager, PMSA, said the organisation represented all print media in the country. PMSA wholeheartedly supported the Government's transformation initiative. PMSA was committed to its own transformation, and to transformation within the industry at large.

South African Advertising Research Foundation (SAARF)
Speaking for SAARF, Board Member Ms Masereme Tshwaedi stated the previous year's allegations to SAARF of racism had led to much soul-searching by the Foundation. They were looking at new ways of compiling research, and there were huge opportunities for improvement. However, the Foundation was experiencing difficulties, as many companies were complaining that it's levy charges were too high. The SAARF submission was presented by Dr Paul Haupt, Managing Director (see GCIS website).

Communication and Advertising Forum for Empowerment (CAFé)
In addition to his presentation, Mr Mohale Ralebitso, Chairperson, said the very fact of the organisation's existence pointed to the reality of there being problems within the industry. Affirmative action, BEE, and affirmative procurement were all terms that were not properly understood by the industry. Much work needed to be done in terms of legislation. The industry was running on incorrect assumptions, for instance that because black people had not participated in the industry previously, they had no skills. This misconception, along with many others, led to much frustration amongst pdi's.

The Chairperson stated that the most important part of any gathering of this nature, was to share a perspective of the way forward. He then invited Ms Patti McDonald to share her 'Values Statement' for the industry.

Government Report
Draft Values Statement of the Marketing and Community Industry (see GCIS website)
Ms Patti McDonald (Coordinator) presented the Committee with a draft document entitled, "Values Statement of the Marketing and Communications Industry". The document confirmed the industry's commitment to transforming itself, and as a body which reflects and shapes the norms of society, to do its utmost towards transforming South African society into one that embraces the values and aspirations of all South Africans. It pledged the industry's commitment to placing the consumer at the centre of all its planning, and to upholding high ethical standards in business.

In summarising the day's proceedings, Mr Trew (GCIS) pointed the way forward. It was an established fact that progress on transformation had come up short. Nevertheless, the hearings constituted a milestone, and brought more clarity on what was needed, creating conditions for faster change. The various Departments (Labour, Education, Treasury, Arts and Culture) needed to get together, along with the industry stakeholders, to develop a framework for transformation in an integrated manner. The following were specific issues which needed to be addressed:
- Monitoring to ensure progress
- Adspend - steps needed to ensure more equitable expenditure
- Reviewing placement procedures
- Addressing of imbalances and access to media

Mr Trew felt that the entire body needed to meet sometime in the middle of next year, in order to assess the progress that had been made.

Discussion
Mr Lekgoro felt that the 'Values Statement' document was vague on specifics. Measurable plans were needed, which could be evaluated at a next meeting. Others expressed similar sentiments: to set goals and time frames, to stop merely talking, and to "get on" with the business of transformation.

Mr Hitzeroth felt there was a need to establish a body to oversee transformation in the industry.

Mr Makwana felt the next meeting should be held around April 2003. A representative from the MFSA indicated that the Federation would willingly host such a consolidated forum, wherein progress could be measured.

Mr Nkwenke was of the opinion that the Values Statement should be accepted and signed by all stakeholders by 31^st January 2003, after which the objectives of the document could be unbundled and actioned.

Several representatives expressed the desire that every stakeholder in the industry should be made aware of the objectives that had been agreed upon in the hearings, and that they understood the present situation, wherein the larger section of the population is overlooked in the industry, would no longer be tolerated.

The Chairperson stated that the country's Constitution ensured the rights and privileges of all citizens, but we also have responsibilities and duties. Therefore, each player within the commercial sector should commit to the process of transformation, and to the sentiments expressed in the Constitution. He concluded by saying, "We are aiming at an industry that is inclusive, profitable, and world-class. We are encouraged by the progress. Let's move on."

Appendix:
Committee Report on the Hearings
WAY FORWARD
A need for transformation
The process the Portfolio Committee initiated in response to complaints about adspend patterns has confirmed the need for further change in spending and transformation of the advertising and marketing industry.

There has been progress in redressing inequity in use of resources to communicate through advertising and marketing. But it has been uneven and far short of what is needed.

With respect to participation in the industry - in ownership, management and operations - the progress has also been disappointingly slow.

An important milestone
Nevertheless, this is an important milestone: bringing more clarity on what is still needed and ways to achieve it; highlighting interrelationships between factors sustaining inequity, which need to be if tackled in an integrated way.

Critically, this is a product of unprecedented interaction between industry and government brought about by the Committee's initiative. It is informed by a consensus that the process must continue.

The process and these second hearings have created conditions for faster and more focused change.

Developing the framework for transformation
Following the report to the Portfolio Committee the various departments in government affected - including some not yet part of the process - will need to work together, in consultation with the industry, to develop a framework for transformation in the light of what has emerged.

That would include definition of desired outcomes, and setting of targets and time frames as well as mechanisms and processes. It would be informed by interrelationships between patterns of expenditure and the representivity of the industry and its relationships with society.

All these initiatives may lead to the consolidation or strengthening of the existing legislative framework, as well as to an industry charter.

Given the scope of what has emerged, a first task of government therefore will be to brief Cabinet on the process, for guidance on the way forward for government.

Maintaining the momentum
In the meanwhile the momentum must be maintained. We must build on the foundation laid by this past year's work, continuing to work towards identified goals and developing the framework for more effective prrogress.

Continued research and monitoring of trends in the industry's landscape, as defined by patterns of expenditure on advertising and by the participation in the industry should inform faster progress towards the goals and targets. What follows is a partial list, needing development, of things emerging from reports and discussions, some needing industry action; some needing government action; some needing interaction. Some are issues for further discussion.

Expenditure on advertising, marketing and communication
There is need, in the light of current and ongoing research and monitoring to devise steps towards more equitable expenditure on advertising and to work to ensure implementation.
Continue monitoring adspend placements against target markets and channels, quantifying gaps and developing segmentation tools (criteria of wealth; consumer profiles wrt FMCGs etc)
Preview placement procedures in the light of findings and in the context of more targeted communication
Finding place for consumer advocacy groups in the monitoring process

Affirmative procurement
There is a need to assess what constrains and what promotes affirmative procurement.
Ensuring clarity in and promoting effective use of procurement policies and guidelines, including in subcontracting, to accelerate the process in all dimensions (ownership; HRD: subcontracting)
The implications of the forthcoming Black Economic Empowerment policy statement will also need to be taken into account.
Steps to align government and parastal procurement policies would assist the process

Representivity in the industry
There is a need to assess what constrains and what promotes employment equity in the industry, and to work to accelerate empowerment at all levels
o Government interaction with industry to promote an action plans to identify and undo blockages.
o Interventions especially in the education system to equip more people to enter the industry and steps to promote representivity at all levels thorough ongoing training and development programmes offered through the education system and the SETAs.

Regulatory framework
There is a need for a comprehensive assessment of the efficacy of current complex legislative framework and regulatory regime concerning advertising.
o Assessing functioning of the current legislative framework, including relationship of ASA and the Consumer Affairs Committee, and the possibility of a Liaison Committee under the Unfair Business Practices Act as a means for doing that;
c A consumer awareness programme to ensure that citizens are aware of their rights and are able to access the means of protecting those rights;

Continuing the process
Maintaining the momentum also means keeping together in an integrated way the
various issues and processes which have been reported on separately and
maintaining interaction. The bare bones could include;
o A consolidated report of this hearing; for
o An early plenary meeting to agree and assign tasks and processes;
o A plenary mid-2003 to assess progress