Transformation of Advertising and Marketing Industry: Progress Report

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Communications and Digital Technologies

19 October 2004
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Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
19 October 2004
TRANSFORMATION OF ADVERTISING AND MARKETING INDUSTRY: PROGRESS REPORT

Chairperson: Mr M Lekgoro (ANC)

Documents handed out:
 

 

Presentations by Advertising and Marketing industry to Communications Committee (offsite link)
Joint Steering Committee:
Towards a Marketing Communications Scorecard and Charter
BEE Monitor:
Baseline Transformation Index for the Marketing, Advertising and Communication Industry
Marketing Federation of South Africa:
Roadmap for Transforming the Marketing Profession & Value-Chain
Association for Communications and Advertising:
Progress report from Association for Communications and Advertising
Advertising Media Forum: Advertising Media Forum
National Association of Broadcasters
South African Research Foundation:
South Africa Advertising Research Foundation
Advertising Standards Authority of South Africa submission
Advertising Standards Authority of South Africa presentation (offsite link)
Communications and Advertising Forum for Empowerment (Café) submission
Analysis of Adspend Placements in Advertising and Marketing Industry
GCIS presentation
Print Media SA submission
Committee Programme

SUMMARY
Key industry organisations reported some progress in redressing inequity but it had been disappointingly slow and uneven, and far short of what was needed. The BEE Monitor project to set up a transformation index for the sector had failed because of a very poor response from the industry. Members were concerned that non-respondents of the survey reflected a resistance to transformation, and it was agreed a resolution detailing the way forward should be tabled before the National Assembly. The Committee noted some progress in black economic empowerment in the advertising industry, but it was less clear in the marketing, graphic design, print media and other industries that formed part of the "value chain" in the sector.

MINUTES
The Chairperson stated that the meeting was a follow-up to the hearings held in November 2002 about transformation in the advertising and marketing industry. This update would allow the Committee to assess the progress that had been made.

Government Communication and Information System (GCIS) introduction
Mr Tony Trew, Deputy CEO: Government Communications (GCIS), in his introduction noted that the signatories to the Values Statement signed in April 2003 had established the Monitoring and Steering Committee for the Transformation of the Marketing and Advertising Industry. He handed over to the Joint Chairperson of this body for an appraisal on progress.

Monitoring and Steering Committee for the Transformation of the Marketing and Advertising Industry
Mr M Makwana (Joint Chairperson of the Steering Committee and CEO, MFSA) said the transformation challenge points to problems with processes, procedure and systems. A Black Economic Empowerment Monitor, an independent body, had been appointed to put together a scorecard and charter, define the industry and the origin of barriers and how to grapple with them. Some progress had been made by the advertising industry. An important milestone was the launch of the Communication and Advertising Forum for Empowerment (Café) as a collective voice of affected employees in the industry. With respect to participation in the industry, a reasonable number of people had entered into black ownership, management and operations, however progress had been disappointingly slow. The industry was also grappling with was the hindrance of limited resources. In order to deliver change, there was the need to equitably distribute ad spend. Progress had been made in redressing inequity in the use of resources but this had been uneven and was far too short of what was needed. This interaction with the Portfolio Committee aimed at finding ways to unlock these constraints.

Baseline Transformation Index
Mr A Falconer (Project Leader, BEE Monitor) explained that the BEE Monitor project to create a transformation index was an initiative by government, media, marketing and communications industry to accelerate transformation and BEE. Working within the framework set by the Department of Trade and Industry (DTI), that is, the national strategy for broad-based BEE and scorecard approach, their research aimed to develop a baseline evaluation and set up methodology and systems for monitoring transformation.

They were at the data collection stage before conducting a comparative analysis to develop realistic targets. He reported that progress had been disappointing slow as a result of lack of commitment to the research by industry bodies and other stakeholders. Response rates had been very poor. Some reasons given for non-participation were: that marketing did not see themselves as part of the industry, too small to participate, had not achieved enough transformation to report on, mandate for the survey questioned, not enough time to complete survey or will not participate. A major challenge was dealing with different industries within the value chain. He felt the campaign about the purpose of this research had to be re-launched since after two months in the field, only ten responses had been received.

Discussion
A Member asked for clarity on funding by the Services Sector Education and Training Authorities (SSETAs).

Mr R Pieterse (ANC) commented that the non-response to the survey might relate either to problems encountered by the research team or that the industry was expressing resistance to transformation. Mr K Khumalo agreed that lack of co-operation reflected the desire for people in the industry to remain where they were.

The Chairperson asked for clarity on the time frame for the campaign about the purpose of the research and whether it had been repeated.

Mr Makwana admitted there was an impasse and that the interaction with the Committee was to find ways to break the impasse. The Steering Committee had appointed BEE firms with grants advanced by the SSETAs to get scorecards off the ground. The SSETA was the largest marketing chamber. The lack of co-operation from the marketing sector was because of the informal nature of the process. The BEE Monitor had to be seen as a quality control establishment, and Parliament had to endorse the annual survey to give it weight. The response to the campaign had not taken off possibly because it was a large survey document, however it was not difficult to complete. He reiterated that there was no compelling support for the research process within the industry.

Ms L Yengeni (ANC) could not accept the explanation that people were not interested in the survey, and asked what the set targets were.

A Member asked whether fieldworkers and focus groups had been sourced for the research.

Mr Falconer said the survey was initiated in August and the expectation had been to get feedback within a six-week cycle. He was of the opinion that this was ambitious and that there was the need to rethink time lines. He said focus groups and fieldworkers would have been a helpful resource. He suggested the need for a call centre.

Mr Makwana reported that the business sector did not respond to change voluntarily, but required a platform as was initiated in 2001 and 2002 with the hearings on state of change in the industry. Through those events, the industry became an integrated group and adopted the values statement, however there was no such platform for implementation. The industry needed funds to engage in this.

Rev M Khumalo (ACDP) commented that perhaps the impetus for transformation could be obtained via a press statement.

Association for Communications and Advertising (ACA) submission
Ms N Ntshingila (Chairperson) reported that ACA was a member of the Monitoring and Steering Committee. It had voluntarily been monitoring members' progress in key empowerment variables - some for over 6 years - though two surveys, namely the ACA Empowerment Equity Survey and the ACA Employee Cost to Agency Survey. Average equity ownership had increased as well as employment equity. Growth had increased while industry declined in terms of employee numbers. Female representation has also increased. There had been major progress in terms of training with 65% going to disadvantaged groups. A key challenge was procurement and enterprise development, and there was an urgent need for a scorecard. Best Practice Guidelines for the procurement of marketing and advertising services by government and parastatals was in the process of being drawn up.

Advertising Media Forum (AMF) submission
Ms J Scholtz (Chairperson) explained that the AMF was an advisory and consultative body to the advertising, marketing and media industry. She reported that there was no clear information on BEE status. It thus aimed to motivate for the development of an analysis tool that will reflect the BEE criteria/score of each individual title used within the communication planning process. This would be in addition to the existing tools that provide measurement data on schedule performance such as reach and frequency. The formulation of such a tool is currently in the planning phase. The dynamics of such a tool have been investigated and are deemed possible by the current planning tool software providers. This tool could become the government certificate of BEE status within the media industry. The biggest concern was how it would be funded.

Marketing Federation of South Africa (MFSA) submission
Mr Makwana reported that the MFSA served as an intermediary that made funds advanced by SSETAS to facilitate the creation of the industry scorecard through the BEE Monitor, and to create a robust chartered marketers. It had championed a 1000 learners in partnership with SSETA. It was working on increased representivity and diversity in the Loeries judging panel and using this festival as a platform for monitoring progress of compliance with the Values Statement. It was in partnership with Black Management Forum to transform the 2005 awards in the marketing industry. The MFSA had influence over members through best practice and a code and in the case of non-compliance, loss of membership. He noted that the challenge had been to synchronise the various sectors into one scorecard.

National Association of Broadcasters (NAB) submission
Mr J Koster (CEO) reported concerns that government ad spend had not been favourably distributed. There were still elements of racism, and not enough transformation had taken place. The NAB supported self-regulation. The value chain had to be investigated realistically.

South African Research Foundation (SAARF) submission
Mr H Gabriels (Chairperson) said SAARF measured the readership of print media, and was a tripartite body of marketers, advertising agencies and media owners. There had been an intensive process for the past two years with stakeholders in order to remodel SAARF. The current constitution of the SAARF Board is now 17% female and 33,3% black and its staff is 50% female and 50% black. The AMPS and RAMS contracts in 2004 were awarded by SAARF to two empowerment contractors.

Discussion
Mr A Maziya (ANC) commented that black empowerment had been poor, with no indication of a push towards growth. He asked for clarity on methods of marketing.

Ms S Vos (IFP) was of the opinion that each component designed their own measurement and scorecard.

Mr Pieterse wanted clarity on how progress was measured, what were the targets, what had been achieved, and the way forward.

A member commented that the progress results had been disappointing, transformation was sketchy, and that there was the need to locate the barriers to change. He felt that the AMF presentation was scanty, and the marketers' progress related solely to awards, and not to transformation. Self-regulation would only be effective if people were committed to transformation.

Ms N Mokoto asked for clarity on areas of difficulty with implementation. Was there an information flow from top management to junior staff. She cautioned about transformation occurring at top management only and was of the opinion it impacted on survey. She felt most advertisements did not conform to national interest, and seemed be profit-driven.

Mr Makwana admitted the value chain did not track progress as it involved a very diverse group of companies and individuals, and asked the Committee to allow them time to come back with feedback. DTI had conducted an extensive investigation into the value chain and could respond better. The industry was grappling to get companies to develop scorecards. Self-regulation was an on-going debate. There was the need for a common understanding of what the transformed value chain should entail.

Ms Scholtz responded that AMF was a body of media planners, a voluntary committee that investigated ethics and industry tools such as methods of marketing and placement of advertisements, determining who the publications reach, and costs per audience. Its members were also involved along with SAARF with the setting of the curriculum and exam papers

Mr Koster reported that the problem with National Association of Broadcasters in assessing growth of BEE companies was that there was no basis for comparison. They needed to prioritise this aspect to speed up the process

Ms Ntshingila said that the filtering of information to lower levels happens but the challenge, due to the huge numbers, was to educate members. The value chain was long. They needed to look at alternatives to assessing progress.

Communications and Advertising Forum for Empowerment (Café) submission

Mr M Ralebitso (CEO) said that Café championed the development of a charter and scorecard. He stated that the BEE agenda had not been well understood, the industry was grappling with skills shortage, and investment levels were not sufficient. The working environment was not shifting hence the low transformation rate. Mr Ralebitso reported a lack of private sector commitment and a lack of monitoring capability due to reliance on industry bodies to monitor themselves.

think/South Africa Graphic Design Council submission
Mr V Archery (Chair) reported that think had set out to create a database of practitioners as there had not been reliable data or measurement of the size of the industry. The graphic design industry is mainly made up of micro enterprises with fewer than 10 individuals. It could only absorb 60% of current graduates annually, and there were no monitoring and enforcement policies for transformation. The newly developed database could be used to measure transformation in their field. They recommended a "short, user-friendly" questionnaire as the BEE Monitor form was unnecessarily complex.

Advertising Standards Authority (ASA) submission
Ms D Beukes (CEO) reported on ASA's involvement in assessing the efficacy of the legislative framework for consumer protection and public awareness of the Advertising Standards Authority . A study based on telephone interviews reflected a growth in awareness. It had embarked on an extensive awareness campaign. Additional funds from the Industry Trust had helped to extend awareness and to appoint and train staff to deal with the increase in complaints. The Code had been revised to adequately address offensive adverts that contained discrimination and gender stereotyping.

Department of Communication briefing
Mr J Mjwara (Deputy Director) said the Department had commissioned the Z-coms to undertake analysis of ad spend placements within the advertisement and marketing industry, and that the study intended to provided an analysis of the Above the Line (ATL) category of ad spend to determine shift in patterns of spending and the nature of those shifts. It aimed to establish how government and the private sector spent money in terms of adverts and to analyse the expenditure patterns.

Mr M Booi (Z-coms) said that the study by DTI in conjunction with GCIS aimed to present a profile on media spending. There was an overall media outlets ad spend growth, with a significant growth in television and radio, and low circulation of magazines. Advertisers favoured TV to other media. Blacks had access mostly to TV but not cinema. Radio and outdoor were the best media for accessing the black population. He reported that percentage of population had to be proportional to ad spend, but there was a gap in terms of black audience, and the challenge was to close the gap. Advertisers paid premiums for higher Living Standard Measures (LSM). Overall government had done a much better job than commercial advertisers but it still falls short of addressing all citizens equally. Inclusion of outdoor into the analysis could improve the government spending.

Mr T Trew reported that the hearings in 2002 had given impetuous for GCIS and the DTI to develop a framework to guide intervention to accelerate transformation. An interdepartmental structure with DoC, DTI, Labour and the National Treasury was established to coordinate and monitor action and track equitable ad spend. All Departments participated in the BEE Monitor. The biggest challenge had been equitable distribution of ad spend and to expand the reach of media. The National Treasury is involved in reforming its procurement policy to comply with supply chain management. The manner in which Government Departments were handling advertisement bids was impacting negatively on small emerging black owned companies.

Mr Mjwara noted his concern that the print media had not attended, and said there was a need for them to come back to the discussion.

The Chairperson responded that the print media had sent a letter recognising the proceedings and they had submitted a submission. They would schedule a meeting with them to address similar problems.

The Chairperson said the Committee had now a fair idea of the status quo, and suggested that the Committee report the matter to a full parliamentary sitting and ask for a public debate on this matter. The Committee would draw up a report containing the submissions and observations and the way forward due to the slow pace of change in some parts of the sector. Some industry members had achieved progress such as ACA and SAARF, and as such detailed reporting should not taint all with the same brush.

Mr Makwana said the industry would await the report detailing the way forward.

The meeting was adjourned.

 

Department of Communications and Z-Coms: submission

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