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Portfolio
Committee on Communications hearings into Transformation of the
Advertising and Marketing Industry
Executive
Summary: The state of the advertising and marketing industry in
South Africa
12
November 2002
- Joe
Mjwara, Deputy Director-General: Department of Communications
Refer
Appendix 10.4: The state of the advertising and marketing industry
in South Africa PDF 152
kb
- Commissioned
by the Department of Communications and GCIS
- prepared by Prodigy Business Services cc
"When
you have a diverse marketing profession you will see diverse marketing.
You will see people asserting themselves. Creativity thrives on
diversity. We need more diversity, because in the end it can only
benefit us"
- Mpho Makwana
(Adfocus: May 24 2002)
The South African
advertising industry will be facing the Parliamentary Portfolio
Committee on Communications in November 2002, to report on progress
that the industry has made in its transformation. Teams of role-players
both from government, ad agencies and other private institutions
have been formed to look into 1,
the vision for the industry, the regulatory debate around the industry,
representativeness in the industry - ownership and employees and
advertising spend.
In line with this objective a dipstick survey of advertising and
marketing companies was undertaken to examine the state of the industry
in terms of its employees and shareholding profile. Results obtained
from the survey would be used to assist to determine realistic industry
targets in order to achieve equity in the advertising and marketing
industries. The survey was conducted in conjunction with the:
- Advertising
and Communication Association (ACA)
- Media Forum
(AMF)
- Association
of Marketers (AoM)
A survey tool
was developed in conjunction with the associations mentioned above
that sought to answer the research objectives. In addition to the
primary research, secondary research was conducted to augment research
findings and to close gaps where the primary research failed to
provide conclusive insight. Ultimately the research will provide
a basis for comparison with future longitudinal tracking initiatives,
and provide an overview of the current challenges that face the
advertising and marketing industries.
The study conducted
has confirmed that the sectors under investigation are still predominantly
white owned. Changing legislation, especially with respect to tender
requirements has kick started some companies to proactively seek
equity partners. Companies that have embraced the equity requirements
also have a more representative workforce, however the workforce,
especially in the higher ranks is still predominantly white. There
is no doubt that progress has been made and an attempt will be made
in this report to forecast these trends, in order to test industry
targets.
A positive aspect,
of the various AA/EE legislation that have been put in place in
South Africa, is that of the companies surveyed, 90% of these companies
have Human Resource Development and Training policies in place.
Affirmative Action polices can be found in all (100%) of the companies
that responded to the survey.
The self-imposed
ACA target of 40% (PDI overall) has been accepted by most of the
companies in these sectors. The ownership profile is reflective
of the minimum equity requirements for tenders, viz. 26%. Major
suppliers utilised by respondents (>90%) were not aware of the
ownership make-up of companies that they procured services to and
from. There is a need for companies to actively adapt procurement
policies to ensure that procurement is representative of all sectors
of the economy. Marketers especially need to ask these questions
when procuring goods and services.
The advertising
industry is shrouded in controversy with respect to its racist subtext.
Each new article explores the same issues and seeks to uncover the
truth. Clinical presentations are made to rationalise an emotional
issue. The extent of the disparity between black staff and white
staff in advertising companies is presented in the graph below.
Figure 1: Employment Profile in the Advertising Industry
The black participation
rate in the advertising industry is 32% versus a national average
of 75%. The 32%, however represents an increase when compared to
the participation rate in 1999 of 22%. Based on these figures, the
percentage change in three years has been 10% or 3,33% per year.
Given this trend, the advertising sector should reach their self-imposed
target of 40% by mid 2004. Equity ownership within the advertising
industry has increased, mainly due to the 26% tender requirement.
Equity ownership is higher in the subsidiary companies than in the
main or holding companies, which suggests that ownership is still
protected.
Insufficient
information was obtained from media and marketing companies to indicate
ownership profiles. The issue with listed companies is that shareholding
resides in the form of trusts and other financial instruments that
do not reflect a racial identity, thus it is not possible to determine,
the equity make-up of these holding instruments. This represents
an area that requires additional research, in order to obtain shareholding
profiles of listed and non-listed media and marketing companies.
Marketing has
had to keep pace with the changing political context of South Africa.
The economic demographics of the country are changing, with the
implication for marketers that colour ceases to be an issue. Marketing
types now need to target consumer types and lifestyle profiles.
Marketing has not fared much better than Advertising with respect
to transforming the demographic profile of their industry. The high-level
industry percentages are presented in the graph below. Participation
is still mostly white (50%) and this number increases when the occupational
categories, such as senior management are interrogated.
Figure 2: Employment Profile of the Marketing Industry
Thus transformation
in the advertising and marketing industries, although present has
been slow. There are a number of factors that have impacted on the
industries ability to meet transformation requirements and the recommendations
below seek to assist in paving the way for accelerated change in
the months to come.
Key process
recommendations emanating from the research are:
- The research
should be segmented into individual sub-industry components in
order to obtain the requisite information. The research tool in
turn must be structured and specific to prevent respondent fatigue
and frustration. Cognisance must be accounted for companies previously
providing information via WSPs and EE reports. Attempting to obtain
too much information leads to frustration on the part of the respondent,
who in turn then does not complete the questionnaire. It is not
feasible to ask for Employee demographics and Procurement demographics
and Ownership demographics at one go and in a short space of time.
- One also
has to ascertain what the requirements of the survey entail. If
the survey has as its main purpose to track progress within occupational
categories, then industry specific job categories are not required,
the EE format can be utilised and compared to year on year information.
Adapting the EE reports to provide job specific information, along
job categories that have been agreed to by industry stakeholders,
will also assist with national skills planning and career planning.
Skills priorities can be identified and addressed by employers
and educators. Accordingly the SOC/occupational categories provided
by DoL require tailoring and the feasibility and applicability
or relevance needs to be assessed.
Key Research
Gaps that have been highlighted:
- An updated
consumer analysis is required to test ad spend per racial grouping.
In many instances there is high marketing spend on consumers that
are more sophisticated, but not necessarily the biggest consumers.
- A thorough
assessment on the constraints and promoters in terms of affirmative
procurement should be undertaken through finding out the subcontracting
trends in terms of clients (especially the big ad spenders) and
government/ parastatals (who are they using - why, the trends
in terms of using black companies etc).
- Similarly
where companies target black consumers a thorough assessment should
be done including who they use in advertisements etc.
Further Research and Insight required for Accelerating Transformation
- The research
thus far has focused on input from managers - it is equally necessary
to validate the findings through anecdotal evidence from employees
- especially black employees.
- An intrinsic
understanding of the supply, demand and cycle of equity candidates
within these sectors should be undertaken. Why do equity candidates
leave the sector, what are the reasons for the shortage of PDI
candidates (when the AAA has full classrooms)? Are there particular
management practices or sub-cultures that are particularly harmful
to PDI candidates?
- An equity
and transformation barometer should be an outcome of the research.
The Establishment
of Mentorship and Skills Programmes
- It is satisfying
to see an emerging black management level within the larger companies.
These individuals have to ensure that they constantly seek and
remove barriers within the industry and act as mentors to new
entrants. Possibly, therefore the findings must be communicated
to such managers and a pilot programme established where the feasibility
of an equity ambassador programme is discussed.
- Specific
management development and new entrant programmes should be established.
Synergies should be discussed and established with MAPPP and Services
SETAs. Similarly the communication and the business imperative
for transformation within the respective sectors must be shared,
understood and accepted by the respective SETAs.
- Piloting
of specific targeted skills programmes should be initially developed
in tandem with industry and with the SETAs and initiated amongst
a small pool of progressive companies. Rollout can then occur
once the indicators and critical learnings have been established.
Accelerating
the Process of Affirmative Procurement
- Procurement
policy guidelines need to be ratified and submitted to companies
to ensure that transformation impacts all stakeholders.
- Government/Parastatals
need to enforce equity requirements as part of good business practice,
in their dealings with advertisers and marketers.
- Proactive
twinning programmes needs to be examined. Government and parastatals
need to be more assertive in their commitment to ensure that the
industry does meet and comply with equity standards. The process
of mergers and acquisitions between black and white/ international
companies will not ultimately ensure the employment and upliftment
of the majority of blacks emerging companies. Thus, where an emerging
or small black company applies for a tender but is deemed not
to have the requisite infrastructure etc, the respective government
department or parastatal should then contract the respective black
company through a twinning programme.
- The positive
work conducted by best practice and informed associations need
to be shown off as "success stories" to the industry.
Accelerating
Empowerment
- Transformation
of the industry should impact on the masses in the country, those
already employed in the industry. The 31% black employees should
have an opportunity to participate in their industry. Empowerment
should not a boardroom deal with an empowerment company, which
impacts only a few.
- In light
of the slow progress, especially in the senior levels of the industry,
industry and government dialogue should increase and synergies
established to implement an action plan for the industry that
will seek to identify blockages, redress imbalances but at the
same time maintain the competitiveness of the industry as a global
player.
- Joe Mjwara,
Deputy Director-General: Department of Communications
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