Hearing into Advertising Industry

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Hearing into Advertising Industry
DEPARTMENT OF COMMUNICATIONS TO THE PORTFOLIO
COMMITTEE ON COMMUNICATIONS 6-7 NOVEMEBER 2001
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ADVERTISING HEARINGS

• Department of Communications Responsible for
• Policy Development
• Draft Legislation
• Linkages and Development of Broadcasting Sector
• Shareholder Responsibility for State Owned
  Entities
• Monitoring Gender Mainstreaming

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ADVERTISING HEARINGS

• POLICY FOCUS
• Meet the diverse language, cultural, educational
  and entertainment needs of South Africans
• Meets broadcasting needs of all society including
  marginalised groups, women and other segments
• Promote ownership and control of broadcasting
  services by all sections of South African
  population
• Ensure access to broadcasting facilities,
  services and programmes by all
• Ensure fair competition in the provision of
  programming and services
• Ensure predominant South African content in our
  South African programming system
• Ensure that the public has an opportunity to
  receive a variety of viewpoints on matters of
  public concern.

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ROLE OF RADIO AND TELEVISION

• Broadcasting critical in our society as the most
  pervasive means of communication
• Most important institutions in portraying South
  Africa, how South Africa is seen and perceived,
  which ideas get discussed and who in our society
  is heard
• Most important institution in fostering a
  democratic discourse and allowing for the
  expression of different viewpoints about our
  national life or different aspects of that life.
• Most important Transformation tools for social
  justice including gender transformation

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ROLE OF ADVERTISERSIN THE BROADCASTING
DISPENSATION

• Constitute life blood of the Broadcasting System
• Constitute 90 of revenue for broadcasting
  entities
• Critical for station profitability, ability to
  pay market related salaries, ability to acquire
  content and to compete in the provision of
  services
• Critical in ability of stations to earn money and
  re-invest in people, content and technology

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Hearing into Advertising Practices

• Hearings into Advertising Practices fundamental
  therefore to the broadcasting system
• Advertising is critical for success of individual
  stations and broadcasting system as a whole
• Any discrimination will impede ability of some
  stations to achieve objectives of the
  Broadcasting system
• Any discrimination will raise barriers to entry
  in the broadcasting system for some
• Any discrimination will therefore hamper the
  choice of programmes and services to South
  Africans
• Any discrimination that impede competition,
  market entry, and access to capital for
  Black-formatted station further compound the
  problem of inadequate Black ownership and
  representation in the media
• Any stereotyping along gender or cultural lines
  violates fundamental rights
• Any discrimination based on gender violates the
  constitutional provisions of equality

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ALLEGATIONS AND PROBLEMS

• Some Broadcasters are subjected to systematic
  discrimination
• Some Broadcasters are overlooked or ignored
• The advertising Industry has thus far failed to
  be reflective of the South African diversity in
  its employment, management, ownership etc.
• Black-owned Agencies bypassed, stereotyped and
  treated as if their only business is appealing to
  black audiences
• Environment not enabling for women to sustainably
  and substantially own and operate business
• Advertisers unmoved by market research indicating
  black patronage in substantial numbers of the
  products of companies
• Generally, advertisers pay less money for
  commercial time on stations targeting Black
  listeners
• Preconceived notion, on the part of advertisers
  that Black Consumers are unimportant and do not
  represent a lucrative market

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ISSUES

• Stations targeting blacks are unable to earn as
  much revenue per customer as stations that air
  programming targeted at whites
• Black owned stations earn less revenue per
  listener than white stations
• Anecdotes collected suggest that media buying
  process is guided by stereotypical perceptions of
  Blacks, women and others, presumptions about
  blackss disposable income, the desire to control
  product image.
• Black women in particular are under-represented
  as strategic decision makers
• Gendered meanings are conveyed by advertisements
  that reinforce societal stereotypes
• Advertisers refuse to back local content and
  willing to back foreign content

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Analysis of Advertising Spend over 5 Years

• DoC commissioned study
• Analysis of Trends over a five year period
• Focused on FMCG
• Broadly categorized stations into Traditional
  White and African stations

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Analysis of Advertising Spend over 5 Years

• The primary advertising spend categories as
  defined by AC Nielsen are as follows
• Food
• Beverages
• Health and Beauty
• Home 1 ( including household appliances)
• Home 2(including print and electronic media,
  furniture, paints, pool cleaners,etc)
• Banking and Insurance
• Travel and Transport
• Retail
• Business to Business
• Education and Miscellaneous

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Selected traditional African and White radio
stations used for the analysis
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Selected traditional African and White radio
stations used for the analysis
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Selected traditional African and White radio
stations used for the analysis
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Year-on-year annual growth rates for FMCG
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Radio advertising spend analysis

• White and African radio stations generally
  indicate general directional increases and
  decreases. However, the magnitude of the
  increases and decreases differ significantly,
  particularly after 2000.
• More advertising spend for Food and Beverages on
  African radio stations. Note, White radio
  stations are increasing advertising spend
  share.
• Radio stations both White and African are prone
  to seasonal fluctuations in January of each year.

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A comparison of total advertising spend on
African and White radio stations
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Results of Analysis

• Research shows that there are total 28 565 000
  million total Black audience and 8 149 000
  million White audiences respectively for the
  above stations
• Therefore practices in the advertising industry
• Values Black and White audiences differently
• Pays less for Black audiences
• Prepared to pay a premium for White audiences
• Is an acknowledgement of divisions of the past
• Has not taken into account context changes over
  in the Broadcasting system over past five years

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Key findings of the analysis of television
advertising spend
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Year-on-year annual growth rates for FMCG
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Key findings of the statistical analysis

• Increase in total advertising spend over the
  period 1998 to 2000
• African radio stations 59,7
• White radio stations 60,0
• Year-on-year growth analysis for FMCG
• November 1999 October 2000 African radio
  stations achieved higher growth than White radio
  stations 56,2 vs. 30,3
• December 2000 July 2001 Decline of 28,9 and
  14,7 for African and White radio stations
  respectively

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Key findings of the statistical analysis

• Food Advertising
• African radio stations have a larger share of
  Food advertising spend than White radio stations
• Share of advertising spend lost by African
  radio stations from October 1997 to January 2000
  regained during 2000
• White radio stations attracting more advertising
  spend on Food during first half of 2001.
• Beverage advertising
• African radio stations claim large share of
  beverage advertising spend
• Over the period 1995 to 2000 White radio stations
  or other media eroded the advertising spend of
  African radio stations by about 25.

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Findings obtained from an analysis of
television advertising spend
CSN 1995 E-TV 1998 and DSTV 1999
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FUTURE SCENARIOS

• LIFESTYLES
• LANGUAGE
• CHANGING DEMOGRAPHICS
• ECONOMIC ACTIVITY
• AUDIENCE

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Population distribution per province for 1999
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Population growth per province (1991 to 1999)
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Gender distribution per race (1999)
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The main race groups in South Africa (1999)
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Percentage distribution of home-language
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Percentage distribution of economically active
population by main race group (1999)
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ECONOMIC ACTIVITY

• Household expenditure by population group

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Annual household expenditure by main expenditure
group
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Content Issues

• Future scenario stress the importance of local
  content
• Local content programmes increasingly are
  dominating the broadcasting system. Trend to
  intensify.
• Local languages to achieve more significance.
  Markets are people not products. No global
  motivations for buying brands.
• Rising levels of awareness in terms of gender
  and responsible advertising against perpetuating
  negative stereotyping
• \

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Conclusion

• Changing nature of society demands
• An advertising industry that is responsive to
  change
• A diverse advertising industry
• Diversity to include ownership and control from
  all genders, racial, cultural backgrounds
• Diversity to include proportionate representation
  at all levels of the value chain
• Diversity to translate to fair representation of
  all languages of choice

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Recommendations

• TRANSFORMATION FORUM
• To include major advertisers, agencies, media
  companies, Commission on Gender Equality,
  government and regulator
• Terms of Reference
• To adopt a transformation agenda
• Sets standards and norms
• Adopt a skilling and training agenda
• Monitoring and evaluation of transformation
• Undertake ongoing survey to gauge extent of
  diversity in the industry

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Recommendations

• ICASA TO CONDUCT PERIODIC INQUIRY INTO
  ADVERTISING PRACTICES IN BROADCASTING
• Inquiry to look at advertising practice in as
  much as it constitutes barriers to entry of
  black-formatted stations
• Inquiry to look at advertising industry in
  relation to fair competition in broadcasting
  stations
• Inquiry to look at Gender transformation

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Recommendations

• Restructuring of the Complaints Structures,
  procedures and systems.
• Statutory bodies to participate in partnership
  with self regulatory bodies in hearing complaints
• Mandate of structures to preside on cases
  relating to gender stereotyping, unfair
  discriminatory practices, unfair treatment of
  stations and segments audiences

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Recommendations

• Public and Professional Awareness Campaigns
• Gender and Diversity sensitive programmes in
  training professionals in advertising industry
• Public education to create a critical mass able
  to understand and analyse advertising context,
  messages and content

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Recommendations

• ANNUAL INDICATOR/BAROMETER OF ADVERTISING
  INDUSTRY
• Barometer to track advert placements and match to
  channels
• Barometer to track products against stations and
  target consumers
• Barometer to track major government/private
  advertising contracts
• Barometer possibly produced by the Transformation
  Forum