6 November 2001
1. Introduction
GCIS welcomes this opportunity to make a presentation to the Parliamentary Portfolio Committee on Communication. We are pleased with the spirit in which the various invitees have responded to the invitations issued by the Committee. In GCIS' previous engagements we were left with no doubt that your concern was at three levels:
- transformation in the industry
- the nature of decision-making processes
- patterns of government expenditure on advertising.
Our presentation aims to address all three concerns. We believe that these hearings mark an important beginning in the dialogue around a set of practices, which play an important role in the shaping of perceptions, the creation of images and symbols, and possibly the instilling of values.
To enhance GCIS' participation in this dialogue, GCIS commissioned qualitative research to supplement statistical data in order to clarify the underlying dynamics of the media selection process. This we hope would help identify a course of action that will inform the direction of change and transformation in the advertising, media and marketing industries
This paper draws on both research directions for discussion that focuses on:
- transformation in the industry
- decision-making processes
- advertising expenditure in the private media sector
- advertising expenditure by government
- segmentation tools.
The discussion leads to a section of Recommendations and Conclusions, including a proposal for an Advertising and Marketing Indaba.
We want, at the offset, to commend a number of role-players who have been acknowledged here and internationally for the quality of their work. When we, as government, public representatives and members of the particular industry look at the way forward, we must investigate as to how we carry these best practices into the future.
1.1 Statistical data
The statistical data, contained in the Appendices to the paper, deals with profiles of media ownership, control and audiences in terms of race and Living Standards Measure (LSM) bands, as well as patterns of expenditure on advertising by government and the private sector.
The information was sourced from agencies, reference books and individual companies.
1.2 Qualitative research
The objectives of the qualitative research into the underlying dynamics of the media selection process were to
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establish the belief systems of those doing the selecting and their understanding of the value of various market segments
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assess the criteria used and influences operating in the placement of advertising
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determine knowledge levels of markets and media among advertising, marketing and media personnel
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identify perceptions of existing skills in the media placement arena and whether gaps exist in institutional and on-the-job training
- determine the adequacy of available research and data resources for media selection purposes.
Kuper Research - an authoritative voice in the media world - conducted the research. A few copies of the research have been made available to members of the Portfolio Committee. It is obtainable on the GCIS website. We wish to emphasise that this research is not the views of the GCIS, but has been released to enrich the discussions around the advertising industry.
Six focus groups were conducted with:
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Advertising agencies
- Media directors
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Media planners
- Marketers
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Media owner representatives
- Television
- Radio.
2. Transformation in the Industry
2.1 Black media
Much hinges on the definition of black media (apart from variation in use of the term 'black' to signify either Africans or black people more generally). The marketing, advertising and media sectors define these media in terms of readership, listenership or viewership, relative to the target market, as well as perceived content of programmes or editorial.
The terminology is important because some argue that black media are receiving less than their fair share of spend because of the very definition of such media as black or white. Media like The Citizen, for example, are seen by some as a black newspaper (because of content and readership figures) and by others as a white newspaper.
The difference in revenue between black and white media seems to be exacerbated by the huge discounts black media such as Sowetan offers. Some media may be receiving a substantial amount of advertising but their rates are so low that it appears that they are receiving less than their competitors. We will return to the reason for such discounts under private sector adspend.
2.2 Appearance of new titles
A substantial contribution to the problem appears to be the fragmentation of the media into targeted niche publications and the explosion of titles and newspapers causing a declining readership for individual titles. Print media see themselves struggling for an equitable share in the market. The research also suggested a surprising amount of recognition between media sectors of one another's problems, with the exception of some radio sales representatives who expressed resentment towards media planners.
2.3 Factors impacting on transformation
Like in many other sectors, transformation in the advertising industry is impacted upon by the business environment and the rate of growth. In terms of the media used for advertising as well as the role-players involved, this appears to be an industry dominated by whites.
The qualitative research indicates that the marketing environment has come under immense pressure to deliver effective responses and sales, even though budgets have become restricted. The pressure has increased as organisations are trading in unpredictable business cycles. Marketers appear to have set their sights on short-term targets as they look for quick wins without taking a long-term view in decision-making in order to grow target markets.
The marketing industry is also pressurised by static growth in advertising expenditure whilst both traditional and new media (taxi, outdoor, internet, etc.) have proliferated, resulting in smaller audiences per medium. This has impacted negatively on both above and below-the-line advertising. Both marketers and agencies are experiencing tougher trading environments characterised by less resources and high staff turnover which are not conducive to building relationships between clients, agencies and the media.
We will expand on transformation issues when looking at the different role-players in advertising.
3. Segmentation Tools
The most widely used segmentation tool in the industry is the LSM. LSMs are non-racial target market segmentation procedures based on a range of variables like type of home, appliances in the home, and consumption patterns derived from the All Media and Products Survey (AMPS). AMPS is a large-scale, nationally representative survey, conducted under the auspices of the South African Advertising Foundation. It is funded by a 1% levy on advertising in above-the-line media.
There are perceived shortcomings in the LSM as a marketing tool, but they are used extensively in the absence of a readily available better alternative. The lower LSMs are economically disadvantaged while the higher LSMs are more affluent.
Both agencies and marketers claim that they rarely use LSMs exclusively but also employ other pertinent factors like demographics, psychographics and geographic area. Demographics that are used extensively are age and gender, sometimes language. Psychographics used include life stage, lifestyle, beliefs and values. Some marketing organisations also conduct their own segmentation studies that are expensive but can sometimes entirely replace LSMs.
The qualitative research commissioned by GCIS also indicates misunderstanding of the methodology and sampling for AMPS. For example, AMPS has a very large representative sample, but is restricted by levy funding. Small titles and stations cannot get large enough sub samples for accurate measurement. In addition there is a misunderstanding of the basis of the LSM segmentation, even among fairly senior people.
LSMs 7 and over are understood and perceived to have the most disposable income. LSMs 1-3 are not seen as viable marketing targets. LSMs 4-6 are seen as 'emerging' and account for a large number of the black population. These LSM are not clearly understood and there are indications that they are undervalued though highly populated. The research indicates that it appears that the real revenue potential may not be known, although marketers deny this.
4. Decision-Making Processes
There are three major players in the decision-making process of the placement of advertising in the media. These key players are marketers, who own the budgets and the brands, media planners who generate media strategies and facilitate placement of media and finally the media owners who offer the vehicle to reach the identified target markets.
4.1 Marketers
4.1.1 Weaknesses
The qualitative research indicates certain weaknesses in the approach of marketers to marketing as many do not seem to have a clear definition and understanding of their target markets: they do not spend enough time or money on target market identification and analyses, they rely too much on quantitative data and tend not to employ qualitative input in their marketing efforts. We believe that data-driven approaches can only indicate existing trends, not the possibilities of breakthroughs. This industry requires very creative and insightful minds.
Equally marketers have less time and resources to manage their brands due to the downsizing of marketing departments. The research confirms that many struggled to employ a long-term vision and therefore do not recognise the value of what is referred to as emerging markets, a euphemism for black consumers. This often results in marketers having a negative or limited influence on media choice. Due to fierce competition, marketers tend to concentrate on short-term results, via tried and tested media, to the detriment of brand-building or exploring new emerging media.
4.1.2 Opportunities
The research suggested and GCIS concurs that:
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marketers should be encouraged to initiate more research or interrogate existing research more thoroughly to better understand their target markets
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the Association of Marketers (ASOM) should encourage debate and education on the economic value and the lifestyles of the emerging markets (LSM 1-6) and the exploration of new channels.
4.2 Agencies
Within agencies there are three key role-players:
- the creative staff - who develop advertising concepts;
- the media planners - who develop media schedules;
- the media buyers - who buy the advertising space for the media schedules.
4.2.1 Weaknesses
The employment demographics of advertising agencies indicate a lack of diversity and therefore of transformation. Not only is there a lack of black professionals in media planning but agencies are also characterised by a shortfall of middle-level planners and minimal succession planning. Most media planners are young, white, English-speaking females. According to the research, agencies see themselves as making rational choices. On the other hand, media owners say media planners are often led by personal considerations and this is exacerbated by little time and the unwillingness to learn new things. These demographic and decision-making factors can result in media planning that is not always to the benefit of building brands.
Those interviewed for the research say that agencies are under huge pressure to deliver a return on the client's investment while their resources are dwindling. In the same vein, they are held accountable for such huge budgets that they avoid risk-taking. The concern is also raised that the agencies' creative staff prefer television and that this sometimes drives the choice of what media should be used, thereby putting less value on the potential contribution of the media department. This is also perpetuated by those interviewed in the research that the reality is that agencies are generating most of their creative ideas in English.
4.2.2 Opportunities
The research suggested and GCIS concurs that:
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Agencies should invest more on salaries, training (media research tools, understanding of unfamiliar markets and media) and time in media departments.
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Agencies should come up with strategies for attracting new people into the industry.
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In order to retain personnel, there needs to be emphasis on training and development, succession planning, mentoring and empowerment.
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Agencies should share information about their client's brand and specific target market with media owners so that they can prepare presentations that are more relevant to these brands and clients.
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Media planners and buyers should allocate time to attend media owner presentations as they can play a big role in educating planners.
- Industry fora for training, briefings and knowledge sharing for people below the level of media directors should be rejuvenated.
If these issues are not addressed within agencies, their clients will see their marketing becoming less relevant to the majority of South Africans. Relevance may well emerge as the next competitive advantage.
4.3 Media Sector
The research indicates that sales representatives generally repeat known target market figures and do not tailor presentations to the individual client or brand, or do enough research to sell products or build their own brands. Print and radio suffer from a lack of marketing their media type, unlike television, which spends large amounts on self-promotion. For example, the biggest advertiser in the country is M-Net. In the same vein, rate cards need a new strategic look as media inflation seems to be on a sharp rise. This particularly applies to SABC TV and Radio, who are seen as pricing themselves out of the market, as they have the power to set the overall pricing structure due to their ownership of a wide portfolio of radio and television stations.
4.3.1 General Media Weaknesses
The research reflects that industry bodies have indicated that the current trading conditions, resulting in squeezed margins, concern their members. The pressure on margins results in an inward focus, eroding the industry bodies' generic marketing budgets. Since the industry bodies are consensus-based voluntary organisations, there is no way of forcing generic marketing programs, which would require additional budget allocations over and above membership subscriptions.
The research also indicates that media representatives complain that agencies do not attend their presentationsand are often skeptical ofeducational presentations, perceiving the media to be selling something. Due to this non-attendance, clients are often denied new information as agencies control the access to clients. Media representatives would like more access to marketers, as they believe that they would communicate more enthusiastically, and in more detail, and perceive that they are being denied this access by the agencies. The research further shows that marketers would like to have direct contact with media representatives. This contact will help develop ongoing, longer-term relationships with marketers.
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Print Media Weaknesses
Print media has suffered with the advent of wider TV selection and alternative information sources such as the Internet as well as the proliferation of print titles (approximately 2 000 with a huge diversity of owners versus only about 200 radio and TV stations). Television has bigger margins to spend on promotions and trade marketing.
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Radio Barriers
Unlike television, the major stumbling block for radio is not the cost of airing the advert, but the cost implications of creative and linguistic translations of the concept, resulting often in English-only adverts, which impact on the choice of radio stations using languages other than English. Radio is also often hampered by a 'bottom of the media heap' perception. There is also a greater focus in the use of radio in Gauteng, with the exclusion of other metropolitan areas, thereby often ignoring regional stations.
4.3.2 Opportunities
The research suggested and GCIS concurs that:
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The media sector should undertake research to promote cultural understanding and also bring LSM 4-6 alive by describing how people live, their needs and aspirations (we will return to the issue of market segmentation).
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They should substantiate the value of black spending power by target market category and demonstrate what they spend their money on. For example, how many people in LSM 4-6 have cheque accounts?
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They should develop a clear personality of the audience or readers so that the client brand begins to identify with their mediums, focusing on their values, beliefs, feelings, and interests.
- It should be noted that marketers are open to case history presentations from the new emerging media who do not have other support to prove their usefulness as a medium.
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Print Opportunities
The research suggested and GCIS concurs that:
- The print media could work together to promote print.
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Radio Opportunities
The research suggested and GCIS concurs that:
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Radio owners should focus on strong branding for stations. Just like print, radio could band together to promote radio as a medium to marketers and advertisers.
- There is a need to get marketers to understand the market and their relationship to the medium. Smaller radio stations should concentrate on attracting 'local' advertisers, tactical activities, joint promotions and programming targeted specifically at attracting certain categories of advertising and target markets.
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Television opportunities
The research suggested and GCIS concurs that:
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there is a need for focused, strong branding for particular programmes
- the qualitative research offered differing views of the educational role to be played by the media owners, but the prevailing call is that those 'who know their medium back to front, are empowered to go out and educate the market'.
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Joint Opportunities
The research suggested and GCIS concurs that:
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there is a huge potential to promote the media and marketing industry as a career with special emphasis on recruiting candidates from the previously disadvantaged communities
- Available Saarf and AC Nielsen figures show that there appears to be a discrepancy between advertising expenditure (adspend) on black-orientated media and the industry's claim that adspend are made purely in terms of scientific information embedded in segmentation tools, in particular the widely-used LSM.
5. Advertising Expenditure by the Private Media Sector
As the data shows in Tables and Graphs in Appendices A-C, adspend goes mainly to white media or historically white and increasingly 'crossover' media, whether this is characterised by ownership or audience. 'Crossover' media refers to media such as the Sunday Times and The Star, which used to target white readers, but have in recent years attracted a large number of black readers.
The industry's view is that audiences (i.e. readers, listeners and viewers) falling into the 7-10 LSM categories are targeted, as these people are regarded as having the disposable income necessary to be of interest to most marketers. Although this is changing, these categories are in the main populated by white people, which, it is argued, explains the skewed pattern of adspend.
However, as shown below, this is not always a direct correlation between adspend and LSMs, and even where there is, it is not a sufficient explanation for adspend patterns. As indicated elsewhere, LSM categories 4-6, which concern mainly black people, are poorly understood by the industry, and this must be related, in part, to the racial and class composition of media planners and other decision-makers in the advertising industry.
The following analysis looks at the print media industry (weeklies and dailies) and radio (public and private), and the information referred to is contained in Table 1 in Appendix A [PDF] 54 kb.
In all instances here 'black' refers to African, Coloured and Indian, unless otherwise indicated.
5.1 Print media
5.1.1. Weeklies
The weekly newspaper that receives most adspend per reader (R87) is the Afrikaans Sunday paper Rapport. Rapport is owned by Naspers, a white-owned company with a readership that is 61% white. 71% of its readers fall into the 7-10 LSM categories.
Sunday Times, with the highest readership in the country and by far the highest revenue, earns R80 per reader. This newspaper, formerly part of the Anglo-American stable and at that time oriented towards white readers at the upper end of the LSM scale, now has a predominantly black readership (73%). It is owned by Johnnic Publishing, which in turn is owned by a black empowerment consortium. Senior management, however, remains largely white and male. The Sunday Times editorial staff, however, have changed significantly in recent years, particularly after the appointment of a black (coloured) editor.
It seems, therefore, that Sunday Times is no longer a 'white' newspaper, and its LSM profile is also mixed, with only 52% of its readers falling into the LSM 7-10 categories.
By contrast Sowetan Sunday World, a predominantly black-owned, managed and read (99%) newspaper, attracts less than R10 per reader. While it may be argued that this is because its LSM profile is predominantly within the 4-6 categories, the point has already been made that these categories are ill-understood.
The case of Post newspaper, however, more clearly contradicts the LSM argument. Owned by Independent Newspapers but read (98%) and run by black people (mainly Indian), Post receives only R9,24 per reader, despite having a readership that falls predominantly within the LSM 7-10 categories (69%).
The second largest Sunday weekly, City Press, is owned by Naspers, but has a 99% black readership falling mainly into the LSM 4 - 6 categories, and earns only R20,38 per reader.
5.1.2 Dailies
The Star earns far more advertising expenditure in total than any other newspaper (R320m per year) although in terms of adspend per reader, at R715 per reader, Business Day leads by a long stretch (The Star only earns R456 per reader). Both newspapers are former Anglo-American publications targeted at white audiences, but now have predominantly black readers (70% and 59% respectively).
Although the foreign-owned Independent Newspaper Group owns The Star, it has a black (coloured) editor, and an increasing number of editorial and management staff are black. The LSM profile of its readers is only marginally in the 7-10 category. (52%).
Business Day is owned by Johnnic, but has a white editor with an editorial staff that, although predominantly white, have in recent years increased the number of black staff significantly. It is firmly in the 7- 10 LSM category.
Beeld, by contrast, while attracting similar adspend per reader to The Star (R524), is overwhelmingly white in terms of ownership, readership (87%) and editorial staff.
Sowetan, black read, run and owned, occupies the bottom rung of the adspend per reader ladder, but this can be explained by its LSMs falling mainly within the 1-6 categories (85%), with the bulk, 65%, falling within the 4-6 categories. Nevertheless, as stated earlier, this segment of the market is little understood, and the argument of bias against Sowetan because of its predominantly black profile does not necessarily fall away.
5.2. Broadcast media
The most adspend per listener goes to Classic FM (R310) with Highveld Stereo, Radio 702, 5FM, KFM and Jacaranda following behind. All these stations target predominantly white listeners, and all fall squarely within the LSM 7 - 10 bracket. In terms of ownership, however, only Classic FM can be said to be white-owned, although Highveld and 702 are owned by Primedia, they only recently acquired a significant black empowerment presence at ownership and management levels.
By contrast, Kaya FM, which targets a black audience and is black-owned, earns only R7,35 per listener. Its listeners fall predominantly within the 4 - 6 LSM categories. YFM, also a black-oriented station with a similar LSM profile, attracted R45 per listener.
Two stations with high LSM profiles, Lotus and Good Hope, only attracted R31 and R94 per listener respectively. They have predominantly Indian and Coloured listeners respectively.
As far as television is concerned, M-Net attracts the most white viewers, and the lion's share of advertising (R1bn, or R379 per viewer). Most of its viewers fall within the LSM 7-10 categories. A more complete analysis of television Adspend would look at individual programmes, and this could be a topic for further research.
See Appendix A [PDF] 54 kb
6. Advertising Expenditure by Government
The Comtask Report of 1996 recommended that government should centralise the buying of advertisements for campaign purposes. Universal McCann/ HerdBuoys McCann-Erickson was appointed as the media buying agency for electronic and print media. The outdoor media is bought by Inca Media. It must be noted that not all government departments are placing their advertising through the Universal McCann/ HerdBuoys McCann-Erickson tender. Reluctance to do so may have resulted from some of the teething problems the GCIS has had in setting up the system. This tender also excludes recruitment advertising.
6.1 Target market
The following analysis is based on all races and the individual title or stations audience profile by race. Generally, all government campaigns are aimed at all adults who are defined as those aged 16 years and older.
However, when constructing individual campaigns, depending on the Department, message, content, time frame and funds available, a more specific focus has been required. In many cases the primary target markets were the youth and females and in particular those living in the rural areas. In others it was motorists, farmers or influence groups including journalists, NGOs, government departments, small business or large corporations.
Population distribution
AMPS 2000 Adults 16 years plus
| Total | White | Black | Coloured | Indian | |
| ' 000 | 28 488 | 4 114 | 21 235 | 2 420 | 720 |
| % | 100 | 14,4 | 74,5 | 8,6 | 2,5 |
6.2 Adspend
The figures below reflect the GCIS expenditure placed through Universal McCann. They are made up of a number of specific campaigns each with their own objectives, mandatories, timing constraints and recommended media mix.
Adspend by Medium
| Medium | Rand | % |
| Radio | 11 417 163 | 43,7 |
| Print/ Newspapers | 10 180 909 | 39,0 |
| Television | 4 511 914 | 17,3 |
| TOTAL | 26 109 986 | 100 |
Source: Universal McCann/ HerdBuoys McCann-Erickson
Adspend Distribution by Race
| Based on Audience profiles | ||
| Rand | % | |
| White | 5 608 168 | 21,5 |
| African | 16 460 985 | 63,0 |
| Coloured | 2 787 088 | 10,7 |
| Indian | 1 253 745 | 4,8 |
| Total | 26 109 986 | 100 |
Source: Universal McCann/ HerdBuoys McCann-Erickson
(See Appendix B [PDF] 29 kb for more detailed figures)
7. Recommendations and conclusion
The above discussion points to a number of steps that will promote and enable transformation in the advertising, media and marketing industries.
7.1 Advertising and Industry Indaba
GCIS would support an industry-wide Indaba whose aim would be constructive dialogue and to strategise around:
- transformation within the industry
- advertising's role in a democracy
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the use of media planning measurement tools such as LSMs in a changing society.
The bodies to be invited to the Indaba could include:
- ASOM
- Media Directors Circle (MDC)
- Association of Advertising Agencies (AAA)
- South African Advertising Research Foundation (SAARF)
- Advertising Standards Association (ASA)
- AMASA
- Communications and Advertising Forum for Empowerment (CAFÉ)
- Design South Africa (DSA)
- THINK
- Creative Directors Circle (CDC)
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Advertising agency representatives.
7.2 Content
While noting concerns that have been expressed regarding the content of adverts, government is not getting involved in content but is approaching this issue on the basis of the principle that taking care of the environment will create conditions in which the industry, stakeholders and public can take care of content. In this instance, government supports self-regulation and encourages the strengthening of regulatory bodies such as the ASA, the Human Rights Commission, etc.
7.3 Skills and knowledge development
Encouragement and feedback should be given to industry bodies.
An audit of the training institutions and the skills required for certain jobs are necessary. The Media Directors' Circle could enhance self-governing bodies, which oversee skills and knowledge development of media planners, both within the training institutions and on-the-job industry schools.
7.4 Decision making process
GCIS concurs with the overall consensus that LSMs 4-6, and their value, are not generally well understood by marketers, agencies or even the media and sees this as a sector that reflects much of the future transformed South Africa and an emerging mass market with aspirations and values that could change the profile of future adspend. An independent body could be established to employ a dedicated research analyst to focus on sourcing and interrogating numerous existing research surveys like the Bureau of Marketing Research, AMPS, Sociomonitor and Census with the objective of quantifying the real value of 'currently undervalued' sectors of the market. This information could be fed into the industry, bodies and schools and be incorporated into examinations. It can also be shared with media owners to assist them in selling their media.
7.5 Transformation in the industry
GCIS concurs that there should be dedication to training among media owners and marketers. Agencies should be asked to self-regulate, and set targets for recruiting planners from more diverse backgrounds. Knowledge skilling will result in an understanding of the 'black' market and media, resulting in an increased adspend so that when this does not happen in specific instances, it will be due to the fact that it was not justified by the commercial realities, rather than due to a lack of marketing or branding, and/or prejudice.
7.6 Language
GCIS recognises the costs of translation of creative concepts and production costs, but in that same vein it must be recognised that advertising well done sells products, stimulates the economy and celebrates diversity, in other words it makes business sense. A good example of this is the recent Telkom advert.
7.7 Government Adspend
The analysis of government adspend, provisional as it is, does seem to indicate a need for government to review its media selection processes, or at least to make a further investigation. This should include recruitment advertising and media selection. Government also needs to undertake further research to assess adspend at a provincial and local level.
Presentation by Yacoob Abba Omar, DCEO, GCIS