1 Hearing into Advertising Industry DEPARTMENT OF COMMUNICATIONS TO THE PORTFOLIO COMMITTEE ON COMMUNICATIONS 6-7 NOVEMEBER 2001
Jan 11, 2016
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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 blacks’s 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
Traditional African radio stations Traditional White radio stations
Metro FM SAFM
Thobela FM RSG
Lesedi FM Jakaranda 94-97 FM
Munghana Lonnene FM 5FM
Motsweding FM Radio 702
Umhlobo Wenene FM Highveld 94.7
Ukhozi FM Good Hope FM
East Coast Radio
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Selected traditional African and White radio stations used for the analysis
Radio Stations 7 day Listeners (100% = 29 013 000)
J ul 1999 - J un 2000
J an 2000 - Dec 2000
J ul 2000 - J un 2001
% '000 % '000 % '000 Traditional African Stations 67,3 19171 67,0 19074 65,8 19102 UKHOZI FM 23,2 6612 23,8 6771 23,2 6732 METRO FM 18,9 5395 19,6 5572 19,1 5549 UMHLOBO WENENE FM 17,4 4970 17,5 4987 16,3 4730 LESEDI FM 13,5 3845 13,5 3858 13,1 3807 MOTSWEDING FM 11,5 3275 11,5 3265 11,4 3299 THOBELA FM 11,4 3238 11,1 3153 10,2 2947 MUNGHANA LONENE FM 5,2 1479 5,1 1465 5,2 1501
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Selected traditional African and White radio stations used for the analysis
Radio Stations 7 day Listeners (100% = 29 013 000)
J ul 1999 - J un 2000
J an 2000 - Dec 2000
J ul 2000 - J un 2001
% '000 % '000 % '000 Traditional White Stations 67,3 19171 67,0 19074 65,8 19102 SAfm 1,7 479 1,7 490 1,6 477 RADIOSONDERGRENSE 5,4 1529 5,2 1482 5,4 1572 J ACARANDA 94. 2 FM/RMFM 4,0 1153 4,5 1296 5,0 1438 5 FM 4,7 1349 4,7 1335 4,7 1362 702 TALK RADIO 1,4 409 1,4 392 1,2 357 94.7 HIGHVELD STEREO 2,8 800 3,1 885 3,1 907 GOOD HOPE FM 3,1 878 3,0 842 2,9 850 EAST COAST RADIO 3,5 998 4,1 1166 4,1 1186
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Year-on-year annual growth rates for FMCG
-0.4
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
0.4
0.5
1996 1997 1998 1999 2000 2001
White
African
Year
White y/y
growth%
African y/y
growth%
1995
1996 21,37 17,09
1997 12,20 2,62
1998 11,00 5,87
1999 7,77 0,76
2000 23,18 40,68
2001 –18,89 –32,19
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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
0%
20%
40%
60%
80%
100%
Total white
Total African
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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
-100.00%
-80.00%
-60.00%
-40.00%
-20.00%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
SABC 1
SABC 2
SABC 3
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Year-on-year annual growth rates for FMCG
-0.4
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
0.4
0.5
1996 1997 1998 1999 2000 2001
White
African
Year
White y/y
growth%
African y/y
growth%
1995
1996 21,37 17,09
1997 12,20 2,62
1998 11,00 5,87
1999 7,77 0,76
2000 23,18 40,68
2001 –18,89 –32,19
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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
Channel 1997
% of total 1998
% of total 1999
% of total 2000
% of total
SABC 1 26.33 27.59 27.99 24,41
SABC 2 23.22 21.79 19.78 18,07
SABC 3 16.34 19.08 18.21 18,16
MNET 33.03 29.76 27.63 28,57
All spend 98.92 98.22 93.61 89,21
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
20.7
18.1
15.5
12.4
9.7
8.3
7.0
6.3
2.0
0.0 5.0 10.0 15.0 20.0 25.0
% of total population
Kw aZulu-Natal
Gauteng
Eastern Cape
Northern Province
Western Cape
North West
Mpumalanga
Free State
Northern Cape
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Population growth per province (1991 to 1999)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
19911992
19931994
19951996
19971998
1999
Po
pu
lati
on
('0
00)
Western Cape
Eastern Cape
Northern Cape
Free State
KwaZulu-Natal
North West
Gauteng
Mpumalanga
Northern Province
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Gender distribution per race (1999)
193
2,222
536
1,84416,019 17,221
1,948
556
2,317
198
20,000 15,000 10,000 5,000 0 5,000 10,000 15,000 20,000
Africans
Coloureds
Indians/Asians
Whites
Other
Male ('000) Female
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The main race groups in South Africa (1999)
Africans76%
Other/Unstated1%Asians/Indians
3%
Coloureds9%
Whites11%
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Percentage distribution of home-language
Sesotho
6. 9%
Xitsonga
4. 2%
SiSwati
2. 6%
isiZulu
22. 4%
isiXhosa
17. 5%
Af rikaans
15. 2%
Sepedi
9. 8%
English
9. 2%
Setswana
7. 2% Tshivenda
1. 7%
isiNdebele
1. 5%
Other
1. 8%
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Percentage distribution of economically active
population by main race group (1999)
Africans/Blacks73%
Whites13%
Other/Unstated1%
Indians/Asians3%
Coloureds10%
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ECONOMIC ACTIVITY
• Household expenditure by population group
0
10
20
30
40
50
60
% o
f to
tal
exp
end
itu
re
1993 34.9 53.5 7.7 3.9
1999 43.8 43.1 7.7 5.4
Blacks Whites Coloureds Asians
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Annual household expenditure by main expenditure group
Income tax & funds16.6%
Communication2.0%
Education1.8%
Recreation0.6%
Furniture 3.8%
Medical4.1%
Clothing 4.1%
Alcohol & cigarettes 4.2%
Transport8.7%
Reading matter0.4%Other
11.9%
Food19.7%
Housing and electricity
22.1%
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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