AN OPEN LETTER TO MR. JABU MABUZA – PRESIDENT OF BUSINESS UNITY SOUTH AFRICA
15 August 2012
Good day Mr. President, my name is Taelo Immanuel. I am the owner and founder of Birth Communications, a through-the-line communications agency based in Johannesburg, South Africa. We focus on Design, Branding, Advertising, Annual Reports and Digital Marketing. I am also a committee member of the Association of Black Communications Practitioners (ABCoP), an organization that exists for the advancement of black people in the Communications Industry.
My business is currently not performing at all. This Mr. President is not due to my incompetence as an entrepreneur or the Euro Zone Debt Crisis that is affecting local trade. This is mainly due to the ownership structure of our local Advertising industry and the disinterest of the State, Government and private business to procure work to local suppliers.
This industry is dominated and controlled by four foreign-owned media groups, namely: WPP (UK), Omnicom (USA), Publicis (France) and Interpublic (USA). These four media groups in turn own all the multinational agencies represented on our shores. At face value our industry appears to embrace competition but beneath the surface it is only four players passing accounts amongst themselves through their multinational representatives.
This Mr. President is not a case of sour grapes on my part but perhaps a sense of patriotism since the net effect of the status quo is our ailing economy being drained by these four media groups through their multinational representatives. What complicates matters sir, is the BBBEE Act in that instead of aiding smaller black players to enter the game it acts as an insurmountable barrier to entry and empowers multinationals to dominate the local industry landscape. Naturally, the presence of prominent black equity partners on multinational boards only guarantees these companies more profits, however, only a small portion of these monies stays in the country and the rest is spent overseas. Therefore, Black Economic Empowerment does not empower black people as intended, rather it empowers the British, Americans and the French in our context.
The following Mr. President is a snapshot of how locally represented multinational agencies are structured:
Grey – 74.9% WPP, 25,1% Bongani Khumalo
Ogilvy – 59% Ogilvy Worldwide (WPP), 41% Local
Y&R – 70% WPP, 30% Memeza QRX
JWT – 70% JWT New York (WPP), 30% Delta Blue
Metropolitan Republic – 85% WPP, 15% Other
Media Edge – 70% WPP, 30% Memeza QRX
MediaCom – 74,9% WPP, 25,1 Bongani Khumalo
Nota Bene – 70% WPP, 30% Memeza QRX
Base2 – 70% WPP, 30% Memeza QRX
Aquaonline – 70% WPP, 30% Memeza QRX
TBWA – 70% Omnicom, 25% Shanduka Trust, 5% Employee Trust
Network BBDO – 60% BBDO Worldwide (Omnicom), 40% Local
OMD – 54% Omnicom, 46% Local
DDB – 64% DDB Worldwide (Omnicom), 26%
Draft FCB – 50,1 Interpublic Group, 26% Barasque, 23.9% Staff trust
McCann – 61% McCann WorldGroup, 39% Local
Lowe Bull – 100% Lowe and Partners (Interpublic Group)
The Media Shop – 51% Interpublic Group, 49% Local
Starcom – 64% Publicis, 35% Koni Media, 3% Other
Saatchi & Saatchi – 76% Publicis, 24% Management
From this picture, Mr. President, it is evident that local participation is very low in our industry. These four media groups bleed about 70% of local industry profits overseas and only a small percentage stays at home, benefiting only a few individuals at that. What makes the picture even more grim is when we see locally based private businesses who draw their revenue from ordinary South Africans spend their advertising and marketing budgets on multinational agencies who in turn take about 70% of those budgets offshore. This strips our local economy of about 70% of local advertising profits that could be alleviating unemployment and poverty. Brands that draw most of their revenue from black South Africans such as MTN, Vodacom, Tiger Brands, Famous Brands, Unilever, SABMiller, Pick ‘n Pay, Checkers, Spar, just to name a few; should at least do business with black suppliers in proportion to the extent they draw such business from the mass market. Most of these brands are homegrown and for them to have succeeded, they had to count of local support. As consumers of these brands with the capacity to market them, we ask that they reciprocate.
Given our economic history of extraction and the dire need to empower black South Africans, Business Unity South Africa is morally and ethically bound to respond differently to our challenge. It is not wrong to expect BUSA not to spend with multinational agencies purely on moral, ethical and economic grounds since you have an understanding of our history as a country and you have profound insights into small business being the catalyst for economic growth.
This is also not me shoving my begging bowl in your face, sir. I am an accomplished Advertising Executive with experience spanning over 15 years in my industry. I have a business degree and I am also an accredited Digital Marketing expert. I have won both local and international awards, I am therefore hardly an incompetent practitioner looking for an easy way out. I am also not the only one with this problem, there are many other talented black entrepreneurs in our industry who are forced to survive on crumbs or close up shop because of the aforementioned difficulties.
Our inability to compete with multinationals as small black owned agencies is not due to incompetence or a lack of experience, Mr. President. We keep being turned down because we are not big enough, meaning, we lack the capacity to handle lucrative accounts. Many of us are unable to sustain office space, we are unable to employ qualified experts and generally lack the technological resources to be able to compete fairly. But how are we to build capacity if we are unable to secure even small contracts from the brands we consume because they keep employing the services of multinational agencies?
I am not in any way averse to foreign direct investment or globalization, Mr President. I am of the view that where we cannot compete as a local economy, as in the case of say a beverage such as Coca-Cola or an automobile such as BMW, I am willing to admit defeat and therefore an inability to compete. But where we have an alternative as a country as in the case of developing effective communications solutions, I believe we should behave differently sir. I do not understand why we need a multinational agency with a global footprint to tell South Africans that a can of baked-beans was R9.50 but this weekend it will cost them only R9.20 or that you can now get free airtime if you top-up for R60 or more. It is an insult to assume that black-owned agencies cannot hold their own against multinationals when their owners and managers were trained and developed by the very multinationals.
The Proudly South African slogan is ‘SHOW YOUR LOVE FOR SOUTH AFRICA. BE PROUDLY SOUTH AFRICAN. BUY LOCAL TO CREATE JOBS’. It would be a victory for our industry and many others if work could be procured not to those who meet the requirements of the BBBEE scorecard but rather to those who are PROUDLY SOUTH AFRICAN. You know this argument better than most as BUSA, therefore, SHOW YOUR LOVE FOR SOUTH AFRICA. BE PROUDLY SOUTH AFRICAN. BUY LOCAL TO CREATE JOBS.
The advantages of using a local agency, Mr. President, include the following:
Keeping industry profits at home
Increasing our narrow tax-base
Growing the local economy
Creating a fair and competitive climate in our industry
I would therefore appreciate a meeting with yourself, where you can meet with me and other like-minded individuals from our association, ABCoP, as soon as possible. In this meeting we can discuss the proposed solution and see how we can best map a productive way forward.
I would like to thank you so much Mr. President for taking the time to read my letter and I am looking forward to a swift response from your office.
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