AN OPEN LETTER TO HONOURABLE MINISTER MALUSI GIGABA – DEPARTMENT OF PUBLIC ENTERPRISES
15 August 2012
Good day Mr. Minister, 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. Minister 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.
The Advertising 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. Minister 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 even further 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 guarantees these companies more profits, however, only a small portion of these monies stays in the country and the rest is spent overseas thus crippling our local economy. 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. Minister 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. Minister, it is evident that local participation is very low in our industry. These four media groups bleed on average 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 State Owned Enterprises and Government Departments spend taxpayers’ money on multinational agencies to do their marketing campaigns who in turn take about 70% of that spend offshore. Brands such as SAA, Mango, SABC, South African Tourism, Brand South Africa, Eskom, Telkom, Transnet, Government Departments, Cities and Municipalities, should be handled by local suppliers and not multinational agencies.
Given our economic history of extraction and the dire need to empower black South Africans, the government is morally and ethically bound to respond differently to this challenge. It is not wrong to expect State Owned Enterprises and Government not to spend with multinational agencies purely on moral, ethical and economic grounds since you are the agents who are entrusted with driving transformation.
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. Minister. 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 Government? What compounds our problem even further is the reality of serial BEE partners who have extensive State and Government relationships and the leverage to secure lucrative contracts for their multinational boards. This is unfair on many levels Mr. Minister, I cannot play and referee at the same time because I am bound to be biased at some point.
We need the initiators and custodians of BBBEE to help change circumstances in our industry. We need to see Government and State Owned Enterprises redirect their advertising spend from multinational agencies to black owned ones. Most Government Departments and State Owned Enterprises cannot justify employing an agency with a global footprint to do their advertising and marketing campaigns because it is outside the scope of their briefs. I therefore fail to see the relevance of employing their services to do your work. 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.
I recently lost a pitch for SABC Olympics to Publicis. What is painful about it Mr. Minister is not just the amount of money and resources I invested as a small business to try to win the pitch, it is also the standard of the work that finally won the tender compared to mine and the reasons that were given for such a decision. There seems to be no vision on the side of the State and Government to deal decisively with the problem of unemployment and poverty in our country. The vision should be to empower small black business and not to destroy it by empowering multinationals they can’t compete with through counterproductive policies.
The advantages of using a local agency, Mr. Minister, include the following:
Keeping industry profits at home
Increasing our narrow tax-base
Growing the local economy
Delivering on your constitutional mandate to empower black people
Creating a better life for all
Looking good in the eyes of the electorate
Therefore, ‘SHOW YOUR LOVE FOR SOUTH AFRICA. BE PROUDLY SOUTH AFRICAN. BUY LOCAL TO CREATE JOBS’.
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. Minister for taking the time to read my letter and I am looking forward to a swift response from your office.
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