BLACK ECONOMIC EMPOWERMENT
Ad agencies need to remodel their brand of diversity
With just six months before the new empowerment code comes into force many marketing, advertising and communications sector agencies have done nothing, writes David Furlonger
Advertising agencies that complain they are forced to make sacrifices to meet new transformation targets are setting themselves up to fail in the future, says Alistair Mokoena, new CEO of the Ogilvy & Mather (O&M) SA brand communications group.
Rather, they should embrace transformation as a chance to grow in new directions.
From April 2018, a new broad-based black economic empowerment code for the marketing, advertising and communications sector will require agencies to be at least 45% black-owned. The current threshold is 25%.
A minimum 30% of the new 45% — meaning 13.5% of the total — must be held by women. Employment equity will also have to improve.
However, the advertising industry — and indeed the broader brand communications sector — has a history of grudging change.
New market research shows that with less than six months before the new code comes into force, many agencies have done nothing to prepare. The most common excuses are lack of suitable ownership partners and of young black advertising talent.
Mokoena, who succeeded Abey Mokgwatsane as O&M’s head in October, is having none of it. While it’s true that advertising schools and colleges can’t supply the numbers of young black copywriters, strategists and artists the industry needs, "that means you, as an agency, must cast the net wider and look elsewhere for the necessary skills".
Some agencies trawl townships for talent, others target schools. "I never turn down kids who want to visit or shadow people here," says Mokoena. "There is so much talent around the country, if we only bother to encourage it."
As for new shareholders, so what if they come from outside the industry? "Just because partners don’t know how to make a TV commercial or to promote a brand doesn’t disqualify them," he says. "Maybe they come with finance or project management experience. We’re not an island. There’s value in knowledge and skills diversity."
Still, he fears some agencies will set out to scrape past the new empowerment rules, and no more. "It’s a shame but the biggest damage will be to them. They are compromising their own future."
O&M will be 51% black-owned and a level one broad-based black economic empowerment ad agency by the end of 2017, he says.
Mokoena succeeded to the top job after nearly three years running the group’s biggest agency, O&M Johannesburg. Before that he was MD of rival FCB Johannesburg after a career in brand marketing that took in Unilever, Tiger Brands, South African Breweries (SAB), Cadbury, Schweppes and Absa.
A lot of agencies say ‘we’re creative, not corporate’, as if ‘corporate’ was a swearword. What it actually means is that you have a proper structure with a profit motive. Is that bad? Don’t clients want an agency whose business model they can respect?Alistair Mokoena
O&M Johannesburg is waiting to hear if it has won the Tiger Brands account. It is on a short list with rivals TBWA, King James and House of Brave.
Mokoena says that he was hired from FCB with succession in mind. "They gave me the Joburg agency and said if I succeeded, I would be in the running for CEO."
Despite keeping the agency at the peak of its creative and business powers and overseeing integration of the Gloo digital agency into the overall business, he was only one of a number of internal and external candidates.
Mokgwatsane, who became CEO in 2012, is leaving to become head of marketing at cellphone services provider Vodacom, which is one of O&M’s biggest clients.
Won’t Mokoena’s personal relationship with his former boss complicate their new business one?
"When we were both at SAB, I was senior to Abey. Coming here, I was comfortable about reporting to him. As long as we share the same vision for the brand, I don’t see any complications," he says.
One of Mokoena’s challenges as group CEO is to deepen the management skills he says all agencies need to embrace. Traditionally, agencies are not the smartest-run businesses. In an industry where creative awards are the Holy Grail, prudent management often loses out.
"A lot of agencies say ‘we’re creative, not corporate’, as if ‘corporate’ was a swearword," says Mokoena. "What it actually means is that you have a proper structure with a profit motive. Is that bad? Don’t clients want an agency whose business model they can respect?"
Common sense often disappears in the face of rand signs and zeroes. The history of the local industry is littered with agencies that crashed after taking on too much business or, fatally, accepting accounts that dwarfed everything else.
The loss of a single account has been known to cost 70% of annual income and, eventually, staff. Some agencies don’t survive the trauma. This need for rational business behaviour is heightened by the fact that clients are more demanding. In times of economic stress, it is commonplace for clients to expect their agencies to provide more for less.
"The industry is unrecognisable from what it used to be. Clients expect you to be efficient, transparent and agile. You have to be quicker, but without compromising on creativity. It’s not more for less, it’s everything for less."