Ad industry needs to enhance compliance processes to manage risks during Covid-19

The ongoing fallout from Covid-19 and national lockdown efforts to stem the spread of the disease is playing havoc on the local ad industry. And things were going so well.

Broadcast advertising showed positive signs

According to a study by PwC, SA’s entertainment and media revenue was set to grow at a compound annual growth rate of 6.5% to reach R177.2bn in 2022. TV and video was expected to be significant drivers of this revenue: pay-TV revenue will add R6bn in absolute terms to 2022.

Since the start of the lockdown on March 27, broadcast and streaming media have experienced significant audience growth. According to one analyst, engagement from audiences on radio shows has increased significantly, with phone calls and WhatsApp messages to shows increasing by 25% and 35%. 

Services like Netflix are showing better-than-expected growth, and with schools closed, TV stations have stepped up with educational shows to support learning for the millions of kids at home due to lockdown. Brands and advertisers will want to pay careful attention to how they take advantage of this captive audience until schools and offices reopen.

While most of media spend growth is expected to be concentrated in various forms of digital advertising, there is no denying the power and importance of broadcast advertising to reaching mass audiences in SA. The country remains the largest TV market on the continent, with total TV revenue expected to reach R40.8bn by 2022, up from a base of R32.3bn in 2017.

However, that’s where the good news ends. 

Lockdown effects hit industry

Since the start of the lockdown, most creative work and production has ground to a halt. The industry is facing a prolonged period of acute financial pressure that may even outlast the disease itself. It is unclear what the effects of the pandemic will be on industry projections, but all signs point to real growth falling well short of projections.

The economic contraction is also likely to have a severe effect on the advertising and production industries. The impact on the production industry has already prompted the Commercial Producers Association of SA (CPA) to launch a fightback strategy to help the industry bounce back from the devastating economic effects of Covid-19. According to CPA CEO Bobby Amm, part of the association’s work includes looking at new technologies “that can facilitate our return to work”.

In this environment, agencies and advertisers are considering a range of cost-cutting measures. It is fair to assume that many broadcast advertisers, for example, won’t be investing in new TV and radio ads, and will instead reuse older content to limit expenses. 

As offices shut down and every organisation suddenly depends on a remote workforce, advertisers and agencies are facing new risks in their compliance procedures that could have a disastrous effect on agency credibility and liability if left unchecked.

Managing risk in a time of coronavirus

Licensing is one such risk. Agencies and advertisers will need to ensure the words, images, videos, brand names, logos and other material constituting intellectual property have all the correct permissions and usage rights in place to remain compliant.

This can be critical for sponsorships, where advertisers need clarity on the reported value of product placements, logo recognitions, and secondary events such as voiceovers and crawls. If any violations occur, agencies and advertisers need to be quickly alerted to ensure they can amend exclusivity or programming rights. 

Royalty management from music is another potential pitfall. Without effective monitoring of record label and artist rights, advertisers could fall foul of regulatory bodies. An estimated R600m is collected from music royalties annually in SA, but there is still potential for improved tracking and monitoring using technology tools that can automate and speed up much of this work.

To ease the pressure of ensuring compliance, advertising and media agencies should seek tools that can automate the tracking of TV and radio material, and verify and reconcile paid-for scheduled advertising to actual broadcasts. Tools with analytical capabilities can provide real-time insights to agencies and advertisers on all aspects of compliance, including usage rights, and can provide valuable intelligence on competitor activity and trends.

Armed with this intelligence, agencies and advertisers can maintain campaign integrity and remain compliant even in the face of the mass-scale disruption we are experiencing. And with insight into competitors, agencies and advertisers can make smarter, more informed decisions over campaigns, ensuring they get maximum return on investment from each cent spent on broadcast campaigns.

• Mike Smit is the director and founder at Media Host.