After a year of uncertainty the funding of the South African Advertising Research Foundation, which coordinates the vital “common currency” research used by media and marketing, has been secured.
Under an industry agreement, a 1% levy on advertising revenue will be collected from all stakeholders except Print Media South Africa (PMSA), which will make payments under contract straight to the foundation.
The funding crisis, which threatened the sustainability of key research products like Amps, Rams and Tams, emerged last September when the PMSA unilaterally reduced levy payments to the Marketing Industry Trust, which had overseen the foundation’s funding since 1997.
Brian Pottinger, PMSA representative and then-MD of BDFM, publisher of Business Day and the Financial Mail, said: “We can’t have one party paying while another benefits, nor tens of millions of rands pumping through a system without strict controls.”
The PMSA felt the print media were funding an inordinate percentage of the foundation’s R45-million a year budget. Audited financials show that from 1999 to 2002 print contributed about R16-million a year.
Its second gripe was corporate governance. At an emergency summit last October, it argued that the foundation’s revenue flow was unpredictable and that its deficit budget would in other instances count as technical insolvency.
The summit gave impetus to a Marketing Industry Trust task force to investigate a new structure. This laid the groundwork for the current solution.
“We’ll continue with the foundation as we know it,” said John Little, task force head. “All associations and media owners have agreed to the minimum research requirements with the foundation. That in turn has been agreed with the Marketers’ Federation of Southern Africa.”
The point is significant given the battle between marketers and media owners over the source of the money that funds the research. The marketers argued that as the 1% levy comes off their advertising budgets, print cannot unilaterally cut its contribution.
With print media now obliged to pay directly to the foundation under contract, the argument falls away. Little, confirming that the PMSA’s contribution for 2004 will be about R8-million, says the foundation now “has the security of knowing it will get a fixed amount”.
While an advertising shift to television, radio, outdoor or cinema would have no material effect — they contribute 1% of total spend — a shift to print, which contributes a flat fee, would result in a budgetary shortfall. “Then we might have to review the levy percentage,” said Little.
The Media Industry Trust will now fall away, to be replaced by a body with the working title “Industry- Wide Forum”.
“We have introduced flexibility and a strong sense of continuity of funds for the foundation,” said Little. “We will soon introduce appropriate levels of corporate governance.”
Media Weekly is produced for the Mail & Guardian by The Media magazine and is edited by The Media’s editor Kevin Bloom