In the midst of South Africa’s booming economy, business is still tough. Especially, it seems, if you are a media agency. Media specialists complain that they are overworked, underpaid and struggling to retain quality staff, in a rapidly changing industry.
Keeping the head-hunters at bay
Passion for a job that often consumes 16 hours a day has dwindled as clients have become more demanding. Experienced media people are opting for a more balanced lifestyle and are leaving the industry. Why work these long hours when you can work half as hard and earn far more elsewhere? It may be a creative profession but media agencies are finding it more and more difficult to attract talented new staff. “We try to create interest, but it is a bottomless pit,” says Gordon Muller, the former managing director of OMD media and now a consultant. “This is not a glamorous job.”
The loss of experienced media people has left a vacuum in the industry. Newcomers have no mentors and often have to rely on gut feel to get the job done. MediaShop managing director Harry Herber says there are many mediocre to average people in the industry. “Most meet the clients’ needs but many of the ‘kids’ in the industry see it as a means to an end.”
Media bosses complain that they spend time and money on training, but the youngsters are poached by other media agencies and media owners once they are only partly trained. “It is soul destroying,” says MediaEdge managing director Michelle Meyjes. “You send people on courses, which costs money and devote your time, but your competitors come and offer them twice as much money to do a job that requires half the effort. How could they say no?”
A training academy established by the industry could solve the lack of skills problem. “We as an industry should contribute towards the establishment of one but we all have pressures internally. We are all too lean,” Meyjes says.
A major problem is that when graduates embark on a career in a specialist media agency they have no understanding of what it takes to become a true professional. “On the surface it all looks so simple,” says Meyjes.
MediaCompete’s managing director Paul Wilkins says media work often involves mathematics and statistics, two skills that are in short supply in South Africa. “A lot of our business involves econometric modelling,” he says. “We do investment analysis to find out what works and what sells. Much of this involves maths but there are very few people with the adequate skills.”
Training organisations are supposed to prepare graduates for the industry, but students are accepted only as long as they can pay or qualify for a bursary. There is no emphasis on latent talent or skills. “We need entrepreneurs, young people who are a little arrogant in their beliefs. If we are lucky we get people with ability, but without that drive and confidence.”
Luisa Belter, managing director of Mindshare, says a basic work ethic is missing among industry newcomers. Old fashioned protocols such as courtesy, hard work, attention to detail and accuracy are lacking. “This is the consequence of poor mentoring and also the speed at which work is being turned out,” she says. One solution might be to import highly skilled specialists from abroad to help mentor young staff.
Marc Taback, managing director of Initiative Media, believes the industry is not promoting itself as it should. “We have to go to schools to promote it and make it more sexy,” he says.
On the other hand, Muller says clients will get what they pay for until incentives are introduced. “How do you encourage someone to work a 16 hour day?” he asks. “We put enormous pressure on people to perform. I wonder where the people will come from to do it? At the moment we are all nicking staff from each other.”
Brad Aigner, MD of Universal McCann, has a different take on staff losses. “The loss of staff to competitors, media owners and other industries are the ‘symptoms’ – the underlying cause of the problem is that we have commoditised our own industry.
“The truth is that we have done nothing to quell the perception that all media agencies are created equal. In fact, we have fuelled this notion by competing on price rather than on differentiating variables like intellectual capital. Although this might work for the few, mega-agencies that earn their profit on volume, the fact is that we have encouraged our clients to pay us less. In some instances, we even work for nothing. So, to make ends meet, we in turn pay our staff less, work them harder, and invest less time in them.”
Not only has the commoditisation had a negative effect on staff, it has also hindered transformation, says Aigner. “Our self-inflicted industry commoditisation is also compromising our drive for transformation. I submit that the challenge of transformation lies less with the need for training, mentorship and development than with our ability to attract young, talented people (of colour) to a career in media.
“We are kidding ourselves if we honestly believe that the promise of 16-hour workdays, almost non-existent mentorship, and frugal pay at the end of the month will attract the right people. And young people now days are far too savvy to believe in the notion of ‘doing it for love’ (like many of us did!). It’s no wonder that the media industry is not exactly the ‘cheerleader that everyone wants to go to the prom with’.”
The industry does lobby through organisations like the Advertising Media Association of South Africa (AMASA) and the Advertising Media Forum (AMF), with membership now open to anyone involved in media procurement. “Outside parties are welcome to take part in the discussion,” Muller says. “We exchange information. We keep a database of CVs. The willingness is there. People want it to work.”
Talking Transformation
South Africa’s media is under pressure to transform and at the same time deliver world class work. Empowering the industry has become increasingly difficult. Media bosses complain that their young black staff are head-hunted by financial houses and media owners as soon as they are trained.
They also complain about a lack of incentives to keep or attract the top people. Says Aigner: “I do not believe that the requirements of leaders in our profession (technical skill, experience, intellect, professionalism) are any less than those for leaders in other industries. In fact, it is commonly acknowledged by our clients and media owner partners alike that the demands of our profession are extraordinarily high. Yet, I submit that there are few top executives in media who earn the same kind of incentives that top executives in other industries earn. So, why should smart, young leaders of tomorrow consider media when it is easier to build wealth elsewhere?
“Not only are we unable to attract future industry leaders, but it seems that we are unable to retain the ones we have (the recent departure of Mike Nussey from Mindshare springs to mind)! These are the mentors we need to keep an increasingly young and inexperienced industry from self-destruction.”
The media industry signed the Media, Advertising and Communication Charter (MAC) recently, but this is just the beginning. “We now have to deliver and at the same time maintain a global standard,” Muller says.
Gordon Patterson MD of Starcom says the industry has been through a period of tokenism. “A period of more sustainable transformation has begun,” he says.
The AMF has been trying to produce software to measure adspend placed with media owners who have the right BEE credentials but the idea is still to get off the ground.
Belter, however, believes that most media are meeting their empowerment targets. “It is a business imperative that we measure empowerment media,” she says.
Paying the bills
Media agents generally bill clients in one of two ways. They charge a negotiated fee or take a commission. Fees are paid before the work is done. A commission of between 0% and 6% is paid after the work has been completed. “Both methods have pitfalls,” says Patterson. Advertising budget cuts impact negatively on commissions whilst fee negotiations are fierce sometimes resulting in very tight margins.
Whilst agents were reluctant to disclose what proportion of their income is earned from interest, it is here that the smarter players have an edge. The client pays for having the advertisement printed or broadcast after 30 days, but the agency is only obliged to hand over the money to the media owner at 45 days. The longer the gap the better it is for agents.
Paul Middleton, MD of Ebony and Ivory, works on fees and commission. “By being full service we balance both very nicely. The agency gains multiple opportunities to deliver added value and multiple channels of revenue generation. Full service delivers the value that clients and marketers look for. If they are separated, the energy and passion dissipates. Client service, strategy, planning, media planning, negotiation and buying. This is what clients love and will pay for.”
A few major advertisers have employed strategists and planners in house. The problem, Patterson says, comes in attracting the right people and stimulating them, which is difficult outside the agency environment. “You need to be around like-minded people and bounce ideas off them. Eventually the in-house team dies.”
A thriving economy
Thanks to a buoyant economy, companies have been recording excellent profits and advertising spend has ballooned. In 2001 total adspend on media was R8,1-billion. By 2005 it had more than doubled R17,1-billion.
Whilst this would seem to represent a windfall to media independents, Muller expresses a concern “We run best in the lean times as a small tight and powerful package,” Muller says. “The biggest problem in a boom is to hold the growth down. Fast is not cool. Service slips, errors increase.”
Yet, despite economic buoyancy, South Africa’s marketing managers are still under-investing in media. According a recent statistic a mere 0.8 % of GDP is spent on media. In countries such as the United States, it is usual to see 2% being spent. “To many companies, advertising is viewed as an expense and not an opportunity,” Middleton says. “Many do not see the benefit of advertising.”
The media landscape is much larger, more complex and competitive today than five years ago. Working methods are changing, consumers are better informed and more empowered and overall accountability is accelerating. “Clients are also facing an increased competitive landscape. These factors as well as a buoyant economy have resulted in additional workload for media agencies,” Meyjes says.
This compounded by the fiercely competitive environment amongst media agencies makes working life extremely challenging. Competition in the industry is set to become even more intense in years to come, particularly as international alignments start to play a bigger role. Global alignments may bring in new business but also cost media agencies business. “It can work either way,” Belter says. “It is an incredibly competitive environment. You have to be driving ahead and innovating constantly to be there.”
With growth expected to increase in the coming years, increasing media fragmentation and the opening up of new channels of advertising, such as cellphones, competition is set to increase even further. There is a belief that natural selection will decide who survives in the end.
“This industry is based on survival of the fittest, not survival of the fattest,” Patterson says.
The future
The media industry is faced with a slew of new advertising channels and a rapidly expanding middle market at which to target campaigns. This scenario bodes well for media independents and most are upbeat about their future. New channels of content distribution are all the buzz at the moment.
At last convergence of content and distribution is a reality and agents are excited by the opportunities these fresh platforms offer.
The demand for PVRs in South Africa has been substantial with 17,000 in circulation by the end of April.
Meyjes says everything seems to have become a channel for advertising. Even school corridors are plastered with adverts. “The industry is becoming more and more complex. The consumer environment is changing and there will be a fundamental shift in the ‘currency’ of communication measurement. We will have to get to know the demographics and consumer behaviour of South African consumers intimately.”
So how will the media and advertising industry evolve in the 21st century? Some see the industry as waiting for the next big thing. “Perhaps they will find a way to download advertisements into your brain while you sleep,” Herber says. “Internet technology will drive advertising. You will have one screen that does everything. It will be your phone, your television, your CD player, your computer. It’s already going that way.”
Factors like innovative packaging and pricing have become highly important for advertisers. “Someone may buy a certain tin of tomatoes just because it has a pull-off lid,” Herber adds.
Boldly going forwards
As yet there has been no mass get together of media bosses to discuss mutual problems. The AMF, which represents the industry, meets occasionally but getting things moving appears to be a struggle. “We are all just too busy to do it,” Taback says.
Aigner says agencies should tackle the cause of the problem rather than the symptoms. “We need to stop competing on price and start differentiating ourselves (like successful companies do in other Industries) through other factors, such as strategic excellence, innovation and service. Perhaps then our clients will pay us fair remuneration.
“The sad truth is that we have managed to ‘reverse the fairy tale’ by turning the charming prince, into a frog. And it’s not a kiss that the frog needs, but a good wake up call,” he says.
There is no doubt that media agencies are facing daunting challenges with the struggle to attract and retain staff a priority. They are however bound by shared problems and a competitive camaraderie permeates the industry. Life may not be easy but, there is no doubting it, the life of a media agent has never been more interesting.
On the customer side
Why would marketers move their media planning in-house? Some cite cost savings, others like the control it gives them. Take, for example, Revlon cosmetics which has taken the planning responsibility for print in-house. It felt that its media agency was not offering additional service, and it was equipped to do the job itself.
The company’s cosmetics department takes the 15% commission it would have given to its agency and reinvests it in advertising. However, it still uses the MediaShop for its television media planning.
Media agents, naturally, pooh-pooh the idea. “Media experts need stimulation,” says Starcom’s managing director Gordon Patterson. “They need to bounce ideas off their colleagues. It is a very intellectual environment. Take a media person out of that environment and they never last.”
Diana Morris of Tiger Brands believes companies that move their media in-house lose out on international networking. She says there is a certain cohesion working with a team dedicated to the interests of your company. “If you move, you are on your own and with your strategist gone you lose your access to the international network. We view our media agency, OMD, as an extension of Tiger Brands. People like having a sense of ownership.”
Others believe your relationship with your agency can be made to work for you. Nic Griffin, marketing director of Avis Rental Cars, says: “It’s a relationship, like marriage, that you have to work on. Changing isn’t necessarily the solution. It is something you need to make work.”
More for less
Media agency bosses complain that economic buoyancy has added enormous pressure to their workload. Many clients, says Initiative Media’s managing director Marc Taback, expect more work for the same fee.
This observation is borne out by DaimlerChrysler South Africa, a company that has cut budgets but hopes to get “very creative and more for less”.
Maretha Swart, a communication specialist for DaimlerChrysler South Africa, says the economy has affected the company’s marketing campaigns and the way it relates to its media agency. “From a creative point of view the whole dynamic and approach has changed,” she says.
Media agents are expected to work faster so pressure has increased. On the other hand, from a media planning and booking point of view, selection has become more focused.
She says Daimler has no plans to increase its adspend but, rather, has cut the budget.
Daimler’s marketing team has investigated and moved away from a separate buying and planning agency. “We currently have a creative and planning agency. We do not plan on changing that soon,” Swart says.
DaimlerChrysler has completely changed its focus to make way for the rising black middle class. “It is a must and it has had a positive effect on our planning,” Swart says.