Caxton has won the long running war of attrition between itself and Paarl Media, a division of media giant, Naspers, it announced today. Paarl Media lost its appeal against the findings of the Advertising Standards Authority (ASA) made last year.
In November 2010, Caxton lodged a complaint with the ASA that a sales brochure used by Shopper’s Friend representatives contravened certain clauses in the ASA code. The brochure was used to promote Paarl Media’s Shopper’s Friend as a means to distribute loose inserts. According to Caxton, the brochure made misleading claims as to its efficacy. The ASA found in its favour, ruling that of the 10 complaints, eight were upheld and ruled to be in breach of the ASA code. The ASA Directorate ordered that Shopper’s Friend must withdraw these claims.
Terry Moolman, Chief Executive Officer of Caxton, said today that despite an acrimonious attack on Gill Randall, the head of Caxton’s National Advertising Bureau, by Shopper’s Friend, “we have been resolute in not allowing the biggest media company in South Africa to get away with false and misleading advertising. Naspers and its subsidiaries should be setting an example to the industry, but instead, they seem to have adopted the attitude when dealing with their competitors in the market, that there are no holds barred.
“This is not the first instance of the Media 24 group misleading its advertisers and the public, nor is it the first time that our staff have had to endure gratuitous personal vilification from our opposition.”
At the time, Randall said in a piece published on TheMediaOnline that Caxton was “disappointed that the advertising industry has been misled by a major media player which is fully conversant with the provisions of the ASA Code”.
Of course, Paarl Media immediately appealed the ruling. In a post published on TheMediaOnline, Paarl Media’s Jacques Coetzee accused Randall herself of misleading the industry. Coetzee said Advertising Standards Authority Directorate had “not found as a fact that any of Shopper’s Friend’s claims are actually untrue, only that insufficient substantiation has been tendered. Shopper’s Friend intends to rectify that”.
So why all the fuss and bother over retail inserts?
Well, as researcher Peter Langschmidt said in a story published in The Media and TheMediaOnline last year, one area of print that is steadily growing is that of retail inserts. “When it comes to printing inserts, there are two major players: Paarl Media, owned by Naspers, and CTP Caxton. These are the two printing behemoths of South Africa, and together account for over R10 billion worth of print annually, of which retail inserts account for about R2 billion.”
And this is the crux of what Langschmidt calls the “great insert war of 2010/11″.
“CTP Caxton has dominated retail inserts because it leverages its community newspapers – some 58 in Gauteng alone. Advertisers who print with CTP get reduced rates on inserting in Caxton’s local freesheets. As Paarl could not compete for the printing, it had to introduce a competitive way of distributing advertiser leaflets… and this is called Shopper’s Friend.”
Today, Caxton announced that Shopper’s Friend had lost its appeal against the finding of the Advertising Standards Authority Directorate.
Caxton said the advertising brochure at the heart of the complaint “contained numerous unsubstantiated and comparative, disparaging, misleading, and/or dishonest claims”.
“The Naspers and Media24 subsidiary distributed the promotional brochure in September 2010 to ad agencies and media clients, proclaiming the benefits its newly launched Shopper’s Friend advertising jacket. In the brochure, Shopper’s Friend claimed to be the ‘best way to distribute loose inserts’, and then attempted to justify why it was better than community and paid for newspapers,” it said in a hard-hitting statement given to TheMediaOnline.
Last week, the Advertising Industry Tribunal upheld the Directorate’s findings. The Tribunal found that Shopper’s Friend had failed to prove it had a better reach, that it had less wastage, or that it had a better response. Shopper’s Friend had already admitted that its claims of readership could not be substantiated by its research. The Tribunal also held that, in the context of the brochure as a whole, the claim by Shopper’s Friend to be the ‘best’ was more than a mere opinion, and was unsubstantiated. The Tribunal confirmed that these claims must be withdrawn.
Paarl Media bought the business of Primedia@home last year to undertake the distribution of Shopper’s Friend, in place of Media24’s On the Dot logistics business. It also had its earlier approval of the merger overturned in December 2011, when the Competition Commission found the acquisition to be anti-competitive. The findings of the Commission in that case case “have now also shown just how expedient and dishonest Paarl Media has been in promoting Shopper’s Friend as a new medium to advertisers”, says Paul Jenkins, non-executive Chairman of Caxton.
“When dealing with advertisers, Paarl Media went to extraordinary lengths to portray Shopper’s Friend as more effective with less wastage, amid other unsubstantiated and misleading claims that it was better than than its competitors, and in particular, Caxton’s community newspapers. Yet, in a complete about-face, Paarl Media itself then told the Competition Commission that the distribution of leaflets in community newspapers is 3.5 times more effective than knock and drop distribution of leaflets.
“It was apparently trying to explain that distribution of leaflets in community newspapers was seen by advertisers as being of a higher quality than knock and drop distribution and that the higher rates of community newspapers reflected the relative effectiveness of these two media. This appalling lack of integrity in dealing with the regulatory authorities and customers alike is surely a new low for Media24 and Paarl Media,” Jenkins says.