Wag the Dog Publishers recently hosted a panel discussion titled: Demystify: Newspaper Research. One of the panelists was the doyenne of advertising research, Barbara Cooke. Here, she unpacks the history of the South African Advertising Research Foundation (SAARF), and organisation that came in for a bit of criticism during the discussion, with the announcement that It was announced that the levy collection agency, which has existed for many years, will cease to operate next year.
A little bit of history…
The South African Advertising Research Council (SAARF) was formed in 1974. The members were the respective industry bodies who elected representatives to serve on the newly constituted board. These included:
- Society of Marketers
- NPU
- SABC
- AAA’s
- Outdoor Association
- Cinema
The members of SAARF agreed to certain principles.
- The data was to be used by all players as a common currency for measuring, buying and selling media.
- All parties interests must be served
- To fund this initiative, a 0.5% levy on defined advertising will be raised on invoice, and collected by agencies
The levy was to be unencumbered i.e. to be raised before commission
Result?
Many advertisers refused to pay the levy and collection of the levy by agencies did not work.
Solution?
The media owners were asked to collect the levy. It was agreed that the levy would be added in to rates so that it became “invisible” to advertisers. The levy was to be unencumbered – this principle was re-affirmed.
Result?
Success. SAARF even managed to create a surplus. Collection of the levy by media owners worked, and the co-operation of the media in this regard was not in dispute.
Mid 1980’s
The ASA Advertising Standards Authority (ASA) ran into difficulties, and funding was needed urgently. MARST was conceived – Marketing and Advertising Research and Standards Trust – to receive the levy and to distribute the monies to the ASA and to SAARF.
Not everyone was happy … the levy was originally set in place to fund media research and not to be a source of funds for other industry requirements.
January 1990 MARST becomes a reality
On January 31, 1990 the CEO’s of all parties and their alternates signed the Trust document.
NPU S. Mulholland/D D Krynauw
ASOM C Adcock/E Schulze
SABC W Harmse/D van Vuuren
OAASA C Holland
Cinemark G R Botha
AAA H Klerck/P de Klerk
Result? CHAOS….
The directors of MARST and SAARF haddifferent objectives. MARST was being run, to all intents and purposes, by Gert Yssel, the MD of SAARF. SAARF was still collecting the levy and research effectiveness was being compromised.
November 1992
MARST is terminated. The contribution to the ASA was capped and a SAARF savings programme was initiated
1993
Discussions commence on raising the levy (ASOM). The continued funding of the ASA from the levywas an issue/ The PMA now has a fresh look at the situation and makes a proposal.
The PMA (Print Media Association) Perspective at this time (1993)
The definition of ‘advertising’ as originally worded in the SAARF constitution is no longer appropriate. The net should be widened and the playing fields should be levelled (e.g.sponsorships must be included)
All players must contribute to the levy as agreed, and all media must pay over the monies so collected
The levy must be unencumbered as SAARF was losing substantial income due to agencies taking commission on the levy.
ASA funding was not a SAARF responsibility
Enshrine the principle that everyone makes a sacrifice to fund SAARF.
The Sacrifice
- Advertisers pay a 0.5% higher ad. Rate and buy less advertising as a result
- Media owners, therefore, give up 0.5% media spend
- Agencies forfeit commision on 0.5% of potential revenue.
Result?
Equity – and all decisions have a financial imperative. All parties agreed to this proposal.
- The definition of advertising would be broadened i.e. a level playing field would be established
- The levy will remain unencumbered
- ASA contribution from the levy capped at R641 000-00 and notice given of SAARF’s intention to cease its support of the ASA.
Collection Formula
With the expectation that this would result in an increase in funds sufficient to support a robust SAARF.
R100-00
less 0-50 SAARF levy
R99-50
less 16-40 Agency Commission 16.5%
R83-08 Cost to Client
Result?
SABC reneges on agreement to level the playing fields. AAA’s withhold the additional income due from the agreed collection formula. PMA contribution increases substantially. SAARF funds were not materially affected.
July 1994
Talk about increasing the levy gains momentum (easier to raise the levy than to fix the problem). PMA not prepared to consider this until the agreement is honoured. Finally, the SABC comes on board and AAA’s refund the deficit but remain unhappy with the collection formula.
1994/5
PMA still not prepared to agree to an increase in the levy, even to 0.65%…. Its funding was up 48% by June 1994.
PMA adopts a ‘wait and see’ attitude’.
But, most other media owners and AAA’s are prepared to raise the levy
Problem was AAA’s solution not binding on media independents and non-AAA’s members.
1996
ASA future critical as pre-clearance of advertising as a source of income dries up. ASOM was now adamant that the levy should be raised to 1.0%. SAARF appoints a new MD whose first task is a strategic review of SAARF’s budget and future plans (Mike Gorton).
The expected income for 1996 of R15 951 000 is R2,2million more than budget. If the 1996 expenditure does not exceed budget, the surplus at the end of 1996 would be R7.7million. Even so, SAARF income was not as high as it could be: the levy income is equivalent to a 0.35% levy, not a 0.5% levy.
SAARF is financially sound with a 0.5% levy under-pinning income, given the current demands on it in terms of research requirements for 1997
The ABC is financially sound.
The ASA is in trouble, but this is not a SAARF responsibility.
The Marketing Industry Trust, MIT, now mooted, is the old MARST in a new guise.
A 1.0% levy in 1996 would have produced +R32 000 000.
Quo vadis?
The PMA supports SAARF unequivocally but would like to see:
- The 0.5% levy on ad income collected in full
- All parties to come aboard, including media independents and non-AAA’s members
- ASOM to exert its influence in ensuring that these two points are addressed
The PMA supports the principles embodied by the ASA, but would like to see:
- A budget, properly motivated and presented to the industry
- A formula for funding the ASA which is NOT a levy dependent on the vagaries of ad income, but which requires contributions from its members in fair shares
The collection formula proposed by ASOM… “A 1.0% ADD-ON (after net) on agency invoices”.
The PMA suggests that this formula is problematic and will result in a new round of chaos and a diminution of SAARF’s income and its ability to serve the industry’s research needs.
ADD-ON did not work previously, and it won’t work now!
1996/1997: The debate continues
The ASOM Proposal:
A joint meeting of the ASA and the SAARF Boards took place on the October 14, 1996: their proposal was that there should be an industry Trust Fund (MIT) with trustees drawn from the ranks of industry. Which would fund SAARF, the ASA, a ‘Fighting Fund’ and an Education Fund. Such fund to be raised by a levy on advertising as defined. On an ADD-ON basis of the net-net media cost. The levy to vary as and when circumstances dictated this.
Result?
This principle was accepted by all members subject to the following:
– A reservation raised by the PMA concerning guarantees and the full participation of all stakeholders.
– Guarantees from ASOM that they would lobby their members to ensure continued participation in the levy principle e.g. Retail
– An assurance that all stakeholders, including Media Independents and other non-members of the AAA would also contribute to the levy funding
– That a solution to the current dilemma concerning the representation of the Media Independents on the MDC, who do not have a seat on the SAARF Board in their own right, but who sit on the Board as the second AAA member, be found.
Observation from the SAARF MD ( July 8, 1996)
– SAARF has no idea how the payments from the PMA are derived.
– It has not proved possible in the past for SAARF to obtain certification from all Print Media Owners confirming that the amounts collected are correct.
– The payment schedule is erratic.
– There is obviously a delay of perhaps 2 months between ad spend and SAARF levy but this time lag should not matter over time.
– ‘Retailers are not happy about contributing to the SAARF levy’ – if this is so, we need to devise a method of denying them access to data or of convincing them of the value of contributing.
2000 – Another SAARF Strategic Review
In 2000 SAARF conducted strategic reviews of what the Industry wanted SAARF to produce. These strategic reviews, resulted in SAARF increasing the scope of its activities to encompass:
– Two separate adult SAARF AMPS per year and to include the measurement of “free sheets” and special interest consumer magazines;
– The measurement of all radio stations, including community radio stations;
– More regular SAARF Teen AMPS reports
– The measurement of psychographics and quality of media contact.
– As part of the strategy the SAARF TAMS panel is also being increased in size and now also makes provision for the measurement of satellite TV.
2002 TGI is launched
– TGI, based on the international model, measures brands used
– The database is underpinned by a software programme integrated into the subscription
– The TGI management approach SAARF with a view to working together as AMPS will not measure brands [it is after all the All Media and Products Survey] and TGI will not measure media.
– Instead, TGI will pay SAARF 7½% of its revenue and will in return buy the media data from SAARF, fusing it with the branded database.
– This would preserve the ‘one media currency’ principle and give SAARF badly needed income.
Result?
SAARF refuses to co-operate with TGI and launches its own branded option, at a price. This fails; the model is replaced with free branded data and only selected brands are measured in selected categories. TGI is forced to measure media
Current situation?
– AMPS’ costs have escalated to fund the branded data.
– Ad income has fallen as ad budgets have contracted, leading to a drop in the MIT levy income.
– The ASA is squeezed for funds, and AMPS continues to budget for branded research, adding substantially to its costs.
Observation…
– A levy, by its very nature, should be equitable to all contributors to the levy – all who pay should benefit equally
– But, with the SAARF levy income, brands not covered are subsidising the brands that are measured and getting no benefit themselves.
– In fact, brands not covered [usually the smaller players] are effectively being disadvantaged to the benefit of the brands that are being measured [usually the major brands].
– The fact that SAARF is measuring brands is contrary to its original mandate, and is now adding substantially to its costs.
– The MIT levy is currently calculated after all discounts and agency commissions have been deducted; this is contrary to the original agreement where the levy was to be unencumbered, and this significantly reduces the MIT income base.
