The Media Yearbook, the only one of its kind in Africa, offers an important and independent overview of the media industry in 2015 as well as giving important insight and perspective into global trends and forecasting for 2016. Here Glenda Nevill looks the biggest media agency issues of 2015, and asks what the 2016 trends will be.
Twelve agencies were sold to international companies; now 17 of the top 20 marketing agencies in South Africa are majority owned by international firms. Why? Probably because there’s slow growth around the world, and Africa looks like it could be the next big thing – leading to big profits.At home, agencies are grappling with many issues that will continue well into 2016.
Globally, between April and June, Results International reports that there were 246 mergers and acquisitions compared with 218 in the first quarter and 199 in the same period in 2014.
US media commentator and former agency owner, Gord Hotchkiss, told The Media Online this reflects some desperation on the part of big agencies. “Small agencies and shops, because they’re more specialised and closer to either the respective technology or the client, tend to evolve more quickly. These advantages are negated upon acquisition – the merger generally kills exactly the qualities they’re trying to acquire,” he said.
There were concerns that these acquisitions could impact on creativity, with Joe Public’s Pepe Marais saying the buyouts could lead to “a loss of culture, independence, independent thinking and entrepreneurial spirit post-acquisition. Being driven by margins doesn’t always serve the best interest of clients and ultimately, profits and dividends leave the country rather than circulating within our economy”.
South African agency guru, Omnicom’s Gordon Patterson also believes that global presence can deliver opportunities and the chance to learn new skills.
Talent and transformation
Talent. Finding it, keeping it and promoting it. This issue will continue to top the media agency agenda in 2016. Local agencies agree that the media agency talent pool is shallow and that it needs to find depth and transform, especially at the top, is without question.
“The media industry isn’t seen as sexy and therefore not considered as a career for school leavers. This needs to be addressed at industry level,” says Helena Durandt, partner at Mindshare in Cape Town. To combat the perception, the company, together with universities, identifies potential “stars” and supports them with bursaries and employment opportunities.
Ilan Lazarus, managing partner at PHD Cape Town, says the influx of young talent “remains an important issue, with the majority of students, for some reason, deciding to follow other disciplines within the advertising and marketing industry.
“This is a pity, as we’re losing out on talent, particularly on the digital side but just as importantly, the demand for media planners significantly exceeds the supply. This leads to high staff turnover, excessive salary increases and general instability,” he explains.
The MediaShop’s MD Chris Botha believes the industry is doing “an ok job of getting young black talent into the agencies and up and running”. The problem, he says, is at the higher level.
“What we’re not seeing is the graduation to media strategists, and the promotion to management. We’re lacking in this area – 21 years
later,” Botha says. “It’s a sad indictment on us that there’s not a single major media agency in South Africa that has a black CEO. The challenges are understandable.
“Our margins are paper thin, and invariably we lose good staff to big paying jobs on the client and media owner side the moment they show some management potential.”
Like Botha, joint MDs at Vizeum, Tanya Schreuder and Richard Procter, agree the talent pool at entry level has grown larger, but is “almost non-existent” at leadership level. Of equal concern, though, is the challenging “skills transfer between offline and online. “There is more demand than supply. We cannot up-skill quickly enough and there’s not a large enough skills pool out there,” they say.
Carat’s strategy directors Graham Deneys and Ilse Gräbe raise the issue of talent in Africa. “Our commitment to growth and skills development in our own network (Dentsu Aegis) goes way beyond SA borders, as our strategy team is tasked with expanding and supporting talent within our sub-Saharan (SSA) network,” say Gräbe and Deneys.
“Strategy training workshops take place and continue from our SSA Hub to local market partners. We also introduced the DAN Academy, an online, learning course open to the entire SSA Dentsu Aegis Network – we have an ‘always on’ approach to developing talent.”
It’s been a turbulent time for media research, and while progress has been made, there’s still much to be done. Botha pulls no punches. “The research time bomb is ticking and we’re all staring at it. Digital is still treated like the redheaded stepchild by so many, while the consumer lives on the platform. We have a long way to go to fix these issues,” he says.
Lazarus says it is “imperative that the credibility and independence of the research be protected” and that uncertainty in the sector will continue next year. “It’s a complicated issue – ultimately marketers need to contribute financially to the research. MASA and the AMF have been actively involved and engaging with the industry, so hopefully this will be resolved soon,” he says.
For Omnicom CEO, Josh Dovey, media research is THE issue, now and next year. “Making sure that our world-class industry research continues to function as it should is a work in progress,” he says.
It’s all about the budget
The financial and political upheaval in South Africa is affecting the agency sector. As Dovey says of 2016, “It’s going to be a tough market for advertisers and agencies alike”.
Durandt and her team believe that given the challenges facing the South African economy (and the rest of the world), budget cuts are a frequent reality.
“This challenge is further amplified by clients still having the same expectations for delivery,” says Durandt.
Further issues have been raised about the production time required (and often costs) for the delivery of media assets that need to be live for a given period. With media often being affected by what happens in the world (a trend, news, sports, politics etc.), we’re expected to have media assets that are relevant and suitable to that scenario/situation.”
Digital integration is imperative, agencies agree. “The days of the stand alone digital media agency are done. If you consider that even within digital agencies there’s a massive evolution taking place (no more just CPM buy but also dealer side platforms, performance buying and social buying to boot), plus the massive skills differential between the search team and the display team you realise that digital is a different and changing beast,” says Adrian Hewlett, CEO of Publicis Machine.
“Now traditional media buying agencies need to figure out how best to operationalise an integrated team and offering. What’s the most efficient way of servicing a client with traditional and digital planning and buying skills without sacrificing the level of specialisation.
And this in an environment where the clients procurements departments keep driving down the pricing model of the agency. So to say there is a mode challenge might be an understatement.”
Durandt says clients increasingly demand integrated teams working on their accounts. “Digital will no longer be seen as a specialist planner role but rather just as another medium. Staff train continuously for this and we’re tapping into the Mindshare network for skills,” she says.
Lazarus says PHD strongly endorses that digital be fully integrated with non-digital channels. “The need for hybrid strategists is now imperative, with planning across both digital and non-digital, not simply outsourcing the digital to separate digital agencies, or divisions within the agency groups. At PHD, we’re far ahead of the curve, having now brought Google, Instagram and Facebook in-house, as well programmatic buying,” he says.
Botha says transformation, media research and digital transformation are equally important. “As an industry we score incredibly poorly – I don’t think we cracked any one of the three. They’ve been briefly touched on, flirted with and toyed with but haven’t been seriously addressed or offered real solutions. I don’t believe there’s been 100% commitment from all stakeholders to fix them.”
Trends for 2016
“The expected trend is to provide a more intelligent and targeted media solution to clients based on data and what it can tell us about our consumers. This will impact digital media as well as the more traditional channels. We’ll also see a need to provide a better way of showing value to clients across all media channels and how they all influence each other.
Mindshare have a compelling global programmatic offering that’s currently being tested for SA and will be used to provide a more targeted approach to digital media.” – Mindshare
“The move to digital is old news. Those who aren’t on board have missed the train. Programmatic media will continue to grow, and become more of a buzz. Data will become an even bigger issue. South Africa is still pretty light on real data analytics from clients and third parties.
We will all live in a time with new research paradigms. We’re going to have to get used to and prepare for a life without AMPS. Smart media people will be on their toes.” – Chris Botha, The MediaShop
“Print adspend will remain under pressure due to increasing advertising costs and declining performance. There’s no doubt that digital is a major recipient of the declining print spend, as is television. Dual screening already exists although the majority of advertisers are not yet applying the syncing technologies to benefit effectively from time-synced multiple messaging. The television environment is set to change considerably with the imminent (and eventual) launch of DTT.
Audiences will become far more fragmented and it’s likely that CPP levels will steadily increase. It’ll be interesting to see how the television networks handle their rate increases, although we anticipate media inflation at approximately 12% in 2016.” – Ilan Lazarus, PHD
“The biggest trend is being able to offer a client a truly integrated solution that is channel agnostic without sacrificing skills associated with specialisation. We need to take a further step up in the IP sector and play a far larger business consulting role – to help businesses transform and grow.
To be successful in this we need to talk more than just media or advertising, we need to be business consultants. You might say we need to take the Deloittes and Accentures on at their game rather than wait for them to play in the advertising world.
This means investing in a different type of skill set for agencies, expensive people who will add further brainpower to our business. This investment in people will take time to deliver a return, but it’s vital to securing our future as a sector.” – Adrian Hewlett, Publicis Machine
“Sub-Saharan Africa: commercial opportunities beyond our border, where agencies will look north for growth. Increasingly, global clients are leading this trend and agency groups are investing in growing their SSA footprint.
Consolidation to full service vs. specialist model: clients want a single source solution which involves functional ecosystems managed by their media agency partners. The same can be said in the creative sphere, where more digital agencies are either merging into traditional agencies or crossing the line and producing offline work.
The on-demand consumer will define how we plan and how media owners will sell and remain relevant. For example, ShowMax and Netflix commercialises the shift from broadcast to on-demand and the availability of Catch-Up on Compact broadens this trend.” – Tanya Schreuder and Richard Procter, Vizeum
This story was first published in The Media Yearbook, an annual title of Wag the Dog Publishers.
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