Business and Economy

BEE bug bites South African advertising industry

From left to right: Brenda Khumalo (ID’s acting managing director), Qingqile Mdlulwa (ID’s executive creative director), and Mosidi Seretlo (ID’s non-executive chairperson). Photo: Supplied

The implementation of the black economic empowerment (BEE) charter in the marketing, advertising and communication (MAC) industry is jolting owners of established white-owned South African and multinational agencies into action.

A few BEE deals have been concluded this year as the MAC industry attempts to overturn its notorious image of being a resistor of transformation and marginaliser of black professionals.

The industry is also racing against the clock to meet a 45% black ownership target by 31 March 2018, which is stipulated in the MAC charter that was gazetted in April last year by Trade and Industry Minister Rob Davies.

Award-winning advertising agencies Ireland Davenport (ID) and M&C Saatchi SA Abel have sold stakes to black investors. ID increased its black ownership from 25,1% to 51% when it concluded a series of BEE transactions that brought in seasoned marketing professionals Brenda Khumalo, Mosidi Seretlo, and Qingqile “WingWing” Mdlulwa as investors.

In January this year, black-owned Avatar Investment Holdings (AIH) and M&C Saatchi Abel concluded a BEE deal that resulted in each of the agencies acquiring a minority stake in each other’s operations.

As part of the transaction, AIH – cofounded by Zibusiso Mkhwanazi and Veli Ngubane – acquired shares in M&C Saatchi Abel, M&C Saatchi Africa, and three M&C Saatchi subsidiaries, namely digital agency Creative Spark, media agency M&C Saatchi Connect, and Dalmatian Advertising.

In reverse, M&C Saatchi acquired a 20% stake in Avatar360, an advertising agency owned by AIH. Since concluding its BEE deals, ID has improved its B-BBEE rating to Level 1 from Level 2.

“We are extremely thrilled by the progress we have made in a short space of time to reach our transformation targets. Our efforts have culminated in ID attaining the Level 1 B-BBEE status, which is a historical milestone for the company as it has never been achieved before,” said Brenda Khumalo, who recently joined ID as acting managing director.

“We have transformed ourselves into a black-owned and operated agency that is committed to serving the needs and aspirations of our clients from all walks of life.”

Mdlulwa, who is ID’s executive creative director, said the transformation that is currently unfolding in the advertising and marketing sector is something that should be welcomed, but he also cautioned that more work has to be done to achieve true and meaningful transformation.

“The slow pace of transformation in our industry has been one of its biggest bugbears that made many black professionals deeply disgruntled,” he said.

“For a very long time, we were sitting with a situation where the sector was dominated by multinationals and white-owned independent agencies that were getting a big share of the marketing spend, despite have little or no black ownership. We are hopeful that the implementation of the MAC charter will address this aberration.”

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