BEE in the Know

Marketing, Advertising & Communications Codes now in play

Jenni Lawrence Jenni Lawrence

Until this year, businesses involved in marketing, advertising and / or communication (MAC) have fallen under the general Broad-Based Black Economic Empowerment (B-BBEE) scorecard.

While a MAC sector charter was originally gazetted under section 12 of the B-BBEE Act in August 2008, it was merely published for information purposes initially and it was intended to be a statement of intent by industry players.  Now that the amended codes of good practice have been implemented, so have the MAC Codes.

The new MAC codes have been compiled in collaboration with industry stakeholders including:

The Advertising Standards Authority of South Africa (ASA); The Association for Communication and Advertising (ACA); Communication and Advertising Forum for Empowerment (CAFE); Government Communications and Information Services (GCIS); The Public Relations Institute of Southern Africa (PRISA) and The South African Advertising Research Foundation (SAARF).

 

Gazetted in May 2016, this scorecard is applicable for entities which derive at least 50% of their turnover from this sector, as follows:

  1. Advertising companies - enterprises whose core business is the conceptualisation, creation and production of advertising to foster a relationship between a product and the consumer.
  2. Public relations companies - enterprises whose core business is the conceptualisation, creation and implementation of communication to facilitate a relationship between a product and the public.
  3. Communication companies – enterprises whose core business is the conceptualisation, creation, production and implementation of communication as a marketing tool in two or more of the following disciplines;
  • Advertising
  • Public Relations
  • Experiential
  • Design

The turnover thresholds for this sector differ in that the definition of turnover has been amended to include total sales less cost of sales. Cost of sales is restricted to third party costs that result in the execution of ideas on which agencies receive remuneration.

This is particularly beneficial for the MAC sector, which often incurs 3rd party costs on behalf of their clients in producing and delivering work.

Thresholds for the MAC scorecards are as follows:

Sub industry sector

EME

QSE

Generic

Public relations industry

0-R5million

R5million – R10 million

R10 million and above

Advertising industry

0-R10 million

R10 million – R50million

R50million and above

Marketing, advertising, communication research industry

0-R10 million

R10 million – R50million

R50million and above

So how does the new MAC Sector Code differ from the Generic Codes?

A two phase implementation has been provided for, with the first set of targets in place until 31 March 2018, and higher targets in some areas, thereafter – i.e. from 1 April 2018.

For Generic sized companies (businesses with a turnover greater than R50m), or PR agencies with a turnover greater than R10m, the following differences are significant:

  • Black ownership targets have increased from 25% to 40% (and 20% for black women ownership). These targets increase in phase two, to 45% black ownership and 30% black women ownership;
  • Lower targets for skills spend are in place –but this increases in phase two.  We see an emphasis on training people through learnerships and then absorbing them into employment, with 10 points awarded here instead of the 5 in the general amended codes. This feeds into the apprenticeship model in which so many of the industry’s workers first cut their teeth.
  • Higher second phase procurement targets have been set for qualifying spend incurred with QSEs and EMEs.
  • The socio-economic development target increases to 2.5% (as opposed to 1%) of net profit after tax (NPAT), in the second phase.

A new element has been introduced, under the heading “Responsible Social Marketing and Communications” (RSM)

Five (5) points have been allocated to this element, with an initial target of 1% of NPAT and a 2018 phase 2 target of 2.5% of NPAT.

This element measures the “annual value of contributions and participation in sector-specific programmes of the entity to promote responsible behaviour changes in line with Government’s strategic objectives”.

In the codes, it is stated that this is “measured by the contribution which MAC entities make towards the promotion of responsible social marketing through involvement in a programme designed to propound, propagate and entrench responsible social marketing:

  • Attendance of sector RSM initiatives
  • Attaining no adverse RSM rulings for the year under review

Although not specifically stated, it appears that the requirement for this element is related to the cost of supporting RSM initiatives, as well as not contravening any requirements that may result in a ruling.

This section mentions the dire consequences of obesity and drunk driving as examples of programmes that would be considered under the RSM element.

To discuss your BEE certification requirements according to the MAC codes, or for further information, please contact us.

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