The MIT Levy – a case of “what yours is yours and what’s mine is mine”?

One of the central pillars of the South African market’s shared commitment to marketing excellence, a pillar almost totally lacking in other African markets, is access to continuous and reliable marketing data. Data like AMPS, RAMS and TAMS.
Although the media industry has a love hate relationship with AMPS, only the most jaundiced of viewpoints would contest that, when it comes to making soundly reasoned strategic media decisions, the availability of reliable single source data has placed South Africa in a unique position on the African content.
Since inception, AMPS (through SAARF) and the Advertising Standards Authority of SA have been funded by a levy (currently 1%) payable on all above the line advertising activity. Initially demarcated as a separate line item on every advertiser’s media schedule, the levy was collected by the placing agency and paid into the Media Industry Trust (MIT). Over time media owners became responsible for the collection process and the levy was slowly absorbed into the advertising rate card, to the point where it was no longer distinguishable as a levy.
This latter point lies at the heart of the so-called “whose money is it” conundrum.
As we seek to balance competing research needs in a fragmented media environment, there is an acute need to resolve the “whose money” debate. One possible route through the impasse is the current National Association of Broadcasters (NAB) initiative.
Effectively NAB has proposed a joint funding model where rate cards for radio and TV will be revised downwards by 0,5% and a 0.5% non-commission bearing levy added on to the net media invoice. In effect, marketers will once again be directly contributing funds to the MIT levy and broadcasters will match this 0.5% with their own contribution. So the overall levy therefore remains 1%, but is reflected as a joint and equal contribution by broadcasters and marketers. It is being reported that the outdoor industry is considering following suite.
To some this model suggests more transparency and joint accountability but others argue that NAB’s sudden “Damascus Road” experience is really nothing more than an attempt to cut media owner MIT contributions by 50% in the current tough economic climate. This latter perspective postulates an alternative suggestion, that NAB cuts the rate card by 1% and then matches the 1% marketers’ contribution. Certainly the resultant 2% levy would take care of SAARF and ASA operating shortfalls in the short and medium term and nobody could argue that media owners are merely halving their contribution.
Ultimately, the final levy formula should, and probably will, be determined by the funding requirements for each media type and just how much the industry can afford to pay. Because of TV’s specific move towards increasingly sophisticated and expensive research methodologies and technologies, this sector is likely to require more funding than the current 1% delivers. Precisely how much more, will be determined by the SAARF tender process and proposals received from service providers.
Other issues such as “will the NAB continue to pay the full 1% levy on non-agency advertising, or will they effectively bank the residual 0,5%?” are operational but from a macro perspective, one primary concern is that entrenching the principle of different collection models for different media will ultimately further erode the position of the MIT levy. Already it is clear that within the NAB there are divergent views on the needs of TV and radio, in terms of both the actual levy amount and proposed implementation date.
Creating different collection models for each media type on one media schedule is a major administrative task. If the industry is going to buy into a joint funding model for AMPS then it is imperative that there is universal buy in from all media owners across the board, not just the NAB. In particular, Print Media SA (PMSA) must be brought into the fold.
From a media agency perspective whilst NAB may speak as one body for broadcasters, unfortunately nobody can lay claim to speak for every single marketer in the country, particularly global marketers, many of whom appoint their agencies on the basis of long term global contracts. Many agencies have expressed the concern that the client portion of the proposed levy-split, will be seen as a “cost to agency” rather than a “contribution from client” and this means that every contract must be scrutinized by both agency and client.
If marketers and media owners in South Africa want world class data as the minimum baseline for sound media decision making, then there is no doubt that the overall levy needs to increase. And a split contribution, probably the 1% + 1% option, seems to be the most equitable solution. Given the need to align marketers, agencies and other media sectors besides NAB, the proposed implementation date of 1st April gives major cause for concern.
The NAB initiative is a significant innovation and should be given very urgent and serious consideration. This one can’t wait until the New Year for a decision though. What is required, before the end of 2009, is a gathering of all industry bodies, represented by individuals with the authority to sign off on budgets, because unless there is an immediate and sizeable increase in funding levies, both SAARF and, in particular, the ASA may simply not be sustainable in their current form.

Advertisements