EDITORIAL: The ACA struck out on Telkom. We need to talk about it.

by The Editors, MarkLives.com The Association for Communication and Advertising (ACA) carries remarkable clout within the broader South African marketing and agency community. It is consistently voted as the most-admired industry organisation by agency execs in our annual Agency Leaders’ Most Admired poll. It plays an important role in self-regulating the advertising industry and has initiated important pieces of regulation, including the MAC Charter, which is assisting in ensuring transformation in the South African industry. Its CEO, Odette van der Haar, similarly holds a uniquely powerful position in the industry.

Such authority, freely granted by member agencies, and which extends well into the broader industry, comes with a set of responsibilities, including the requirement of transparent engagement with all stakeholders. For better or for worse, this includes the media covering the agency and marketing business, as well as member agencies and non-member agencies (which are still impacted by the ACA’s decisions), and the broader marketing community.

At the moment, the ACA finds itself in a troubled position of its own making. If you were unaware of this, it may be because the ACA has clammed up (its limited communication on the issue indicates it considers this a ‘closed topic’) on discussing and dissecting an issue that has already resulted in a major brand shrugging its shoulders at the rules for managing pitches and has seen three important South African agencies having their memberships suspended.

Van den Haar is well-known for enforcing the ACA’s rules on pitches — a call from her has ended the participation of more than one agency in a client pitch (as has been freely admitted by numerous agency execs over the years). This is an extraordinary power that has a real effect on both member agencies (and their people), as well as marketers.

These phone calls seemed to have been less than effective when the massive prize that is the Telkom account pitch swung into view in mid-2017. The brand spent a cool R479 536 387 on advertising in 2016, according to Nielsen Adex, making it South Africa’s 13th biggest advertiser, and a major prize in a slowing economy and with many agencies being stung by the rapid move of adspend to online media (OK, to Facebook and Google, then).

The ACA isn’t the only trade organisation trying to guide pitch processes. The World Federation of Advertisers (WFA) and the European Association of Communications Agencies (WFA/EACA) offer their own set of guidelines to assist marketers and agencies with following industry best practice. Note that the ACA offers “rules of engagement“; the two global bodies offer “guidelines”. It’s an important distinction.

The WFA/EACA guidelines note that a “long list will normally be around six agencies” and recommends that the shortlist should “consist of three or four agencies, including the incumbent if relevant.” On pitch fees it states, “Unless there are local rules or customs dictating the payment of a pitch fee, it is up to the advertiser whether they offer one or not.”

The ACA rules, meanwhile, require that the number of agencies shortlisted shouldn’t exceed five; that only credentials and case studies should be submitted and/or presented by agencies during pitches; and that a pitch fee of at least R50 000, excluding VAT, is to be paid to each unsuccessful agency when agencies are briefed to provide strategic and/or creative work. The ACA rules also notes that intellectual property of agencies, created during pitches, is protected and retained by the agencies, unless paid for (the pitch fee doesn’t count) and that sufficient time must be afforded to agencies for preparation of their submissions. At least fifteen (15) working days are required.

While it is important to guide the industry towards best practice when participating in pitches and tenders, and the process is intended to protect member agencies, as well as marketers, even the best of intentions may have adverse effects. When this happens, it’s important to look beyond intent and at the end result.

When it picked its fight with Telkom, it had no qualms about doing so in a very public manner. The ACA outlined the issues it had with how the pitch process was managed clearly, including on our pages. Similarly, it publicly announced the suspension of members DDB South Africa, Ireland/Davenport (since relaunched as Collective ID) and Wunderman South Africa, after the three agencies were found guilty of transgressing the ACA’s Code of Conduct governing tenders and pitches.

The ACA finally, and once more publicly, announced a committee to hear the appeals from the three agencies, scheduled for 3 August 2017. Then suddenly the doors were slammed shut. When MarkLives enquired about the appeals process or results, Van den Haar told us that “the ACA deems this matter closed and we will not be commenting on it anymore.”

Before we continue, let us state the obvious. The three suspended agencies did indeed breach ACA rules, and we don’t question the right of the ACA to suspend members; however, we do need to point that their suspension is part of the nett result of the ACA’s rules and regulations, and raises questions about how and why we had to come to this point in the first place. This requires open, transparent interrogation and introspection on behalf of the ACA. Even if it decides that its rules and regulations are correct and enforcable, the ACA needs to be seen to be capable of such engagement and self-reflection, which can’t happen when it seeks to shut down discussion through non-engagement.

On the issue of non-engagement, how can the ACA not release the results of the appeal, or not even admit if it is still ongoing? It’s in the industry’s best interest to know whether the initial decision to suspend its members, and announced in such a public way, stands or not. Surely this case goes to heart of the ACA rules on pitches and whether they are, in reality, enforceable?

Still, more than three months of chasing comment, and trying to persuade the ACA to continue communicating on the matter, has yielded no result.

The ACA seems to have simply lit the match and walked away. It now seems possible that the organisation may be taken to the competition commission for anti-competitive behaviour (by limiting the number of agencies that may participate in a pitch). The demand for pitch fees could also constrain the competitive environment by limiting the number of agencies a client may afford to invite into the process.

A new wave of black owned startups have been complaining that the ACA’s demand that only credentials and case studies should be submitted and/or presented by agencies during pitches puts them at a competitive disadvantage (the only way they can hope to be competitive is to present a concept; many start-ups have no case studies yet to put forward) but this seems to have been falling on deaf ears for several years.

That the ACA demanded that Telkom’s incumbent agency not participate in the pitch process, given the number of resulting redundancies the loss of the account would mean, seems cold-hearted. When this is how you treat your own members and their staff, it should serve as a first indication that your process requires a more-thorough interrogation — and possibly a dose of humanity.

The industry, and its wide range of stakeholders, has every right to expect the ACA to engage with it openly and transparently. As a trade organisation, it needs to be responsive, rather than inflexible, and it can’t shirk from taking responsibility for processes and procedures it has put in place, or the consequences which may result. The ACA’s pitch rules, if they are indeed enforceable, need continuous interrogation and engagement. We all need to talk about it. Not least the ACA.

We call on the ACA to open up on the ongoing consequences of its decisions regarding the Telkom pitch and to reengage the industry, including marketers and non-member agencies, on best practice during pitches, as well as to the enforceability of the international guidelines and/or local rules now in place. Now is the time to put egos aside to work alongside one another — openly and transparently — towards the best interest of all stakeholders. If it doesn’t, it fails in its directive to serve its core constituency, and we will all be the poorer for its loss of influence and relevance.

Herman Manson
Simone Puterman

PS: We invite you to add your name to our call for further and substantive engagement on this matter by the ACA. Simply add it, along with your job title, in our comments section below.