SABC Crisis, Recession Deal Blow to Advert Producers
The financial crisis at the SABC and the global recession have hit SA's advertisement production industry, with a 14% decrease in the number of adverts produced in the 2008-09 financial year to April.
Jacques Stoltz, senior marketing manager for the Gauteng Film Commission, who commissioned the survey with the Commercial Producers Association of SA, said the next set of results of the R1bn industry was expected to show even greater decline.
He said the effect of the SABC's financial situation only really began to be felt towards the end of the year when companies stopped placing advertising after popular shows were taken off the air. Also of concern to the two industry bodies is that turnover per advert increased 21% during the period surveyed, despite fewer adverts being made, suggesting the industry may be charging too much. The advertising industry relates to film advertising for cinema, television and on-line.
Stoltz said the industry should make sure it did not price itself out of the market, forcing clients to turn to cheaper markets such as Latin America and Eastern Europe. "The costs of production companies are going up when demand is dropping, and it's worrying that SA could become less competitive when we should be cutting costs. "The currency exchange rate used to be more competitive which made it even cheaper for overseas companies wishing to film commercials here."
According to the fifth Commercial Producers Industry Survey 2009, which surveyed 34 commercial production companies, mostly members of the Commercial Producers' Association of SA, the total billable value for advertising productions in 2008-09 was R970m. More than 672 adverts were produced, of which 63 were shot in high definition.
The average budget per advert was just less than R1,5m.
Gauteng is the most popular location for adverts to be shot, followed by the Western Cape. In the survey, 50% were shot in Gauteng, up from 48% in the previous survey, against 45% in the Western Cape, down from 46%.
The Western Cape is still the destination of choice, however, for foreign advertising agencies, which means it had a higher turnover than Gauteng, bringing in R583m against Gauteng's R385m. Stoltz said the industry was showing a greater move towards freelancers, in line with global trends.
It was felt the industry still had a way to go in advancing previously disadvantaged sectors of society, with only 40% of full-time employees being blacks or women, while 89% of part- time employees were previously disadvantaged.