The advertising industry needs a major creative revamp to regain its spark as it grapples with cost pressures from clients and the rise of artificial intelligence (AI) that is encroaching on human tasks and posing a threat to the industry.
Once ranked among the top 10 advertising industries in the world, South Africa has gradually been slipping over the years with an industry veteran blaming this on the mediocre products the country is delivering.
Joe Public co-founder and group chief creative officer Pepe Marais says the industry has lost 30%-50% of margins in recent years.
“I have a firm view on this ... we can say it’s economic, yes clients are cutting back. We [in advertising] always feel it first. But that’s not that. In my view, because our top line hasn’t reduced by 30%-40% our bottom line has reduced. So that shows to me that either there’s a problem with our efficiencies, with our process, or with the value that we give to clients, and I think there’s a mix of all of it.
“I would say, one of the challenges we face in the industry is that our output has become mediocre. We have lost focus. Because remember, 25 years ago, this industry was one of the top five in the world, and on top of that, it’s become a much more inclusive and diverse industry.”
Marais said diversity is the cornerstone of creativity and brings with it different views. And, as such, the industry should have a higher creative output.
Despite our talk, we have taken a few steps back; specifically as it relates to the quality of our work ... I have felt strongly that something must be done and that we need the collective will to do it
— Luca Gallarelli, group CEO of TBWA The Disruption Company
“Creativity is our sustainability. That’s why I’m very passionate about driving this agenda because you have to first be sustainable as a business before you can even sort of help the bigger narrative in the country. But our sustainability depends on creativity, so we have to be more diverse. But the inverse happened.”
Joe Public, founded in 1998 by Marais and Gareth Leck, has undergone a number of changes over the years including in ownership. Four years ago, black employees bought 60% of the company. As a result, for the second consecutive year, Joe Public scooped the large agency of the year and transformation awards at this year’s Financial Mail AdFocus Awards held this week. Its marquee clients include Chicken Licken, Nedbank, Cell C, SAB and Clover, which has been a client for 21 years.
According to Marais, part of the decline in the standard of work being produced is due to globalisation. About 95% of the local advertising industry is owned by US and European companies as part of the global trend of integrating full service, from product design, development, marketing and communications to advertising.
Marais said while he is not pointing fingers at international investors, “at the same time, and I know this because we were part of an international group, we could see where the focus was. The focus was on return on investment. So the business leaders of our industry are more focused on return on investment for shareholders than actually doing great work for the clients.”
According to Marais, there are very few outstanding adverts nowadays whether in print, broadcasting or digital.
“On TV you will watch 10 to 30 adverts, how many of them will you tell friends about? Our output has become very mediocre.”
Luca Gallarelli, Group CEO of TBWA The Disruption Company, wrote in the AdFocus supplement that 2024 has been a year of refocus for the sector.
“It’s been a year in which the industry took a long, hard look at the years that have preceded it and realised that despite our talk, we have taken a few steps back; specifically as it relates to the quality of our work. It’s been a year where for the first time I have felt strongly that something must be done and that we need the collective will to do it.”
Joe Public, which earlier this year opened an office in London, constantly measures its creatives and work produced. “We have a mix of work and it’s not like every single piece of work is this amazing work that everyone talks about.”
He explains that if 60% of work is short-term, which will always be there, the remaining 40% should be brand work that stands out.
According to Statista, advertising spend in South Africa is forecast to reach $2.16bn (R38.8bn) by the end of this year. The largest market is TV & video advertising with a market volume of $701.7m (R12.6bn) in 2024. About 50% of total adspend in SA is projected to come from digital sources by 2029. About 83% of revenue will be generated through programmatic advertising by 2029.
Programmatic advertising is the use of software to buy and sell digital ad space. It uses algorithms and machine learning to collect data, segment audiences and provide ads for the right users to drive impressions and improve returns on investment. This is driven by the increasing use of AI.
Marais said AI in the advertising space is especially used in conceptualisation and pitching. It saves costs and time and fast-tracks output. So far it is not taking jobs from human beings but is more of an enhancing tool that almost takes care of the menial tasks and allows more big thinking for the big tasks.
He believes that short-term projects such as promotional sales will work with AI for faster turnaround, while 40% of brand work can be reserved for humans.
“I think there will still be room to use human beings ... their ideas, their emotions, their thinking, their insights, their storytelling. But if we don’t change as an industry, AI can actually take all those people's jobs, because it would probably make those ads better than we make them at the moment.
“Some clients are already producing some short-term adverts in-house using AI.”
