What's the beef with SABC ad rates?

And let's face it, everyone else is doing it. Car manufacturers in the past few years have shamelessly pushed prices to what the market will bear and ordinary South Africans have sold their houses for astronomical prices – far outstripping the SABC's ad rate hikes.

So, what's the beef?

SABC monopoly

Well, the problem is clearly that our media is not working in a free market economy by any stretch of the imagination. And particularly not the SABC, which in television and even radio terms still not only has an effective monopoly but is also sitting in a very privileged position, being the only benefactor of TV licence fees.

When one has a situation where there is too much advertising chasing too few media, the playing field is by no means level. And, in spite of arguments and whining from broadcasters that the country's 150 odd radio stations means that the market is saturated, the reality is that if one compares this country with other free markets, this SA will not have too many radio stations until the total reaches somewhere nearer 900.

The same applies to TV stations and, frankly, the whole process of licensing new players now being undertaken by ICASA should have been done years ago to avoid any situation whereby advertisers could be held to ransom.

TV ad noting declining

And in spite of adspend having doubled in the past few years, it is abundantly clear that advertisers on television are battling to budget for these huge increases because research shows that public awareness of advertising campaigns is decreasing. Which suggests that instead of simply increasing budgets advertisers are simply having to lower the frequency of advertisements – a dangerous marketing practice, given the critical nature of frequency in advertising performance.

But largely also, the beef is about how the SABC goes about these things. It shoots first and maybe, possibly, occasionally, answers questions afterwards.

Frankly, were I a media owner such as the SABC, I would be really worried about the fact that some of the most important media buyers in the country hate my guts. Right now, the SABC is playing a dangerous game with its own brand loyalty and, come the day that media buyers have alternative options, they will turns their backs on the SABC with relish.

Arrogant desperation

In my opinion, while the SABC is perfectly entitled to jack up its rates as high as it wishes, there is certainly a combination of desperation and arrogance in it all.

Looking after important customers has taken a back seat to the desperate need for additional revenue to pay for, among other things, the horrendously high cost of local content and pandering to the often pie-in-the-sky-all-things-to-all-men whims of parliament.

Then, of course, one has SABC CEO Dali Mpofu commenting in Business Day that this was not a matter for public domain.

Public domain

Now there's arrogance for you. Not only is the SABC a public entity but the recipients of advertising are consumers and they are the people who actually have to pay for the advertising, which does not come out of company profits but simply loaded onto products as a cost of sales element. The public have every right to know what the SABC's motives are for these mind-boggling increases.

Frankly, I detect an air of desperation in all this. When every now and then SABC has a look at what money comes in and the torrent that pours out, it has only two options. Try and get more licence fees coming in or resort to that good old favourite – the advertisers.

Given the SABC's pathetic attempts to get TV viewers to pay their licences (only a tiny minority of them do), it's far easier just to jack up ad rates.

So far the advertising industry and the media buyers who hold those R20 billion purse strings have been patient and dignified about their protests. But, they are all becoming very, very tired of being held to ransom and are running out of explanations to their clients. Sooner or later there will be a backlash.