Black advertising firms must consolidate to grow

Our business approach hasn’t done much to help transformation and we need to review that to find a way forward as we seem to be stuck and helpless.

Vula Mthimkhulu

A young turk from the South African advertising industry, Lufuno Makungo, has launched an extraordinary challenge to fellow black advertising professionals to get their house in order if they are to realise fruits of the transformation project.

In a piece, styled as a review of transformation in the advertising industry, Makungo makes a call for consolidation amongst the many small black advertising firms.

Transformation, says Makungo, is not just about what white people need to do but also about what we need to do as black agencies to help speed it up. “Just being black is not good enough,” he says.

“Our business approach hasn’t done much to help transformation and we need to review that to find a way forward as we seem to be stuck and helpless.”

Makungo is a director of a small firm called MKT Media which is one amongst an expanding base of the many entities established by black professionals who do not see a future inside the big white controlled firms. This development makes for a clumsy picture which can be characterised as a sea of Spaza Shops. Many are niggling at the periphery. Indeed it can be argued that HerdBouys was the first and the last black controlled advertising agency which shook the core of the industry. Since HerdBouys was sold and became HerdBouys Mccan-Erickson in 2004, the pursuit of black control has only known diffuseness.

Makungo says “We have so many small black advertising agencies in South Africa and they all complain about transformation and black empowerment because they are struggling to get business. The reason why they are struggling to get business is not only just because they are black but because they also lack the capacity to handle big accounts.”

He adds “You are not going to be given business just because you are black-owned as there are other key requirements that you also need to meet. There is an option for all these small black agencies to merge and form a one big agency that can help transform the industry but they won’t consider that because their main agenda is not transformation but personal gains camouflage as transformation.”

Makungo further notes that “The business landscape is very competitive across all sectors and it will only get worse with time so being independent for the sake of independence is not going to grow your business.”

According to the research, says Makungo, Microsoft has acquired over 146 companies and purchased stakes in over 60 companies since its establishment. “Facebook has acquired more than 40 companies with its largest acquisition being the purchase of WhatsApp. Google has been acquiring, on average, more than one company per week since 2010 so this tells you that even big companies that you think can handle competition understand where the growth of their business lies and this is the thinking that most black start-ups lacks.

“Even big international communication groups like WPP, Omnicom Group, and Publicis have been growing not only through winning accounts but largely through mergers and acquisitions based on their business objectives.”

He said transformation is not just about having 100 small black-owned agencies but having black agencies with the capacity to handle any account. “All these small black agencies find themselves competing against each other for small businesses and they pose no major threat to big agencies like Ogilvy and FCB as they lack the capacity to compete at that higher level.

“For transformation to happen we need to be very clear with regard to what needs to be done rather than everyone just free styling or trying to start something just because they are black. If we are going to put personal gains ahead of transformation then we are not going to transform, we will just continue to fight and compete against each other for small projects that are not even sufficient enough to sustain us.

In a way Makungo’s lament can be interpreted as a longing for a HerBouys of sort. It is part of a well-established reminisce. In his biography, Doing Time, Peter Vundla who is one of the founders of the original HerdBouys makes a point which can be interpreted to be saying that selling out of the firm was a mistake. The home for black professionals was lost. Vundla writes that “None of us was prepared for the resulting backlash from the largely black community who felt that we had sold out the movement.”

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