Tuesday 7 November 2017

Afro Leo

South Africa’s ASA launches funding model

Resurfacing from business rescue just over a year ago and a series of AGM’s in April this year, the ASA has continued to make steady progress back to recovery. Yesterday it launched its  voluntary 0.1% funding model from advertisers.

It works like this. Marketers will be able to opt in to pay .1% of levy on all advertising. So, if an Ad costs R10 000 then R10 will be destined for ASA funding, collected by media buying agencies. If the ASA is over funded then the levy is adjusted downwards. 

R15bn of advertising is placed through media buying agencies annually. If there is a 50% opt in to the system that will work out to  approximately R7,5 million per annum for the ASA, enough to cover operational costs.

According to the Business Rescue report the ASA required an initial amount of R5 million to cover its historical debt and a further R3 million to keep it going in the short term. Roughly two thirds of this has been achieved through pledges and up front competitor complaint payments by 40 companies, including one law firm, ENS Africa. You can view the list here.

Internationally, this model is not dissimilar to one the one used in the United Kingdom whereby a .1%  voluntary levy is charged on the cost of advertising space and .2% on some direct mail collected by independent third parties. They also charge for seminars and premium industry advice services.

Over the past month the ASA has made 20 Rulings which are published on its website here. It has also announced that it is moving to a new address in Parktown North (no 5, 7th Avenue). 

Prior to that structural and lobbying changes and commitments have been well documented on this blog here (Herbex decision), here (Business Rescue recommendations and AGMs), here (Schimmel appointment and interview), here and here (funding updates).

The steady progress of the ASA in achieving its goals is commendable. It will be interesting to see if relatively high competitor complaint fees introduced a few years ago will be reduced if the .1% funding model achieves traction. With Herbex out the way, the ASA can now also focus on a potential large damages claim which was set down for 18 March 2018, according to the Business Rescue report. It will also be interesting to see how the National Consumer Council will respond to this resurgence and the ASA's withdrawal of their wish to become an ombudsman. 

Afro Leo

Afro Leo

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