Local or foreign control of an industry? This was the debate recently after government blocked MTN's merger with India's Bharti Airtel - having previously interfered with the listing of rival Vodacom and its relationship with British major shareholder Vodafone.
If the same spotlight were cast on the media and advertising sector, nationalisation proponents would throw in the towel. Much of the SA advertising and communications industry is controlled by foreign multinationals.
At least 70% of SA's 10 biggest advertising and media agencies are owned by WPP, Omnicom, Interpublic Group (IPG) or Publicis Groupe - the world's largest communications services groups. Also playing in this space, but on a smaller scale, are UK-based Aegis Group, whose agency Carat in SA was picked as Nokia's global media partner this year; and France's Havas, which owns advertising agency Euro RSCG SA.
Though some of these groups have been operating in SA for 30 years or more, their infiltration is growing. For example, SA-linked advertising brands in the London-based WPP group network include Grey, Ogilvy, Young & Rubicam and JWT. Sister media agencies include Mindshare, Nota Bene, Mediaedge:cia and MediaCompete.
Omnicom has TBWA, BBDO, OMD and Interbrand; IPG includes McCann-Ericsson, Draftfcb, Lowe Bull, Initiative and The Media Shop; while Publicis controls Leo Burnett, Publicis, Saatchi & Saatchi and Starcom.
Within the local agency groups are also networks of digital, public relations, branding and other activities.
Though sharing common parentage, executives insist their agencies operate independently and in direct competition with each other. Well, most of the time. Mediaedge:cia and Nota Bene make no secret of the fact that their services complement each other. And when MediaCompete lost the huge MTN account a few months ago, it stayed in the family at Mindshare.
McCann Worldwide CEO Reinher Behrens says SA's attraction to foreign groups is the efficiency and ability of local agencies to compete globally. Add to that the fact that SA is a developing market with growth prospects - something which can no longer be said for many Western markets which are on the verge of saturation.
SA is also being used as the springboard into Africa. WPP, for example, wants to increase the share of total revenue from developing markets, such as SA, from the current 25% to 30% by 2013.
However, Joe Public MD Gareth Leck says foreign purchase of local agencies has caused the SA industry to lose some of its spark. "It has killed the spirit of entrepreneurship that made SA advertising exciting. It's probably why people say the heyday of our advertising was the 1980s when most agencies were owned by people, not corporations."
Leck knows all about independence, having led the buyout of his agency from IPG-owned Draftfcb SA in January 2009.
When SA opened its doors fully to the international community after the first democratic elections, one of the first advertising agencies to be bought was Hunt Lascaris, founded in 1983. Cofounder Reg Lascaris says the sale - which turned the agency into TBWA\Hunt\Lascaris SA - was a practical business decision but also "bitter-sweet". He says: "If you're going to play in the world, you have to have foreign partners."
TBWA\Hunt\Lascaris SA is 70% owned by Omnicom. The group's empowerment partner, businessman Cyril Ramaphosa's Shanduka Group, owns 25% and the rest (5%) is housed in an employee share trust.
Benefits of partnership for local agencies are that they can expand into new markets, particularly in Africa and the Middle East, and work on international accounts. Globally held accounts often trickle down to local affiliates. However, the benefit is often more in experience and prestige than income. Locals are frequently left out of fee negotiations by their London and New York parents.
There are dangers in this trickle-down philosophy, says Behrens. There have been examples of SA agencies doing great work for global brands within SA, then losing the account for reasons not of their own making, when the international agency and client have differences. Publicis and JWT SA, for example, have retained blue-chip clients for decades through the quality of their work, but they are also aware that some names are shared with international parents.
Other agencies have worked hard to diversify. Draftfcb SA has built up a strong client base of SA corporate giants such as Vodacom, Toyota SA and Old Mutual.
One of the commonest complaints about foreign ownership is the big-brother treatment meted out to local media and advertising agencies. Even minor decisions sometimes have to be approved by accountants thousands of kilometres away.
But the benefits of international associations apparently continue to outweigh these considerations. In January 2009, The Jupiter Drawing Room, SA's remaining large independent advertising giant, sold 49% of its business to WPP.
WPP's previous foray into the SA market was in 2007, when it bought digital services agency Aquaonline.
Jupiter cofounder and chairman Graham Warsop says it was WPP CEO Sir Martin Sorrell's agreement that Jupiter keeps its independence that swayed the agency to sell - that and the prospect of expanding into new markets after 20 years of operating in SA.
The Jupiter Drawing Room & Partners is the brand-holding company. On the next level is Metropolitan Port Authority and The Jupiter Drawing Room SA, which are classified as brand custodians. They are not owned by the same shareholders and pay a licence fee to the brand-holding company for the affiliation.
The idea is that Metropolitan Port Authority (which houses Metropolitan Republic, The Royal Metropole and Metropolis Media Ideas) and Jupiter (which owns the Cape Town and Johannesburg advertising agencies bearing its name) should be able to pursue accounts without fear of conflict of interest. This has enabled Metropolitan Republic to win the FNB banking account while Jupiter retains Absa.
Sensitivities like these have been a source of frustration among globally owned SA agencies, says Leck, whose agency was dropped from a short list for a major account because its sister company within Draftfcb was also on the list. "That was the final straw," he says. Though few would say it openly, some of the agency owners confided to AdFocus that, given the opportunity, they would buy back.
But that's short-term, for working independence. Longer-term, multinational suitors have put dollars and euros into shareholder pockets to compensate for their effort in building up their agencies. Who'll be first to give it all back?
