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SAARF Principles And Policies On Cooperation With Research Suppliers March 2006

SAARF Principles And Policies On Cooperation With Research Suppliers March 2006

Index

1. Definitions

2. The Nature Of SAARF

3. How does SAARF execute its functions?

4. Relationship With Contractors

5. Implications Of Changes To This Approach

6. The Strength Of The Current SAARF Surveys

7. Availability Of Information

8. In Conclusion

1. Definitions

“Joint industry research”, refers to the Media Audience and Products/brands research, as well as the provision of targeting and market segmentation tools intended for joint use by the industry as industry currencies.

“Stakeholders”, refers to the advertising, marketing and media industries as represented by the members of SAARF as well as their constituent members.

“Research suppliers”, refers to companies or individuals who plan and execute research projects or parts thereof by utilizing resources to do fieldwork, data capturing, analysis as well as the

creation of databases and other delivery mechanisms.

2. The Nature Of SAARF

Some people make the mistake to think of SAARF as a research supplier and seem to think that SAARF and research companies are the same. However, it just seems that way. SAARF and such suppliers are not the same.

SAARF is a noncommercial industry association that acts on behalf of its stakeholders. It is the custodian of the currency for the buying and selling of media space and time and for target marketing. SAARF commissions research and is an instrument used by the industry to provide them with the best and most relevant research that the combined funding of all players can procure. One of the chief reasons for this is the enormous cost of media audience and products and brands research.

SAARF also functions in such a way that the research provision to the industry cannot develop into an unfettered monopoly and especially not a private sector monopoly, such as is found in some other countries.

And lastly, as SAARF is not a commercial entity, all reserves that it might accumulate goes back into research development.

3. How does SAARF execute its functions?

SAARF is tasked with facilitating, coordinating and determining the joint industry research needs of its stakeholders and to ensure that these needs are met within the limitations of the funding available for this activity.

To carry out this mandate, SAARF keeps track of local and international developments, ensure that new approaches are explored and developed, and that the necessary joint industry research programs, which accurately reflect the totality and complexity of the South African society, are implemented, managed, and monitored.

4. Relationship With Contractors

In the interests of good corporate governance SAARF regularly goes out to tender for its different surveys and all research suppliers are welcome and invited to tender.

This ensures that there always is a certain amount of competition for its contracts which leads to keen pricing by the prospective contractors.

More importantly, it also ensures that SAARF does not land in a position where it can be accused of monopolistic practices. SAARF has also used more than one supplier for many years. Previously we had the Research Alliance that consisted of Markinor, Nielsen and DSI and during the later part of the nineties, the contract was given to Nielsen and DSI.

Currently, the contract for AMPS® and RAMS® is handled by Shonigani (a black empowerment partnership between Nielsen and Plus Harris 94) and African Response a black empowerment initiative partly owned by Synovate. This approach has also further strengthened and grown the research capacity in South Africa, something which is for the best of everyone.

The relationship between SAARF and its contractors is thus that of client and contractor.

In the contract with suppliers this is also carefully spelled out as is worded below. The "Relationship of Parties" clause is inserted to clarify the nature of the relationship between SAARF and the research companies ("the contracting parties") contracted in terms of the AMPS®/RAMS®/TAMS® Agreements.

The clause serves to confirm that the agreement does not and should not be deemed to create a partnership or a joint venture. The main risks which flow from the relationship being deemed to be one of a partnership or joint venture and which this clause seeks to avoid are as follows:

A partnership or a joint venture relationship would involve the sharing of profits and losses in the activities related to the contract that gave rise to the relationship, in this case the AMPS®/RAMS®/TAMS® Agreements. Obviously this could not have been the intention of the contracting parties and the clause merely serves to confirm this;

In a partnership, either one of the contracting parties would be at liberty to bind the other contracting party to an agreement without being required to obtain the consent of such other contracting party. The "Relationship of Parties" clause seeks to expressly prevent this type of situation from occurring and expressly prohibits one of the contracting parties from binding the credit of the other.

For SAARF’s directors who has a fiduciary duty as directors of the company this is of particular importance. SAARF and its contractors are not partners or associates. The business relationship is an arms-length relationship and with good reason.

5. Implications Of Changes To This Relationship Approach

The current arms-length approach has the advantages as spelt out above. If SAARF decided to start permanent or semi-permanent relationships with commercial entities, the following problems may arise:

5.1 Other commercial entities might approach SAARF with the intention to form similar relationships. How and on what basis do we decide to work with one company and not with another?

5.2 By doing this we deliver our stakeholders into the hands of what could amount to private sector monopolies. The cost of media audience and products/brands research is such that the chance of more than one company venturing into this field is extremely small.

5.3 SAARF will be open to accusations of monopolistic practices.

5.4 Any such arrangement will have to be carefully structured to avoid any fiduciary implications for SAARF directors.

5.5 A basic reason for SAARF’s existence is to provide data to all players in the industry. Commercial relationships will lead to a situation where only large companies will be able to procure such information, thus reneging on our duty to supply “currencies” that are accessible to all players. With our industry currently undergoing transformation, this will also be particularly detrimental to new entrants into the market place as the playing field will not be even.

5.6 The cost of research will undoubtedly go up if SAARF entered into commercial relationships, negating the current synergies and therefore savings that our stakeholders now enjoy. The strength of the SAARF approach is that we leverage the existing surveys to gain extra advantages for our stakeholders.

5.7 Finally, all SAARF research is done under SAARF brand names so that the investment of the industry goes into the building of industry owned and controlled brand names such as SAARF AMPS®, RAMS® and TAMS®. Research suppliers must therefore understand that when they tender for SAARF projects, the research results will not be published under their brand names.

6. The Strength Of The Current SAARF Surveys

The strength of the SAARF surveys lie in the fact that it links media consumption to product and brand usage or consumption.

AMPS® is not, and never was, just a media survey.

The South African approach, which differs from that followed in the UK, ensures that users can use the surveys for target marketing and for the buying and selling of media space and time utilizing information on products, brands, the SAARF LSM®, activities/lifestyle and a myriad other variables in addition to normal demographics. This is of particular importance in the light of the waning power of demographics. In addition it provides information, as far as is possible, of all media, products and brands so that comparisons can be made based on data from the same survey. The surveys are also structured in such a way that editorial and programme planning can be done, even if sometimes only at a strategic level.

The involvement of industry representatives at SAARF meetings ensure transparency and control over content and thus that the needs of the industry are addressed. The biggest complaint about AMPS® is that we do not include certain “nice to haves” as well as information on attitudes. The latter are currently excluded because it was found that attitudes are not good predictors of future behaviour and the “nice to haves” were excluded by our stakeholders to contain costs.

These exclusions are, however, naturally not absolute and future inclusion would depend on whether stakeholders feel that there is a need for it or not.

7. Availability Of Information

As clearly spelled out in the Articles of Association, all members of SAARF have full access to all information regarding the results, findings and reports of the company, except if otherwise decided by the Board. To ensure fair-play at all times, the findings are also made known to all members at the same time. The Board may, however, determine other terms and conditions on which information is made available.

The information currently gained from the SAARF surveys may be augmented by further research at any time such as for instance by boosting the sample in a specific area or by including any other research whereby the industry’s investment can be leveraged to create more value for the stakeholders. As a general rule, such information will automatically be available to everyone except if the board should otherwise decide. Requests for additions to the surveys are also considered where a specific stakeholder has a very specific need and in such cases the Board may decide to make the data available only to such a stakeholder. An example of this could be specific research by the SABC on one of their stations where they require further information for internal purposes. The latter is however few and far between and is only allowed if we are sure that there will be no detrimental effect on the currency.

8. In Conclusion

All research suppliers are welcome to put in tenders for SAARF surveys and thus to submit themselves to an open, fair and competitive process. It is not SAARF’s function to promote the interests of certain commercial entities or their products and if companies want to work with SAARF, they must do it within the framework provided for everyone and under SAARF’s banner.

No supplier can expect special treatment and SAARF will not jeopardize its position as trusted and objective suppler of credible industry research. All contractors must therefore be willing to submit themselves to an open, fair and competitive tender process and to in-depth scrutiny by industry representatives that serve on the SAARF Tender Committee.

SAARF has never entered into exclusive arrangements with suppliers and it is current policy that competition amongst suppliers be encouraged.

SAARF, and through it the industry, has a long record of investing in media audience and products and brands research. The value of more than 30 years of experience and learnings in this field is incalculable and one of the best investments ever made by the industry and it needs to be protected by all SAARF stakeholders.

 

 
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