B-BBEE Advertising Marketing Sector Codes: How Agency Ownership and Skills Development Shape Who Wins Work

The Marketing, Advertising and Communication (MAC) Sector Charter sets a black ownership target of 45% for firms that derive more than 50% of their profit from the sector. This is markedly higher than the 25% target of the generic B-BBEE codes. The Department of Trade, Industry and Competition confirms that the sector code's higher ownership target was negotiated and agreed by industry stakeholders.

What the Codes Are and Which Firms They Cover

The MAC Sector Charter applies to advertising, public relations, and communication as marketing vehicles in all media, including digital platforms. The code is applicable to companies that earn more than 50% of their profit from the marketing, advertising, and communication sector.

On to measuring BBBEE compliance: The Charter adds industry-specific rules on top of the generic government codes, but where the Charter’s measurement principles differ materially, the Codes of Good Practice take precedence, the Charter says.

Why Ownership Matters Most in This Sector

The MAC Sector Charter has a black ownership target of 45%, with 30% reserved for black women ownership, to be achieved by 31 March 2018; that is a more demanding target than the generic code’s 25% threshold. The Department of Trade, Industry and Competition says the Charter’s higher target was negotiated and agreed by industry stakeholders.

How B-BBEE is Measured in Law

The Broad-Based Black Economic Empowerment (B-BBEE) Act spells out key elements on which firms are measured, including:

• Ownership: Measures effective ownership of entities by black people. This is a point of particular tension in the marketing sector.
• Management Control: Measures effective control by entities by black people.
• Skills Development: Measures the extent to which employers develop the competencies of black employees and black people internally and externally.

Simply having a black CEO is not enough. The Act requires firms to achieve certain sub-minimum targets.

The Points and Sub-Minimums That Can Sink a Rating

The B-BBEE codes impose strict sub-minimums on key elements. As published in the 2019 Codes gazette, the sub-minimums that agencies must aim for are:

• The Ownership sub-minimum requirement is 40% of Net Value
• The Skills Development sub-minimum requirement is 40% of the total weighting points excluding bonus points

Who Polices the Sector

The MAC Charter Sector Council oversees implementation and monitors compliance with the Sector Code, and provides guidance on BEE matters in the MAC sector, says the government.

What This Means for Pitching for Work

The MAC Sector Code's 45% black ownership target, combined with the Acts sub-minimums on ownership and skills development, mean that an agency's ownership profile is critical. A firm that fails to meet the ownership sub-minimum of 40% of Net Value risks not qualifying for its intended B-BBEE recognition.

An agency cannot finesse its way around these requirements. The generic codes' definition of "B-BBEE enterprises" is clear: these are enterprises whose B-BBEE score has been verified by an accredited verification agency, whether on a sector scorecard or the generic scorecard.

Conclusion

While the practical effect on marketing agency tenders is not specified for a particular agency or client, it is clear that ownership profile, together with skills development, cannot be treated as an add-on that only comes into play at the end of a pitch. Unlike in other sectors, where ownership is sometimes described as a curveball final-round question that firms then strategise around, in the marketing advertising and communication sector, ownership is legally core to the scorecard, not a soon-to-be-forgotten subtext. The sector-specific Charter plus the generic code sub-minimums require it.