Advertisers and agencies smell a cost increase behind TVNZ’s bold move to cut agency commissions to 10 per cent by 2011.
TVNZ yesterday announced the results of a review into agency remuneration. The proposal to halve media commissions to 10 per cent, in January 2011, was met with swift response by industry bodies.
The Association of New Zealand Advertisers warns that “any change from the current practice of commission payments cannot be a cost increase by another name”.
Lindsay Mouat, general manager, says ANZA welcomes TVNZ assurances to the contrary but “we will be watching closely to ensure this commitment is met”.
Likewise the New Zealand Marketing Association is cautious.
Sue McCarty, chief executive of the NZMA, says while she is sympathetic to TVNZ’s commercial realities “it’s our responsibility to ensure that the intent of these changes is upheld. We need to monitor, invite feedback and provide support to our member base alongside other Industry Associations.”
The three organisations have agreed to establish a reporting system to provide an objective assessment of advertising costs and audience across media for advertisers and agencies.
CAANZ president David Walden suggests the TVNZ cut, if picked up by other media, will result in a migration of power and talent to Australia and other larger markets.
“Cut the commission by half and suddenly everyone has to work for even less. How can an agency afford to hire top talent like Andy Blood or Nick Worthington?” asks Walden.
ANZA says the changes will be a catalyst for open dialogue between advertisers and agencies on the best model for agency remuneration.
“Many advertisers have already moved to fee-based remuneration, often with a performance component. TVNZ’s plan will accelerate this evolution,” says Mouat.
Advertisers also share CAANZ concerns over the sustainability of smaller media and creative agencies as commissions reduce. “It is important for advertisers that we maintain a competitive and vibrant industry, where agencies are fairly remunerated for their services,” says Mouat.