David Walden, president of CAANZ, says TVNZ’s ‘review’ of commission structures is a thinly disguised move to improve its margins.
“As far as CAANZ is concerned, this is a TVNZ initiative aimed at improving its financial performance,” he writes in a formal response from CAANZ.
TVNZ claims the industry is seeking change. However, Walden and CAANZ know of no member “demanding wholesale change of the existing commission structure”.
As reported in Tuesday’s StopPress newsletter, not all agencies are as concerned by the review.
Experienced media buyer Glenda Wynyard of the Media Counsel says the change is already occurring, albeit in a piece-meal fashion. “The reality is that media buying agencies either work on a fee structure or a vastly reduced commission-based structure—which may be based from either a net or gross media expenditure base. The non-existence of commission in other markets has very little impact upon the media agency communities.”
However, Wynyard agrees that TVNZ is potentially hiking rates with the move.
“The issue is whether or not media owners use the removal of commission to implement a surreptitious rate increase; and this will impact upon our mutual clients – not the agencies.”
Of more concern than commission, she warns, is a slide towards late payments of invoices – an issue causing cashflow shortfalls in all businesses.
“It is a well known fact that many agencies, particularly the global agencies have issues with clients that have global contracts allowing anything from 60 to 90 day payment terms on vastly reduced revenue models.
“The recession has seen many clients stretch their payment cycle. Yet the media owners are unwilling to be flexible on payment terms. It may be a necessary evil in these times to ensure our industry as whole (and this includes the media owners) survives.”