MEDIA: FORUM; Should ‘over-stretched’ TV buyers be penalised?

Just when you thought it was safe to do a bit of decent TV buying, the

problem aspects of the business rear their head again. This time it’s

agencies allegedly over-committing themselves on share deals. Does this

confirm the system is unworkable? Or can we tolerate ragged trading at

the fringes of the market? Alasdair Reid reports

For a couple of years now, elements within ITV have been waiting for the

chance to settle a few scores with the big media buyers. Some sales

people have not been able to forget, or forgive, what happened during

the Yorkshire over-trading fiasco of 1993. They were totally unprepared

for the vehemence of the witch hunt, or the atmosphere of fear and

loathing that followed.

Yorkshire certainly wasn’t innocent, but then everyone had lived with a

certain amount of trading ‘flexibility’ for years. Agencies had been at

it too. And they were the ones demanding ridiculous discounts. Surely

they should have accepted some of the blame?

But agencies adopted a holier-than-thou attitude and the sales people

were forced to eat humble pie. When all of that was finished, both sides

issued assurances - principally for the benefit of clients - that the

trading system would be cleaned up once and for all.

Well, surprise, surprise, they’re still with us. Except, this time, the

boot is on the other foot. Apparently, several agencies - five at least

- will be unable to meet their share deals this year.

The agencies involved can’t be named at this stage - at least that’s the

advice of m’ learned friends. But should ITV exact the maximum penalties

possible? Is it the only way to keep the market honest in the future? Or

does the current crop of problems prove that the trading system is

fundamentally flawed? For at least a year now, sales points have been

dropping hints that agencies have been reneging on deals. Maybe this has

to be accepted as a fact of life.

And what about the advertisers? What do they feel about renewed trouble

in the airtime market? Do they feel aggrieved about agencies messing

about with schedules in an attempt to save their own skins? Or do they

accept that they are as much to blame for the situation? After all, some

of the trading problems have arisen because everyone is trying to please

the advertisers by giving them the biggest discounts possible.

Tim Wootton, the chairman of TSMS, is the most experienced of all the

sales bosses. He understands the pressures on agencies and is only too

well aware how they can get themselves into trouble.

But his sympathy extends only so far. ‘In the end, agencies must

understand that if you sign a deal you must meet it,’ Wootton insists.

‘I fully intend to finish this year with a clean trading balance. And if

there are problems, I won’t just sit there. You have to take action. No-

one likes to see the industry tarnished, and I’m absolutely certain that

blue-chip clients will want nothing to do with agencies that won’t meet

deals made on their clients’ behalf.’

Agencies can break share deals for all sorts of reasons. It’s not always

because of an inability to stand up to voracious clients’ demands for

ever greater discounts. In some cases, the agency is merely overtaken by

events. A new client may come along, or an existing client may want to

change the regional emphasis of its marketing plans.

But Wootton says this is no excuse. He believes agencies should learn to

hedge their bets. ‘The media world is changing and everyone knows that

there is a lot more uncertainty around,’ Wootton argues. ‘Who knows what

the effect of Channel 5, digital TV or changing media ownership rules

might be? Maybe people have to learn to keep their options open and not

commit themselves to long-term deals they may not be able to keep.’

John Blakemore, the UK advertising director of Smith-Kline Beecham and

the broadcast spokesman for the Incorporated Society of British

Advertisers, agrees: ‘I’d be appalled if buyers were deliberately over-

committing themselves and then trying to hide it. We can’t accept any

more of that. And as for clients putting pressure on agencies, well,

they are big boys. They can stand up and say no can’t they? With some of

the alleged problems at the moment, I think it may be more of a case of

them being overtaken by events - but that’s not very clever either.

‘You could argue that it calls into question the wisdom of doing long-

term deals. But I don’t think that the system is fundamentally flawed.

Agency deals are still relevant, it’s just that they have to be done

well. Smart operators, for instance, might not want to commit 100 per

cent of their share points and keep some in reserve. It can be done.’

Simon Rees, the deputy managing director of TMD Carat, says he’s

reserving judgment until the full facts of the matter come out. ‘There’s

a lot of misinformation out there at present,’ he insists. ‘I’m not sure

yet how much of a problem there is, but it is worrying that negative

aspects of the industry have come to the fore again. Clients have every

right to be concerned.

‘The retrenchment of the sales side into three sales houses has added to

the uncertainties on both the sales and agency side. Perhaps the

business has tried to go too far too quickly. But I’m optimistic that

the problems can continue to be ironed out,’ Rees says.

Some agencies are less charitable. They can smell malpractice. Agencies

that always play by the rules say they are sick of having their buying

performance unfavourably compared with agencies that turn out to have

been over-promising. They want to see justice being done.

Keith Impey, the broadcast director of Lowe Howard-Spink, concedes that

the trading system is as transparent as it has ever been. ‘The current

system works as well as in any other dynamic and competitive trading

business,’ he maintains. ‘It certainly works as well as the City.

However, rules in the financial market didn’t stop Nick Leeson, did

they?

‘But the very fact that the problems have been spotted shows that the

market is working well in this instance, and I trust that things are

being resolved. No-one likes this sort of thing because it gives the

industry a bad press, but bad practice has to be exposed and dealt

with.’

This article was first published on Campaign