Indiantelevision.com > Media, Advertising & Marketing Watch > IBF holds firm on 'no surcharge, no ads' from Tuesday

Indiantelevision.com's Media, Advertising, Marketing Watch

IBF holds firm on 'no surcharge, no ads' from Tuesday

By ASHWIN PINTO
Indiantelevision.com Team

(15 October 2007 1:15 pm)

MUMBAI: The war of words between the broadcasters and advertisers is getting hot. On the heels of talks breaking down completely with the AAAI (Advertising Agencies Association of India), the Indian Broadcasting Foundation (IBF) last evening issued a release stating that all advertisers who accept the 25 per cent surcharge by 6 pm today will receive a surcharge waiver for the first month i.e. 16 October to 15 November.

The surcharge comes into effect from midnight. The exception is that of the four southern states for whom the surcharge will come into effect after a month.

The IBF states that the waiver will ensure that these advertisers will continue to enjoy a surcharge-free status right through the Ramzan, Dussera and Diwali festival season.

The major broadcasters have agreed on the terms of the surcharge. They include Star, Sony, Zee, Network 18, Turner, NDTV, Sahara, Discovery India and Times Now, among the notable names. Together they control 90 per cent of TV viewership.

If clients and agencies do not agree to the surcharge then their ads go off the air from midnight onwards. The broadcasters further argue that if a client deals directly with them then the effective payout increase will be a little less than 10 per cent (since the 15 per cent agency commission will not be part of the billing invoice).

Having said that, an official from the country's leading broadcaster says that the aim is not to drive a wedge between the client and agency though some may see it in that light. "Our aim is to send a message that the intent is not trivial. We are not playing a game of one upmanship. We only want to get our fair share of the pie."

In an earlier story done by Indiantelevision.com agency representatives had accused the broadcasters of forming a cartel, which is illegal. However the official says that this is not a cartel. "We are not adopting a predatory pricing approach. After the hike our pricing vis-à-vis each other stays the same. In fact it makes us less attractive vis-à-vis some of the smaller networks, which have not come on board. The broadcasters are doing this move on their own free will and for this I have to thank Jawahar Goel (IBF president) for uniting the members. He has made us see that we all have common interests although we are fierce rivals.

"TV is a every efficient delivery platform and one can measure this. Some genres of TV are less expensive than radio which has not been measured. This is not to say that TV should grow at radio's expense. It is just that clients should respect the value of our business proposition."

The IBF in the release says that it again wants to emphasise that the surcharge only partially negates the effects of cost inflation that broadcasters have suffered even as audience deliveries have grown very strongly thereby ensuring that TV continues to remain the most efficient and most effective advertising medium in India. IBF also adds that several advertisers are coming forward to accept the surcharge.

When contacted GroupM CEO India and COO South Asia Vikram Sakhuja said that he did not want to speak right now. However, in an earlier interaction he had stated
that it was unfair of broadcasters to expect a 25 per cent hike across the board. "It violates existing contracts. While we look for accountability and transparency, a lot of media selling is opportunistic and opaque. Broadcasters should be willing to work in a collaborative manner with us."

One can expect hectic negotiations today. It will be interesting to see how this situation pans out.