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Still running 'cancelled spots' could lead to payment disputes

19-July-2013
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Still running 'cancelled spots' could lead to payment disputes

Whilst there has been a debate on why advertisements are still running despite leading brands having pulled out starting from last Friday July 12, from seven broadcasters who opted for monthly ratings, pulling out of channels was doubtlessly an extreme action taken by advertisers at not being a party to the ratings decision. These broadcasters included NDTV, STAR India, Viacom18, ZEE Network, MSM and more recently, Fox.

Starting July 12, emails were sent out from four leading media agencies asking respective channels to cancel their client activity.

Nikhil Sharma, Marketing Director, Perfetti Van Melle said, “The cancellation clause shouldn’t hopefully lead to payment disputes and the impasse should be resolved soon.” The brand has pulled out of all channels, and like other advertisers, given a 72-hour notice period. Sharma remains optimistic that a resolution will be out in the next couple of days in view of developments that have taken place during the week.

Ad revenue loss to broadcasters is expected to be roughly 14 – 15 per cent, when calculated on a weekly basis. Since the ratings will be calculated on the CPT format, the per day average amounts to around 2.73 per cent.

Broadcasters, including a prominent India-based channel as well as an internationally headquartered niche channel, are combating this problem by using the 14-day cancellation clause to prevent spot cancellation by brands. They continue to run advertisements as usual.

Broadcasters are also hoping that the issue will be resolved by the time the 14-day clause (which entails the advertiser giving a 14-day notice to the channel) is completed, acting as a buffer and preventing loss of revenue.

Advertisers and media agencies, on the other hand, are adamant and stand by their cancellations.

As channels continue to run advertisements of HUL, P&G, Colgate, Dabur, Perfetti, Godrej, Parle and other leading brands who have pulled out to make their stand in favour of weekly ratings clear, advertisers and agencies remain adamant that they will not be paying for ads that are running post cancellation. Whether this will result in a payment dispute between both the parties remains to be seen.
 

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