Now, AAAI speaks up against ‘pitch discount’ issue
AAAI has sent a written communication to all its members to abstain from the practice of offering discounts to clients without prior “written” permission from channels
Published - 09-January-2019
Nearly six months after the Indian Broadcasting Foundation (IBF) raised concerns over the practice of agencies offering discounts to clients, the Advertising Agencies Association of India (AAAI) too has taken note of the issue. As per highly placed sources, AAAI, in its first board meeting held after IBF highlighted the matter in August last year, has sent a written communication to all its members to abstain from the practice of offering discounts to clients without prior “written” permission from the channel. The meeting was held in the second week of December.
“The communication has reiterated the concerns raised by IBF and INS (Indian Newspaper Society) in August last year over the pitch discount issue,” said a senior industry source.
However, when contacted for official comments on the matter, Ashish Bhasin, President, AAAI, said it’s an internal matter and he would not like to comment on it.
In a crucial development in August 2018, IBF had sent an email to all agency heads, asking them to abstain from the practice of offering discounts to clients on behalf of broadcasters without prior approval from them. The email was sent by then IBF Director Punit Goenka.
Similar concerns were raised by INS in a meeting with AAAI. Hormusji N Cama, Chairman of INS, had confirmed to exchange4media that he had raised the issue with AAAI and would soon be taking it up with each agency individually. The issue of shrinking margins for broadcasters and agencies was discussed in all meetings held by IBF in the last one year.
Talking about the latest development, a senior agency head said the move will keep up the momentum and agencies are trying to at least not do it as blatantly as they were doing it earlier. “In the last few pitches, we did notice a subtle change where some leading agencies were not as blatant about the negotiations as they have been in the past,” said an industry person who did not wish to be quoted.
However, another senior industry person called these moves as “mere paper work”. He claimed one of the leading electronic clients, who has been on pitch for a few months now, is believed to be holding the decision only due to pricing negotiations.
Earlier, speaking about the issue and criticising the practice, Ashish Sehgal, COO, Zee Unimedia Limited, said, “It puts both the agency and the broadcasters on the back foot. Margins are shrinking day by day. We both have to work together and find a solution to the problem that has increased by manifold in the last few years.”
Agency heads, however, say that pricing in a free market is run by demand and supply and not what one wants. “It’s a free market. I have to protect my business and hold my clients back and win new clients. I have every right to get them the lowest price. If not me, someone else will. Having said that, there is no compulsion on a broadcaster to take the slots if they feel we are underselling them,” says an agency head.