Advertisers nervous of cost increases

ASSOCIATION OF NEW ZEALAND ADVERTISERS MEDIA RELEASE
Date: 25 September 2009
Release: Immediate

Advertisers nervous of cost increases from changes to TVNZ commissions

Television New Zealand’s announcement of a reduction in media commissions paid to advertising agencies from January 2011 has advertisers concerned about potential increases in advertising costs.

“ANZA has consistently maintained that any change from the current practice of commission payments cannot be a cost increase by another name.” says Lindsay Mouat, General Manager, Commercial of the Association of New Zealand Advertisers (ANZA). “We welcome the assurances provided by Television New Zealand of an equivalent reduction in advertising pricing so that this change will be cost-neutral for advertisers.”

“We will be watching closely to ensure this commitment is met.” said Mouat, announcing that ANZA and CAANZ have agreed to establish a reporting system to provide an objective assessment of advertising costs and audience across media for advertisers and agencies.

The implications of this change will vary according to whether advertisers are currently paying via commission, fees or a mix of the two. “Advertisers will need to reconsider the commercial terms of their agency partnerships as a consequence of the commission changes,” says Mouat. The change in commission structure will be felt most by small to medium sized advertisers. “ANZA will work closely with CAANZ to assist advertisers through this transition. We will be running a series of joint industry workshops to assist advertisers with best-practice agency remuneration methods.”

ANZA believes the changes will be a catalyst for open dialogue between advertisers and agencies on the best model for agency remuneration. “Many advertisers have already moved to fee based remuneration, often with a performance component. TVNZ’s plan will accelerate this evolution.”

Advertisers also share CAANZ concerns over the sustainability of smaller media and creative agencies as commissions reduce. “It is important for advertisers that we maintain a competitive and vibrant industry, where agencies are fairly remunerated for their services.”

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