CLOSE-UP: GLOBAL BRIEF; A Greek tragedy for agencies

By MICHELE MARTIN, campaignlive.co.uk, Friday, 25 October 1996 12:00AM

Michele Martin examines how a new law has caused problems for ad agencies

Michele Martin examines how a new law has caused problems for ad

agencies



The Greeks say that when one door closes, another window opens,

indicating there is a solution to every problem. But so far, no-one has

found a way round Greece’s ten-month-old Mass Media Law.



The law, dubbed the Greek ‘Loi Sapin’, was introduced early this year to

‘clean up’the country’s erratic media business by introducing more

transparency.



What it has done, say advertising professionals, is to slash ad budgets,

increase redundancies in advertising agencies, and push down TV revenue.

Universal, Carat and Initiative Media are hatching plans to lobby for

reform.



The law was first mooted in the early 90s to bring more openness to a

market where deals are often done on a handshake. Wheeler-dealing was

primarily affecting the government by depriving it of much of its 51.5

per cent tax on TV airtime. Crafty agencies had been buying airtime in

sponsorship packages and claiming 70 per cent as ident production costs

rather than advertising, thereby paying the government tax on just 30

per cent instead of the whole lot.



Another reason for the law was that clients had started to complain

their agencies were pocketing under-the-table annual volume bonuses from

media owners.



In any event, the new regulations plugged the sponsorship loophole and

forced agencies to pay airtime tax on full ratecard, regardless of any

discounts they received. Both of these delivered more cash into

government coffers, but have at the same time obliged clients to pay

more tax for the same amount of advertising - something that is bound to

lead to the production of fewer ads in the long term.



Equally, the new laws have restricted volume bonuses to 9.9 per cent of

total airtime spend, and have changed the system so that only full-

service agencies can claim it. As a result, many clients have tried to

pull business out of media shops in favour of mainstream agencies - a

move that has caused much friction.



How far the industry can lobby for change is not yet clear but the fight

is set to escalate as media shops feel the pinch.



This article was first published on campaignlive.co.uk

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