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
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
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
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
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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