Just when you thought it was safe to do a bit of decent TV buying, the
problem aspects of the business rear their head again. This time it’s
agencies allegedly over-committing themselves on share deals. Does this
confirm the system is unworkable? Or can we tolerate ragged trading at
the fringes of the market? Alasdair Reid reports
For a couple of years now, elements within ITV have been waiting for the
chance to settle a few scores with the big media buyers. Some sales
people have not been able to forget, or forgive, what happened during
the Yorkshire over-trading fiasco of 1993. They were totally unprepared
for the vehemence of the witch hunt, or the atmosphere of fear and
loathing that followed.
Yorkshire certainly wasn’t innocent, but then everyone had lived with a
certain amount of trading ‘flexibility’ for years. Agencies had been at
it too. And they were the ones demanding ridiculous discounts. Surely
they should have accepted some of the blame?
But agencies adopted a holier-than-thou attitude and the sales people
were forced to eat humble pie. When all of that was finished, both sides
issued assurances - principally for the benefit of clients - that the
trading system would be cleaned up once and for all.
Well, surprise, surprise, they’re still with us. Except, this time, the
boot is on the other foot. Apparently, several agencies - five at least
- will be unable to meet their share deals this year.
The agencies involved can’t be named at this stage - at least that’s the
advice of m’ learned friends. But should ITV exact the maximum penalties
possible? Is it the only way to keep the market honest in the future? Or
does the current crop of problems prove that the trading system is
fundamentally flawed? For at least a year now, sales points have been
dropping hints that agencies have been reneging on deals. Maybe this has
to be accepted as a fact of life.
And what about the advertisers? What do they feel about renewed trouble
in the airtime market? Do they feel aggrieved about agencies messing
about with schedules in an attempt to save their own skins? Or do they
accept that they are as much to blame for the situation? After all, some
of the trading problems have arisen because everyone is trying to please
the advertisers by giving them the biggest discounts possible.
Tim Wootton, the chairman of TSMS, is the most experienced of all the
sales bosses. He understands the pressures on agencies and is only too
well aware how they can get themselves into trouble.
But his sympathy extends only so far. ‘In the end, agencies must
understand that if you sign a deal you must meet it,’ Wootton insists.
‘I fully intend to finish this year with a clean trading balance. And if
there are problems, I won’t just sit there. You have to take action. No-
one likes to see the industry tarnished, and I’m absolutely certain that
blue-chip clients will want nothing to do with agencies that won’t meet
deals made on their clients’ behalf.’
Agencies can break share deals for all sorts of reasons. It’s not always
because of an inability to stand up to voracious clients’ demands for
ever greater discounts. In some cases, the agency is merely overtaken by
events. A new client may come along, or an existing client may want to
change the regional emphasis of its marketing plans.
But Wootton says this is no excuse. He believes agencies should learn to
hedge their bets. ‘The media world is changing and everyone knows that
there is a lot more uncertainty around,’ Wootton argues. ‘Who knows what
the effect of Channel 5, digital TV or changing media ownership rules
might be? Maybe people have to learn to keep their options open and not
commit themselves to long-term deals they may not be able to keep.’
John Blakemore, the UK advertising director of Smith-Kline Beecham and
the broadcast spokesman for the Incorporated Society of British
Advertisers, agrees: ‘I’d be appalled if buyers were deliberately over-
committing themselves and then trying to hide it. We can’t accept any
more of that. And as for clients putting pressure on agencies, well,
they are big boys. They can stand up and say no can’t they? With some of
the alleged problems at the moment, I think it may be more of a case of
them being overtaken by events - but that’s not very clever either.
‘You could argue that it calls into question the wisdom of doing long-
term deals. But I don’t think that the system is fundamentally flawed.
Agency deals are still relevant, it’s just that they have to be done
well. Smart operators, for instance, might not want to commit 100 per
cent of their share points and keep some in reserve. It can be done.’
Simon Rees, the deputy managing director of TMD Carat, says he’s
reserving judgment until the full facts of the matter come out. ‘There’s
a lot of misinformation out there at present,’ he insists. ‘I’m not sure
yet how much of a problem there is, but it is worrying that negative
aspects of the industry have come to the fore again. Clients have every
right to be concerned.
‘The retrenchment of the sales side into three sales houses has added to
the uncertainties on both the sales and agency side. Perhaps the
business has tried to go too far too quickly. But I’m optimistic that
the problems can continue to be ironed out,’ Rees says.
Some agencies are less charitable. They can smell malpractice. Agencies
that always play by the rules say they are sick of having their buying
performance unfavourably compared with agencies that turn out to have
been over-promising. They want to see justice being done.
Keith Impey, the broadcast director of Lowe Howard-Spink, concedes that
the trading system is as transparent as it has ever been. ‘The current
system works as well as in any other dynamic and competitive trading
business,’ he maintains. ‘It certainly works as well as the City.
However, rules in the financial market didn’t stop Nick Leeson, did
‘But the very fact that the problems have been spotted shows that the
market is working well in this instance, and I trust that things are
being resolved. No-one likes this sort of thing because it gives the
industry a bad press, but bad practice has to be exposed and dealt